Expanded Health Coverage Hurts Smaller Clinics

  • By Heo Sang-woo, Hong Jun-ki

    June 20, 2019 13:16

    Healthcare providers are becoming increasingly polarized two years after the Moon Jae-in administration drastically expanded public insurance coverage for medical treatments.

    The top five -- Samsung Medical Center, Seoul National University Hospital, St. Mary's Hospital, Asan Medical Center and Severance Hospital -- saw their combined market share rise a record 8.5 percent last year, and the revenues of the top 42 hospitals nationwide rose 33.5 percent compared to 2016 before the coverage expansion.

    But among smaller hospitals and private clinics with fewer than 100 beds, closures outpaced new openings for the first time ever last year. In 2014, 147 clinics opened while 124 closed down, but last year 121 opened and 122 closed down.

    The government in 2017 drastically expanded coverage by the National Health Insurance Service and scrapped selective care offered by big hospitals, which resulted in treatment fees becoming roughly the same at big and small hospitals.

    The result was that patients flocked to big hospitals, with some 10,000 people lining up at each of them. One medical industry source said, "You won't see this anywhere else in the world. Because their profit is now largely based on patient volume, hospitals are becoming overwhelmed and patients are suffering" as doctors are under pressure to process as many of them as possible.

    Patients crowd a hospital waiting room in Seoul on Wednesday.

    According to the Health Insurance Review and Assessment Service, the number of patients in big hospitals continues to rise, and the bigger the hospital, the larger the increase. They increased by 2.29 million over the last five years, and 1 million of them were at the top 5. 

    The sharp rise in the minimum wage also hurt smaller clinics. One head of a small hospital said, "The minimum wage grew, while the 52-hour cap on weekly work hours forced us to hire more workers, so we ended up losing W100 million a month since last October" (US$1=W1,176).

    Smaller hospitals, especially those outside Seoul, are also increasingly understaffed as big hospitals are hiring huge numbers to cope with the growth. The number of nurses at the top 5 hospitals rose 40 percent from 10,137 in 2014 to 14,145 last month.

    Shin Young-seok at the Korea Institute for Health and Social Affairs said, "As more and more medical workers feel it's safer to work in big hospitals in Seoul and opt to wait for new openings, medical centers in other regions are facing a dire shortage of workers."

    A patients' room is filled with unused medical stands and beds in a hospital in Incheon on Monday.

    Industry insiders say the usual three-tiered system of choosing hospitals based on the severity of illness -- small clinics for minor ailments, mid-sized hospitals for more serious diseases, and large hospital for major illnesses -- is breaking down.

    Chung Young-ho of the Korea Small and Medium Hospital Association said, "Patients who could easily be treated at small hospitals are flocking to big ones, while those who need to go to big hospitals are journeying to the top hospitals in Seoul."

    Im Koo-il, a former medical professor at Kyunghee University, said, "At this rate, small and mid-sized hospitals will go bankrupt, while major hospitals which should be treating seriously ill patients will be overrun by people with minor ailments, destroying the whole medical system."

    Another problem is skyrocketing NHIS payouts over the long term. The government plans to boost the proportion of state medical coverage ratio from 62.7 percent in 2017 to 70 percent by 2022. It will raise contributions by 3.49 percent every year until 2022 and 3.2 percent after that. The current rate for salaried workers is 6.49 percent of their monthly salaries.

    But even with those rises, the NHIS is expected to see its accumulated reserves of W20.6 trillion run dry by 2026. The Ministry of Health and Welfare recently said it will try to maintain the reserve level at around W10 trillion, but that means the public will have to fork out more money.

    Kim Jong-dae, a former head of NHIS, said, "An accumulated reserve of W20 trillion sounds like a lot, but that will last three or four months. We may see a crisis in the system during the next administration." 

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