Why is South Korea’s comprehensive fee system poison for patients and doctors alike?

South Korea’s comprehensive fee-for-service system leads to poor quality of care and poor quality of life for doctors due to low fees, limited number of doctors, and excessive working hours. Reasonable policy improvements are needed to address this.

 

Public dissatisfaction with the healthcare system is nothing new in South Korea. People complain about unfriendly doctors, short treatment times, and frequent medical accidents. In reality, it’s hard to argue that South Korea’s healthcare system is affordable. However, despite the fact that complaints about the medical system form the majority of public opinion, very few people understand the specific circumstances and underlying causes of the current state of the medical system. A careful analysis of Korea’s healthcare system reveals that patients are not the only victims of the country’s dysfunctional healthcare policies. Let’s take a look at the reasons why the Korean healthcare system, and in particular the Korean comprehensive fee system, needs to be improved from the perspective of a medical student who will become a doctor.
Before listing the reasons, let’s first understand what the comprehensive fee system is. According to the Doosan Encyclopedia, the comprehensive fee-for-service system is “a system that pays medical institutions a predetermined amount of money based on the type or amount of medical services provided to a patient, regardless of the disease for which the patient is admitted to the hospital. In other words, under the comprehensive fee system, a patient pays a predetermined amount of money for a specific disease covered by health insurance, regardless of the number of treatments, types of treatment materials, or number of days in hospital. The comprehensive fee system is used in many countries because it not only prevents doctors from overtreating, but also reduces friction between hospitals and patients over medical bills. So why is Korea’s fee-for-service system toxic for both patients and doctors?
Before we go any further, let’s take a look at the characteristics of Korea’s comprehensive fee-for-service system compared to other countries. Firstly, the purpose and background of the comprehensive fee-for-service system are different in Korea and other countries. On average, more than two-thirds of medical institutions in other countries are publicly owned, and even in countries with low public ownership rates, the public function of medical institutions is recognised and a certain level of basic medical resources are provided. Therefore, in the healthcare system of other countries, the main challenge is to efficiently manage the basic medical resources, so the quality of medical care is unlikely to decline even if a comprehensive fee system is implemented to prevent overtreatment and efficiently allocate medical resources. In addition, in Europe and Australia, the comprehensive fee-for-service system is used as a standard indicator of the quality of public healthcare.
In Korea, on the other hand, there are almost no public resources for healthcare, and 93% of all medical institutions are private. In addition, the compensation for medical procedures that are recognised as public medical procedures (those covered by health insurance) in other countries is lower than the actual cost of medical treatment, and the fee itself is set much lower than in other countries (in fact, the cost retention rate is only 73.9%), so it is a natural result that the quality of medical treatment in private medical institutions that basically pursue profits has declined as a result of the implementation of the comprehensive fee system. Lastly, in other countries, medical fee adjustment cycles, principles, and procedures are discussed and adjustments are made appropriately, but in Korea, the fee determination is done only using macro indicators, so micro indicators such as material and drug costs, welfare costs, staff salaries, physicians’ workloads, and the risk of medical practices are not reflected at all. Add to this the fact that other countries have a national management system and compensation insurance system for medical accidents and medical disputes, while Korea does not have a social safety net for medical disputes at all, and the comprehensive fee-for-service system encourages doctors to avoid certain medical procedures. In the following, we will take a closer look at some of the issues that arise from the characteristics of the Korean fee-for-service system.
First, the Korean fee-for-service system contributes to the lack of quality of life for doctors and contributes to the high incidence of medical errors. The basis for this argument is that the Korean fee-for-service system is grossly underpaid. In 2014, the average hourly wage for a specialist was 5,885 won. A specialist is a doctor in the final stages of training, from medical school through internship and residency. Surprisingly, contrary to popular belief that doctors make good money, their hourly wage is less than the South Korean minimum wage of 6030 won. What’s more, the rates are so low that doctors are forced to see as many patients as possible in one hour of so-called “three-minute visits” in order to reach 5885 won per hour. Even if they see as many patients as possible in an hour, they still don’t make the minimum wage.
This phenomenon can be explained as follows. The government sets ridiculously low prices to preserve scarce insurance funds. However, since they have to guarantee a minimum wage for doctors, they use measures to limit the number of doctors to a very small number, i.e., by having a very small ratio of doctors to patients, they can meet the minimum wage by ensuring that each doctor sees a large number of patients. According to the OECD, South Korea has only 1.6 doctors per 1,000 people, compared to 2.4 in the UK and US, and 3.4 in France, Denmark, and Sweden. In addition, due to the low cost of healthcare, the average number of outpatient visits to a doctor per person in Korea is 11.8 per year, nearly double the OECD average of 6.8, and the average number of days per inpatient stay is 13.5, far exceeding the OECD average of 9.9 days. In short, Korean doctors see more than four times as many patients per person as the average doctor in OECD countries.
What are the consequences of the “caring” healthcare policy of guaranteeing a minimum wage? Intensive care and exorbitant working hours. According to a survey of 1,745 doctors in Korea, the average work week for a doctor in Korea is 93 hours. The infamous interns work an average of 116 hours a week. That’s more than three times the legal limit for reasonable working hours. As a result of the incredibly low reimbursement rates that characterise South Korea’s comprehensive payment system, the number of doctors to patients is limited to a very small number, which leads to doctors working intensively long hours. The killer working hours do not allow doctors to sleep. Add to this the pressure to remain kind to patients, and the rate of depression among doctors is 13 times higher than among non-physicians of the same age. This has a direct impact on patient safety. I often hear from my seniors that they often stumble into the operating theatre in a daze, not sure if they are awake or dreaming. At this point, it seems strange that there are no medical errors.
Secondly, there are some fields that doctors avoid, resulting in a shortage of manpower in certain fields, which makes it difficult for patients to receive timely treatment. In Korea, doctors’ views are not fully reflected in the standards for setting medical fees. Doctors who perform painstaking surgeries with great effort and high risk are not rewarded for their efforts if the government sets low medical fees. Unless a doctor has a special sense of mission in the field, it is a crying shame to take on a surgery where the rewards are so low or the risks are so high that the risk of malpractice and subsequent medical disputes is too high. This is especially true in Korea, where there is no social safety net for medical errors.
Aside from special cases where a prospective doctor has a sense of mission in a particular field, even a prospective doctor with the right values and a good cause cannot fail to consider this situation when choosing a field. This naturally leads to a division between popular and unpopular fields, and when this situation becomes extreme, it leads to excessive shortages in unpopular fields. Access to care, or the ability of patients to receive the care they need in a timely manner, is a very important issue in the medical community. The cost to patients of not receiving timely care due to understaffing in a speciality is unimaginable. However, preventing these problems relies entirely on the sense of mission of doctors, without any measures. They also bear the brunt of public criticism when things go wrong. This is because the majority of the population is unaware of the situation.
Third, the quality of medical care is poor. The cost retention rate of Korean doctors is 73.9 per cent for items that are covered by the government. This means that the remaining 26.1 per cent of the cost of healthcare that is covered by health insurance is lost to the doctor. There are only two ways for doctors to make ends meet. Doctors are civilians who have families to support and need to “make ends meet,” so it’s natural for them to want to make a profit. Do doctors seem to be complaining because they’re full? Of the 1145 people who have filed for bankruptcy in the past five years, doctors are the second most common, followed by Chinese medicine practitioners, fourth, and dentists, fifth. In addition, 40 per cent of those who filed for personal recovery are doctors. Many doctors in Korea are committing suicide due to the difficulties in running their clinics. Desperate doctors end up trying to reduce the number of hospital days by using cheap materials, choosing less expensive surgeries, and scaling back on patient care. Inevitably, the quality of healthcare suffers. As a result, the volume of healthcare decreases, the public role of hospitals is reduced, and inappropriate discharges lead to more readmissions and higher mortality rates. This is not an exaggeration. In fact, a study in Health Care Financ Rev found a 3.7 per cent increase in mortality among discharged patients, indicating that premature discharges due to overzealous implementation of capitation can be a major problem.
In the same vein, people who don’t live in densely populated areas have less access to hospitals. If a hospital is built in a sparsely populated area, it will go bankrupt because the number of visits will not be enough to meet the budget, and doctors will not open hospitals outside of densely populated areas. This is unfortunate, given that access to hospitals is a critical factor in providing patients with healthcare that can mean the difference between life and death.
The problems listed above are more specific to the Korean Universal Healthcare System than to the system itself. It is a poison for patients and doctors alike. As a pre-medical student, there is a lot of room for improvement in the Korean healthcare system. The comprehensive fee-for-service system is just one example. Many of the problems in Korea’s healthcare system cannot be solved by blaming doctors and demanding excessive dedication from them. The healthcare system will improve when doctors are able to work under reasonable policies and with a genuine sense of mission.