Keynote Address (10:00 ～11:20 Auditorium of East Building)Session chairs: Prof. Sumio YamadaProf. Tetsuhito KojimaKeynoteAddress

THE PRESENT AND FUTURE OF KOREAN HEALTHCARE INDUSTY
Young-Joon Seo1)
1) Department of Health administration, College of Health Sciences, Yonsei University, Kangwon-do, Korea

The present of Korean healthcare industry
Healthcare industry has been understood as a broad concept
which includes pharmacy and healthcare appliances as well as
healthcare services together with a narrow idea which refers toonly healthcare service industry. When healthcare industry isdefined as healthcare service industry, the recent argument ofhealthcare industry advancement in Korea has been mainly
focused on changing the healthcare paradigm from a regulated
healthcare system to a free market system such as deregulation,
allowing for-profit hospital corporations and vitalization of a
private health insurance market without having a clear goal or
seeking the ideal model. Advancement of healthcare industry
from the stance of the hospital which is playing an importantrole specially in the healthcare provider group has implicatedthat the health-related systems and policies should beestablished to contribute to the national economy throughattracting overseas patients and creating employment as ahighly profitable industry by developing an advanced
healthcare technology and human resources. Furthermore, theindividual hospitals internally feel they need to enhancecompetitiveness by improving all of the hardware and softwaresystems as a world-class.
Competitiveness of Korean healthcare industry has been
told to be weak compared to the international competitors eventhough clinical technology reaches world class in many areas.
We can find the reason in the following several aspects. First,
Korean healthcare industry have difficulties in marketing
because there are a lot of limitations such as price control,
regulation of advertising, etc. Second, by serving the large
number of patients for a low margin of profit due to low
medical fee, it is difficult for hospitals to care each patientdelicately to meet their personal needs. Third, because financial
resources of the healthcare industry mainly consist of publichealth insurance, supplementary private insurance and out-ofpocket money, the scale of domestic healthcare market islimited and it is difficult for healthcare providers to invest
boldly in the clinical research and high-tech medical services(market scale of current domestic healthcare service industry is
5.6% in GDP, compared to about 10% of the advancedcountries). Fourth, because the scale of medical-related support
industry such as pharmaceutical and life sciences is small andits quality is not high, it does not exert a synergistic effect asneighbor industries.
The prospects of Korean healthcare industry
There are several factors that can have a significant effecton future Korean healthcare industry. First, due to rapid aging
population, demands for health and aged care, and healthpromotion (estimated $70billion market in 2010) will
dramatically increase and result in heavy financial burden to
the individual household as well as the government. Second,the development of information technology and life sciences
will bring the emergence of medical complex combined with
BT, IT, pharmacy, and also make it easier to access to the Uhealthcare. Third, the change of reimbursement system fromfee-for-service to capitation and prospective payment system
will drive hospital administrators to emphasizing more costeffective
management.
Fourth,demands
fortheenvironmentally-friendly healthcare will be grown in the caredelivery process as well as hospital construction due to theglobal warming, resources depletion, air pollution, etc. Fifth,
the quality assessment of healthcare that eventually converts
into accreditation system will be more reinforced, and most of
the hospital information will be released to the consumers andinsurers to use as a selection criteria. Finally, facing a turbulent
environment caused by kin competition among healthcare
institutions, introduction of for-profit hospital corporations,
growth of private health insurance market, and performancebased payment from third part payers, healthcare institutions
will try to recruit and maintain high quality staff and to
implement diverse management strategy.
Future strategies of Korean hospitals
Korean hospitals have made various efforts so far in orderto survive under the turbulent environment of healthcare
market. However, it is true that many hospitals have still
followed physician-centered traditional hospital management,
and that operating systems of the hospitals are also far fromthose of advanced countries. In order for the Korean healthcare
system and hospitals to be advanced, there are some nationaltasks to be solved. First, the government has to build advanced
healthcare system that all the people can receive good qualityof care without worrying about medical bills by increasing
public insurance coverage dramatically from the current 65% to90% level. Second, the government should change theparadigm that has focused on disease treatment to the disease
prevention and health promotion. Third, Integrated Delivery
System (IDS) which is defined as a network of organizations
that provides a coordinated continuum of care to a defined
population should be established in order to deliver appropriate
care to the people at right time at right place. Fourth, thegovernment should actively foster the complex healthcare
industry which bundles up BT, IT, pharmacy, and business.
Fifth, the government should free unnecessary regulation thathas restrained the hospital's autonomy and creativity, while
intensify the hospital's responsibility for patient's safety andenvironmentally-friendly care. In addition to the governmentrole, hospitals themselves also have to make efforts to improvetheir internal effectiveness. First, hospitals should build
customer-oriented care delivery system through restructuring
and reengineering of the hospital. Second, hospitals should
generate synergy effect through networking with other
healthcare institutions - vertical and horizontal integration, andintegration of oriental-western medicines, etc. Third, customercentered marketing should be strengthened. To do this,
hospitals build customer database and should strengthen theformal and informal contacts with target customer groups.
Fourth, hospitals should establish the culture of labormanagement cooperation by improving the quality of workers’
life and open management. Fifth, hospitals should provide a
personalized patient-centered care through case management
system. Finally, hospitals should strengthen the relationshipwith the local communities through formal and informal
communication and economic contribution to the community.
Conclusion
The advancement of the healthcare industry in Korea could
be accomplished when government, consumers and providers

KA-2

agree on what the most desirable healthcare system in Korea
should be in the future and how it is achieved. It means that thetrue advanced health care system will be created when all thestakeholders in healthcare market clearly recognize their rights
and responsibility, and extend mutual understanding andcooperation with sharing the goal of ‘Healthy and WelfareState of Korea’.

KA-2