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(EDITORIAL from Korea Herald on Dec. 7)

All News 07:04 December 07, 2018

Good precedent
: Jeju governor's go-ahead to foreign-invested hospital deserves praise

Jeju Gov. Won Hee-ryong should be lauded for giving the final go-ahead to the nation's first foreign-invested medical institution in the country. The decision will have many positive impacts on health care services, deregulation and the local economy.

Won deserves praise because he needed courage to override the verdict of a public deliberation committee he commissioned. As a politician who has a presidential ambition, it would have never been easy to go against a decision of a panel that represented his own electorate.

In all regards, it would have been better if the governor had not gone for public deliberation, which only delayed a final decision on a project that had started as many as eight years ago.

The outcome of the six-month deliberation, in which 58.9 percent of the participants opposed the opening of the China-invested Greenland International Hospital, showed that such public deliberation process does not always result in an outcome that is beneficial to the nation or local community.

Most of all, a reverse decision by the governor would have caused a large-scale damages suit -- which could amount to 100 billion won -- and unaccountable damage to international investors' confidence in Korea. Also lost would have been a chance to boost the medical tourism and the local economy on the resort island.

The most intriguing part of the public deliberation, which started in April and ended in October, was that it was called up although the central government – namely the Ministry of Health and Welfare – had already authorized in 2015 the Greenland Group's plan to open a hospital on the island. The authorization came four years after the Chinese conglomerate signed a memorandum of understanding.

With the Korean government's blessing, the Chinese real estate developer invested 77.8 billion won ($69 million) to build the 47-bed hospital. It was completed in August 2017 and the hospital has already hired a total of 134 staff, including nine medical doctors and 28 nurses.

It is not difficult to imagine what would happen if the Jeju provincial government blocked the project. Besides the damages suit, the Korean government and the Jeju provincial government could face an investor-state dispute lawsuit and protests from the Chinese government, with which Korea has a free trade pact.

Also gone would have been a big plus to the local economy. Greenland officials said at least 10,000 employees of the group would visit the hospital each year for medical checks and treatments.

One more reason Won's decision should be commended is that approval of the Greenland International Hospital would provide momentum toward deregulating the Korean health care system to draw foreign investors.

Allowing hospitals in which foreign investors put in capital and are permitted to get dividends for their investment was first proposed by the then President Kim Dae-jung in 2002. Kim pushed the policy in order to promote medical tourism as a future growth engine of the Korean economy.

But the plan has since faced stiff opposition, with critics claiming that allowing such "for-profit" hospitals would increase medical bills and thus exacerbate commercialization and polarization of medical services. They also worry about negative impact on the public health care system, including the national health insurance scheme.

Gov. Won made it clear that the Greenland International Hospital will be open only to foreign patients and it will provide services only in internal medicine, dermatology, cosmetic surgery and family medicine. Moreover, the hospital will be excluded from the Korean national medical insurance scheme.

The current law also ensures minimal negative impact from open-investment hospitals on the public health care system, by requiring foreign investors to have more than 50 percent of paid-in-capital for each hospital. Such foreign-invested hospitals are authorized only within the eight free economic zones and Jeju. Like Greenland, they can only accept foreign patients.

These limitations will help minimize negative effects from allowing more foreign-invested, for-profit hospitals. The open-investment hospitals would be able to contribute to enhancing and diversifying medical services available in the country. Then Korea will be able to take one more step toward becoming a hub of medical tourism in the region, which the late President Kim had dreamed of.

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