South Korea’s fee-for-service system leads to lower quality of care and lower quality of life for doctors due to low fees, limited number of doctors, and excessive working hours. This needs to be addressed with reasonable policy improvements.
Public dissatisfaction with the medical 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 these complaints form the bulk of public opinion, very few people are aware of the specific circumstances and underlying causes of the current state of the medical system. A careful analysis of the Korean healthcare system reveals that patients are not the only victims of the country’s dysfunctional healthcare policies. Let’s take a look at 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 what disease they are hospitalized for. In other words, under the comprehensive fee system, a patient pays a predetermined amount for a specific disease covered by health insurance, regardless of the number of treatments, types of treatment materials, or number of hospitalization days. 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 the Korean fee-for-service system that stand out compared to other countries. First, the purpose and background of the system is different from 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 recognized 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 for budget payment for 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 recognized as public medical procedures (medical procedures covered by health insurance) in other countries is lower than the actual cost of medical procedures, 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 care in private medical institutions that basically pursue profits has declined due to the implementation of the comprehensive fee system. Lastly, in other countries, medical fee adjustment cycles, principles, and procedures have been discussed to ensure that medical fees are adjusted appropriately, but in Korea, the fee determination is done by the public corporation using only macro indicators, which does not reflect micro indicators such as material and drug costs, welfare costs, employee salaries, doctor’s workload, and the risk of medical practices. 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. Below, we’ll take a closer look at some of the problems with South Korea’s 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 rate is so low that doctors are forced to see as many patients as possible in a so-called “three-minute consultation” in an hour 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 of patients, i.e., by ensuring that the ratio of doctors to patients is very small, 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 United Kingdom and the United States, and 3.4 in France, Denmark, and Sweden. In addition, due to the low cost of healthcare, South Koreans visit doctors outpatient on average 11.8 times per year, nearly double the OECD average of 6.8 times, and the average number of days per inpatient hospitalization is 13.5 days, well above the OECD average of 9.9 days. To summarize, South 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 workweek for doctors 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 characterize South Korea’s comprehensive payment system, the ratio of doctors to patients is limited to a very small number, which leads to doctors working intensively long hours. The killer working hours don’t allow doctors to sleep. Combine this with the pressure to be nice to patients, and the rate of depression among doctors is 13 times higher than among non-physicians of the same age. This directly impacts patient safety. I often hear from my seniors that they often stumble into the operating room 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 risk are not compensated for their efforts if the government sets a low fee. Unless a doctor has a special sense of mission in the field, it is a crying shame to take on a surgery where the reward is too small for the effort or the risk is too high to risk a medical error and subsequent medical dispute. This is especially true in Korea, where there is no social safety net for medical errors.
Aside from special cases of prospective doctors who have a sense of mission in a particular field, even prospective doctors with the right values and good causes can’t help but consider this situation when choosing their field. This naturally leads to a divide 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 get the care they need in a timely manner, is a very important issue in the medical community. The impact on patients who don’t receive timely care due to understaffing in a specialty can be 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 something goes 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 for government-subsidized services is 73.9%. This means that the remaining 26.1% of the cost of health insurance-covered services 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 last five years, doctors are the second most common, followed by acupuncturists, fourth, and dentists, fifth. In addition, 40% of those who filed for personal rehabilitation are doctors. Many doctors in South Korea are committing suicide due to the difficulties in running their clinics. Desperate doctors end up trying to reduce hospitalization days by using cheaper materials, choosing less costly surgeries, and cutting back on patient care. Inevitably, the quality of care suffers. As a result, the volume of healthcare decreases, the public role of hospitals decreases, 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% 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 will 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, considering 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’s 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 our healthcare system cannot be solved by blaming doctors and demanding excessive dedication from them. When doctors are allowed to work under reasonable policies and with a true sense of mission, the healthcare system will improve.
