JEJU-DO < invest Korea

According to Yonhap News,

(SEJONG=Yonhap News) South Korea's government on Friday gave approval for the opening of a foreign-owned for-profit hospital on Jeju Island, which can lead to diversification in the country's medical service sector.

According to the Ministry of Health and Welfare, it approved the request made by the Jeju Special Self-Governing Province for the establishment of the Greenland International Hospital.

This marks the first time ever that Asia's fourth-largest economy has taken steps to approve the establishment of a for-profit hospital on its soil. Alternatively called investor-owned hospitals, these medical institutions are created to generate profit for their shareholders and permit the repatriation of earnings. At present, all hospitals in South Korea are non-profit.

The hospital owned by China's Greenland Group will be set up on some 28,163 square meters of land in Jeju Healthcare Town in Seogwipo City. The three-story hospital will offer treatment services in internal medicine, dermatology, cosmetic surgery and family medicine.

Greenland is a state-owned enterprise with 50 percent of its stakes controlled by the city of Shanghai. In 2014, its total sales hit 71 trillion won (US$59.9 billion).

Under the plan submitted by Greenland, the new hospital will have 47 beds and be staffed by 134 doctors, nurses, medical technicians and administrative staff. The Chinese company said it plans to inject 77.8 billion won into the project and have a 100-percent stake in the hospital.

"The decision to allow Greenland to build the hospital was taken after careful consideration with all matters being examined in detail," said a senior ministry source, who declined to be identified.

He pointed out that under South Korean law, for-profit hospitals can be built in certain areas and added that the new hospital will act as a test bed for the feasibility of such ventures in the future.

The official also said that almost all the users will be Chinese nationals with beauty-related treatment and medical checkups being the main business areas.

South Korea technically allows for-profit hospitals on Jeju and in free economic zones across the country, if foreign capital makes up more than half of the total equity investment. The minimum amount that must be invested is $5 million.

The rules finalized in October 2012 also permit local patients to receive treatment at such facilities if they are willing to forgo health insurance coverage.

For-profit hospitals are attractive because they can bring in foreign direct investment and draw talented doctors from South Korea and other parts of the world because they can pay higher salaries. Advocates claimed that these hospitals can raise the quality the country's medical service and give more choices to patients.

Detractors, on the other hand, have warned this system can result in higher medical costs, and lead to the dismantlement of the domestic medical insurance coverage scheme that will eventually hurt users.

yonngong@yna.co.kr

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