Pros and Cons of For-profit Hospitals and Policy Alternatives

ABSTRACT

Currently, the Korean government is actively advocating the need to allow for-profit medical institutions. According to the government, the establishment of for-profit medical institutions would further improve the quality of medical services and create new employment. However, the issue has triggered a social controversy between the two major parties of interest; some claim that for-profit hospitals would only cause negative effects while the others emphasize the advantages of such institutions. Proponents of for-profit hospitals argue that this new type of medical institution would enable patients to receive more diverse and advanced medical services. In addition, they also believe that hospitals would experience more efficient and transparent management, raise capital with greater ease, and in turn, use the additional funds for more sophisticated medical research. On the other hand, opponents claim that they would only increase medical expenses while decreasing access to medical care. The goals that the government seeks to achieve with for-profit medical institutions can be accomplished by eliminating or easing regulations on existing hospitals and clinics. The introduction of for-profit medical institution is expected to deliver the projected benefits not solely because the current medical institutions are non-profit but because they are banned from pursuing commercial activities by law and regulation. Before considering plans to establish for-profit medical institutions, priority should be on easing or eliminating regulations that interfere with market principles such as compulsory participation of medical institutions in national medical insurance should be eliminated or eased