In this blog post, we take an in-depth look at whether healthcare privatization is a threat to public health or a necessary change to improve the quality of healthcare services.
On August 12, 2014, the South Korean government announced a plan to promote the service industry at a meeting on trade and investment promotion chaired by the president. The plan was mainly aimed at the healthcare sector and included the establishment of medical corporations and expansion of ancillary businesses, deregulation of hospitals to open up to investment, and expanding the number of overseas patients. In response, opposition parties and civic organizations have reacted by claiming that this will open the door to medical commercialization. In the midst of this controversy, many South Koreans are unclear about the government’s intentions because of the negative connotations of the term. But in reality, the debate on healthcare privatization goes deeper than that. The South Korean government’s attempt to improve the efficiency and sustainability of its healthcare system is not a simple matter.
I don’t think it’s necessary to push back against this, but the above proposals are so superficial that they don’t even come close to the real problem underlying them. I’m going to point out what I think shouldn’t even be up for debate. But first, we need to rethink the nature and purpose of healthcare. We shouldn’t forget that healthcare is not just an economic transaction, but an essential public good that protects people’s lives and health. That’s why the commercialization of healthcare should always be approached with caution, and the ethical and social issues that may arise should be fully considered.
Before moving on, let’s clarify the meaning of the terms used by the people and organizations involved, as they are often unclear. In fact, it is often intentionally misleading, which can spark controversy and make it difficult to understand. First of all, the term “healthcare privatization” is incorrect in South Korea. More than 90% of medical institutions are already privately run. If you think about it, there is no public medical institution that comes to mind except for National University Hospital. Under the current medical law, only doctors and non-profit corporations, including medical corporations, can establish medical institutions, and the vast majority of hospitals are operated by them. However, there is a need to define the concept of healthcare privatization. In particular, the long-term effects of privatization need to be analyzed in depth. We need to consider the inequalities in healthcare and the decline in quality that will inevitably occur if healthcare is overly commercialized.
This is because we usually think of commercialization in the sense of “medical institutions can make money,” but there is no regulation that says medical institutions in Korea should not make money. Instead, if the founder is a doctor, the profits can be taxed and taken out of the organization; if the founder is a corporation, the profits must be used for the business for which the corporation was formed. This legal structure is intended to limit the commercial activities of healthcare organizations while maintaining their public character. However, a thorough review of how healthcare organizations are using these regulations in the real world and how they are actually affecting the health and safety of the public is needed.
So, is healthcare privatization really turning hospitals into huge profiteers? The reality is that incorporators can put anyone they want on the board of directors and pay them a salary, which means there is currently no problem with healthcare organizations making money and taking that money out of the organization.
After all, there are already for-profit elements in the system, and it’s important to understand exactly how they affect the quality and accessibility of healthcare. Current issues aside, what healthcare privatization actually means is “open to investment” hospitals. In layman’s terms, this means that hospitals are built with the help of outside investors. There is a lack of forecasting and analysis on how this will change the Korean healthcare system in the long run. The Korean government’s reasoning for this policy is based on economic logic, but it may undermine the intrinsic value of healthcare.
