Major Hospitals Overcharge Foreigners

By Lee Tae-hoon
Staff Reporter

Korea's major hospitals charge foreigners, especially medical tourists, 2.5 to 3 times more than locals but these hospitals say the pricing is globally competitive because of the nation's high quality medical services.

However, critics say the dual and discriminatory pricing policy will ultimately scare away foreign patients, jeopardizing the plan to make the medical tourism industry one of the nation's main growth engines.

To find out the extent of price discrimination, The Korea Times conducted an investigation into major hospitals in Korea.

First, the paper made inquiries on leading hospitals in Seoul about the initial consultation fee which is not covered by the National Health Insurance.

Two-Tier Pricing

When asked in fluent Korean, they answered the fee is set at 16,450 won ($14.30) whether the patient is insured or not, saying it can be stretched up to 21,950 won if the patient chooses to see a preferred specialist.

They added that the first check-up at tertiary hospitals is not covered by health care.

However, when disguised as an uninsured foreigner, many of the hospitals demanded much higher fees irrespective of the choice of doctors.

Samsung Medical Center in Gangnam said the initial consultation fee was fixed at 70,000 won; the Severance Hospital in Sinchon was slightly lower at 62,000 won; while Soon Chun Hyang University Hospital (SCHUH) in Yongsan charged 35,000 won.

Seoul National University Hospital (SNUH) in Jongno answered it would cost either 36,000 won for a general consultation or 46,000 won to pick a physician with more than 10 years of experience as a specialist.

Medical Fees Rising

During the investigation, many hospital and government officials admitted that a two-tier pricing system has emerged with the advent of medical tourism in Korea, where only non-profit hospitals are allowed to operate under a universal health care system.

Previously, uninsured foreigners were charged the same rate Korean nationals without insurance would pay, but now many foreigners pay much more - roughly two to three times the standard fee.

Noh Jung-woo, chief administration officer of SCHUH, says his hospital charges foreigners roughly 1.5 times or slightly more.

"Foreigners pay more because we run an international clinic within the hospital to meet their demand for a longer consultation, and interpretation services," Noh said.

Officials of other major hospitals also acknowledged that their hospitals have set higher fees for foreigners.

Inha University Hospital set the so-called international rate at 2.2 times the stated fee for locals as did Severance Hospital. Konkuk University and Korea University medical center charge 2.5 times; and Cheongshim International and Hanyang University medical centers, and Wooridul Hospital, three times or more the rate for Korean nationals.

The JoongAng Ilbo newspaper reported in December that the Wooridul Hospital charges seven times more than the standard rate for Japanese patients.

"Japanese patients pay 20 to 25 million won here for an operation," Lee Sang-ho, chairman of the renowned spinal hospital, was quoted as saying. "We will charge foreign patients more to give benefits to Koreans."

Legal Issues

Hospital officials said the international rate is a new term that does not exist in law and is often referred to as the self-regulated rate.

Only a few hospitals, including Severance and SCHUH, reported the existence of the discriminatory fees to the authorities last year, according to government sources.

All hospitals in Seoul's posh district of Gangnam, including the Samsung Medical Center and Wooridul Hospital, failed to report the two-tier pricing scheme, according to Lee Kyung-hee, an official of the Gangnam Community Health Center.

Under medical law, hospitals face a temporary closure when caught twice over negligence to report the fee list for medical services not covered by national healthcare.

However, the majority of hospitals claim that foreigners are not subject to the Medical Law. And if their argument is correct, foreigners cannot be protected from malpractice and other legal risks.

Expert say that two-tier pricing may also violate the Fair Trade Law, which stipulates that unfair or discriminatory deals can be punished by a fine of up to 2 percent of the gross sales.

However, Jung Eun-young, a senior policy official at the Ministry for Health, Welfare and Family Affairs, refuted this, saying that legislators revised the Medical Law last May with the clear intent to introduce a two-tier system.

"There was mutual understanding last year that the government needs to deregulate the pricing of medical services for foreigners with the aim of building the medical tourism industry as one of the nation's growth drivers," Jung said.

Under the revised law, hospitals are allowed to directly market medical services to foreign patients, and are obliged to notify the list of fees for medical treatments not covered by insurance through a booklet and Web site from Feb. 1.

Yet, most of the 1,500 hospitals licensed to host medical tourists are reluctant to make such a list available to foreigners.

Excuses for Higher Fees

Moon Joo-young, head of SNUH's international business team, is also well aware that the two-tier pricing scheme has become a norm in the heavily regulated industry.

He believes a discriminatory fee will be inevitable to give a boost to the newly fledging medical tourism industry.

"Medical tourists pay roughly twice compared to locals at SNUH given that the new investment has been made for foreign tourists, including new multi-lingual booklets and the international clinic," Moon said.

"It should be noted that no hospitals will attract foreign patients under a single-tier fee system, as they are already inundated with local patients," he claimed.

According to the OECD Health Data for 2009, the number of doctors per 1,000 people in Korea was 1.7 in 2007, the second lowest among OECD countries after Turkey and well below the OECD average of 3.1.

Moon said he believes Korean hospitals, which have demonstrated excellent outcomes in regards to serious illnesses, should compete with their quality of care in the global market, rather than with lower prices.

"Foreign patients pay slightly more at SNUH compared to other rival hospitals in South East Asia, but the number of non-Korean patients is constantly increasing thanks to advanced medical technologies and expertise," he said.

Lee Young-ho, marketing director of the Global Healthcare Business Center, estimates that Korean hospitals charge foreigners roughly 1.5 times to twice the rate for Koreans, considerably lower than the paper's survey results.

He claims that the dual pricing mechanism is not unethical because most medical tourists carefully compare the price of hospitals abroad before choosing the one that best meets their budget.

"Hospitals should be compensated for their extra efforts to attract and treat foreign patients, such as marketing campaigns, catering customized meals and hiring interpreters," Lee said.

"What concerns patients who shop for the best health care is not how much more they have to pay compared to locals, but how good the product is compared to the ones offered by other hospitals worldwide."

Fear of Second-Class Care

Some fear that medical tourism is a prelude to introduce for-profit hospitals and will result in better care for the rich who want better quality or faster access.

An official of Severance Hospital told the paper that the nation's first Joint Commission International-accredited hospital is already allowing queue jumping to medical tourists, making the waiting time longer for local patients.

According to the World Health Organization, medical tourism may facilitate access to high-level services for the better off. But it warns that this may eventually divert human resources from public services to more profitable private services for the elite in foreign markets.

leeth@koreatimes.co.kr