Welcome ruling for for-profit hospitals

A regional court in Jeju found unlawfulness in the permit for what would have been Korea’s first for-profit hospital in the resort island of Jeju on the condition of restricting access to Korean nationals. The first trial result underscores the cost for a political decision swayed by hard-line civic groups.

The government sought to establish for-profit hospitals since the Kim Dae-jung administration in 2002. But the project was often met with strong opposition from medical and civilian communities. In 2015, the Ministry of Health and Welfare gave the first grant to create a for-profit hospital in Jeju dubbed Greenland International Medical Center. Even after the building went up and staffing became complete, the Jeju provincial government dilly-dallied in allowing the opening. It finally gave a go-ahead with the condition that it only accepts foreign nationals in December 2018. It was a decision made in the face of strong protests although the 47-bed hospital would specialize in just four divisions of plastic surgery, dermatology, internal medicine and family medicine.

In February 2019, the Chinese operator of the hospital filed a suit as it could not be sustained purely on foreigners. The hospital could not open for three months after the conditional permit, and the provincial government eventually revoked the permit. The hospital filed a lawsuit to overturn the cancellation and won the final trial of the Supreme Court in January.

Greenland Hospital cannot reopen its original design as the building and compound has already been sold. Yet health care and the medical union under the militant Korean Confederation of Trade Unions (KCTU) issued a statement vowing a protest to prevent the opening of Greenland Hospital and permission of for-profit hospitals.

The for-profit hospital could be a measurement of how engaging the Korean society has become towards novel concept and business model. Under the Korean law, a medical facility can be opened only by a licensed medical professional, government or local governments or non-profit organizations. For-profit hospitals can allow individuals or companies to invest in a hospital and give them the right to liquidate the assets if the hospital becomes insolvent.

Nearly all, or 90 percent, of medical facilities in Korea are under private ownership and therefore seek profit. Yet for-profit hospitals are still strongly protested for fear of rises in medical charges and over-competition among hospitals. Preventing a new attempt is not right. The Jeju government actually has a special law enabling the operation of for-profit hospitals in free economic zones that could help promote the medical industry and services and jobs. But the law is of no use due to the over-emphasis in the public role of hospitals. Stakeholders should know that most member countries of the OECD allow for-profit hospitals.