There is at least one area in which economic policymakers should take a backseat. It is dangerous to see hospitals as an industry where free competition is encouraged. Korea must delay the introduction of for-profit hospitals until patients are ready to shoulder additional costs.
Strategy-Finance Minister Yoon Jeung-hyun rekindled the debate this week. He backs the scheme to attract foreign investment and ignite competition to improve the quality of medical services. He is right in saying that investor-owned hospitals will upgrade the quality of medical services, and create jobs. He misses the crucial point that upgrading quality entails a hike in costs.
The profit-seeking hospitals are necessary unless this leads to an increase in medical expenses.
It is questionable whether Korea badly needs foreign investment to run its hospitals.
Even without foreign capital, existing hospitals are thriving. As is well known, doctors hold one of the most highly-paid and coveted professions here. Even under state control, Korean doctors are ahead of or on par with Western peers in terms of skills. Many foreign patients visit Korea for treatment. The brightest high-school graduates are opting to enroll at medical schools. This illustrates the profession is still attractive.
With for-profit hospitals, doctors will rush to the highest-paying medical centers, widening the polarization of salaries. Many rural hospitals will disappear due to lack of profitability. Chaebol will build ultra-modern hi-tech hospitals, but only in Seoul and other major cities.
Competition will surely raise medical bills for all. Hospitals will increase money-making services and reduce unprofitable functions. This will help the rich enjoy extensive medical services while the poor will see hardships even in gaining access to hospitals in emergencies. This will create a polarization of medical service coverage.
Even under the current system, salaried people have seen a rapid hike in medical bills, which have been rising faster than wages. A lifting of price control will certainly raise bills.
The OECD reported that Korea would see the fastest rise in medical bills as the population has been aging fast. It sees a widening of the deficit in medical insurance funds, even under the current state-administered formula.
Koreans are still lucky to enjoy universal medical coverage regardless of wealth, status or location. Both the rich and the poor can gain equal access to hospitals, thanks to the egalitarian insurance coverage.
Yoon proposed the limitation of for-profit hospitals to Jeju and free economic zones. But once the plan is in place, all hospitals will become profit-seeking entities. This will surely raise medical fees.
A hasty decision might put the national medical system in an uncontrollable crisis.
Now is the time for Korea to balance quality and cost. A blind focus on quality is certain to raise medical charges and drive out the poor. Patients are ready to wait to see a doctor because it is cheap. The government should not deform the current faulty but efficient medical system.