[Editorial] Spurring investment

The government is under fire from two sides in response to its latest investment revitalization package, which includes a plan to allow hospitals to establish subsidiaries to engage in incidental businesses.

Hospitals can already engage in some businesses incidental to medical services. For instance, they can operate funeral parlors, parking lots or facilities for medical care and welfare for the elderly.

The government’s plan, to be implemented in the first half of next year, is to allow a hospital that operates, for instance, a funeral parlor to set up a subsidiary to manage it as a for-profit business. The main point of the plan is to allow hospitals to attract private investment.

The government also intends to sharply expand the scope of incidental businesses that hospitals can engage in. They are likely to be allowed to engage in solicitation of foreign patients, hotel management, medical tourism, research and development of biotechnology, medicines, health food supplements and medical equipment.

The government also plans to allow pharmacists to pool capital and jointly launch a company to set up bigger pharmacies. The current law bans this practice, but it was recently ruled unconstitutional by the Constitutional Court.

These measures are expected to spur investment in the medical sector. But they are criticized on one side by doctors and pharmacists for opening up too much to the market, and on the other by advocates of for-profit hospitals for not opening the sector up enough.

Doctors and pharmacists view the package as a step toward privatizing medical services. They are against privatization on the grounds that it will cause a drop in the quality of medical services by driving out neighborhood hospitals and pharmacies.

Advocates for for-profit hospitals attack the government for lacking the courage to push for a system in which hospitals can operate just like private companies. Currently, hospitals run by medical corporations are not allowed to pursue profits. Announcing the package, Finance Minister Hyun Oh-seok declared that the government would not pursue the introduction of such hospitals.

For-profit hospitals are viewed by some as the most effective way to vitalize fresh investment into the medical sector and make Korea’s health care industry a growth engine and a source of decent jobs.

But introducing such hospitals is virtually impossible at the moment, as they are opposed not only by doctors but by the main opposition Democratic Party. The package announced Friday is an attempt by the government to work around the stiff opposition to profit-oriented hospitals.

Doctors and pharmacists need to help the government to implement the new package. The domestic medical sector needs fresh investment to make a quantum leap. To ease opposition to its plan, the government also needs to increase investment in building a stronger primary care system.