The Present State of the Medical Industry and Future Success Factors
Hwan-Kyu, Rho, former President of the Korean Medical Association
I started my long struggle against unfair medical institutions in August, 1995. I happened to treat a young man whose lungs had stopped and had to use an instrument called ECMO. The hospital didn’t allow me to use the tool more than one time. This was a limitation imposed on us by the healthcare insurance institution and only when the hospital paid for it could we use it again. Contrary to what happened to him, Lee Kun Hee, chairman of Samsung, has survived a long period depending on this instrument. It’s wrong to treat people's lives differently according to their wealth.
South Korea has gone through heavy and chemical industry drives and an IT boom and now the keyword for future industry is Bio-Heath. However, the situation that the doctors are in is desperate. This presentation will start with an illustration of the current situation of Korean Medical practice and go to the medical changes in China and the U.S. and end with a prescription for better medical practice.
1 Diagnosis: South Korean medical practice, where are we now?
The longevity of South Koreans has lengthened drastically for the past 50 years. Contrary to most advanced nations where patients have to wait for one or several months to see doctors or get surgery, Korean patients can get these medical treatments with no waiting time. Actually, we get treatment and stay in the hospital twice as much as the average of OECD countries, but the medical expense is only two thirds of the average. However, what is surprising is that Korea’s catastrophic heath expenditure, the rate that households confront financial catastrophes because of medical expenses, is the highest among OECD countries. It’s weird. How come we pay only two thirds when we visit the hospital twice? Again, how come the financial catastrophe is so high when we pay less than others?
South Korea’s National Health Insurance Service has taken the form of getting low premiums from the people, covering lowly, and paying lowly to the hospitals since 1989. When this service first started in 1977, only those companies which employed more than 500 were obliged to subscribe to this service. So there were many patients without insurance and the hospitals could endure this low payment from the insurance service. However, currently the consequences of this three-low insurance plan are disastrous because all the people are insured and the service pays only 76% of the expenses to the hospital. Most hospitals are suffering from enormous deficits, so they’re decreasing the number of intensive care unit beds, which results in threatening patients’ lives. In an attempt to stay in the black, hospitals offer treatments that are not covered by insurance, or unnecessary or careless treatment. They give up offering treatment that can cause financial loss and get rebates for using improper medicines or medical instruments. The current medical insurance system is seriously challenging doctors’ consciences.
This system gets low premiums and covers a small amount of the medical expense and by doing that puts much burden on the shoulders of the people. About thirty three million Koreans subscribe to private medical insurance companies, which spend 30% of the premiums on recruiting, marketing, and company profiting and raise the premiums year by year. This situation is good for the government, which enjoys the good reputation from low premiums and avoids people’s resistance. It is also good for the private health insurance companies, which are experiencing a dramatic expansion. However, the people have to pay a lot both to the government and the private companies. At the same time, doctors are suffering from deficits and can’t put their efforts into developing new medicines, new equipment or the bio-health industry. The beneficiaries of this system are the government and private insurance companies and the victims are the people and doctors.
2 Consideration: Foreign medical business, the opportunities and risks
China is in a big bang of medical industry. Unmet treatment needs and fast aging led the government to invest in public hospital buildings, privatize more hospitals, allow private capital investments to build hospitals, and expand the subscription of the people to health insurance. This enormous medical market is occupied by the big players like GE, Philips and Siemens and Koreans are nowhere to be found.
In the U.S., healthcare startups are booming. Incredibly innovative technologies like gene therapy, operations by robots, transplantation with 3D printing technology, to name but a few, are being developed. Most of these are hard to even imagine in South Korea, where so many doctors are working their fingers to the bone to make ends meet or to fight against the government’s dangerous policies.
3 Prescription: How to improve the competitiveness of healthcare industry
We need to change the institutions to improve medical service. We need to normalize the health insurance service and expand the public spending of medical expenses. We need to diversify the monolithic health insurance system and satisfy the demands which have been cared for by private insurance companies. We need to correct medical laws. In order to raise up medical touring, we need to expand treatment sectors for foreigners and the government needs to advertise the expertise of Korean doctors. Without practicing these fundamental prescriptions, the government is urging us to do ancillary services or to run subsidiaries to improve our financial situations. It’s like urging taxi drivers to sell chewing gum to overcome their financial woes. The fastest way to gain competitiveness for future medical industry is correcting these harmful medical practices.
Translation by Kang, Soo Jung
President of Salt&Light