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A Committee under Health Ministry Takes Issue with Medical Privatization
Brakes on Investment-type hospital
A Committee under Health Ministry Takes Issue with Medical Privatization
  • By Choi Mun-hee
  • April 20, 2018, 09:47
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A recommendation made on April 18 by a committee under the Ministry of Health and Welfare will prohibit even the establishment of an investment-type hospital.
A recommendation made on April 18 by a committee under the Ministry of Health and Welfare will prohibit even the establishment of an investment-type hospital in a Free Economic Zone.

In February, the Ministry of Strategy and Finance announced a service industry innovation plan which included the establishment of a general hospital on a site reserved for an investment-type hospital in the Incheon Free Economic Zone. The site for an investment-type hospital has been changed to a general hospital site. The site was part of land reclaimed in 2002 by the Kim Dae-jung administration to create a "Northeast Asian medical hub." However, opposition by civic groups has stalled the project for 16 years.

Even the Finance Ministry's general hospital plan faces opposition. A committee under the Ministry of Health and Welfare recommended the government on April 18 not to promote the establishment of an investment-type hospital.

"We decided not to push forward with medical commercialization policies considering the fact that conditions for opening medical institutions are limited under current medical laws,” the committee explained.

If the current policy line holds, the decision is highly likely to affect a permission to open Jeju International Hospital being discussed by residents of Jeju Province.

"The government should go ahead with the introduction of an investment-type hospital to nurture the medical industry at a time when the paradigm is being shifted to precision medicine such as the utilization of artificial intelligence and big data,” said an official of the bio industry. “Hospitals hold the key to the health and medical industries.”


A recommendation to remove health care from the Regulation-Free Zone Act and Basic Service Industry Development Act is also controversial. With respect to an exception to corporate regulations in the Regulation-Free Zone Act, the committee pointed out the fact that the Ministry of Strategy and Finance can permit a project via a resolution by the special committee in the case of strategic local industries as a problem. As for an item about basic projects for new technology, the committee pointed its finger to the point that if the special committee approves a project as a basic project for new technology, the special committee can recommend related ministries to make, revise and abolish related acts. The committee claims that if the two items are applied to the health and medical industries, it can generate negative effects, which will have a big impact on the lives and health of the people and trigger irreversible aftereffects.

The same goes for the Service Industry Act. The committee argues that the application of the Service Industry Act will create effects too enormous to measure. "The committee is asking the Ministry of Health and Welfare to coordinate medical commercialization to protect the public interests of the medical industry," explained a senior official of the Ministry of Health and Welfare. “The Ministry of Health and Welfare should also respect this matter.”

But some experts did not agree. "It is good to emphasize the publicness of medical care, but it should not cause any negative side effect against the promotion of the medical industry,” said Lee Jae-ho, a researcher at the Hyundai Research Institute. “There is a concern that a declaration to exclude medical commercialization elements completely will act as an obstacle to fostering new industries in the era of the Fourth Industrial Revolution. "

There is no big difference in allowing subsidiaries. The committee said that a guideline of the Ministry of Health and Welfare allowed the establishment and operation of an affiliate of a medical corporation even though it will be possible only if the relevant act is revised. Then the committee insisted that the permission of a medical corporation through a guideline without a national consensus should not be allowed to happen in the future.

The scope of the healthcare service will also narrow down. In 2016, the Park Geun-hye administration came up with a plan to promote the healthcare service with the goal of creating new markets and fostering promising service business items. However, the committee also insisted that the government approach the healthcare service in terms of prevention and management of chronic diseases in the current health care system based on local communities.

"The core areas of the development of the service industry are medical care and education," said a former senior official of the government. "Investment-type hospitals are a way to create jobs and spread the Korean medical care wave. It is regrettable for the committee to make the decision.”