Tertiary hospitals move to reduce beds, raise service quality in Health Ministry pilot program

Tertiary hospitals nationwide are looking to reduce a record number of patient beds as they abandon quantitative growth to shift their focus on quality service.

Doctors in Seoul National University Hospital, Jongno District, central Seoul in June 6. [YONHAP]

Tertiary hospitals nationwide are looking to reduce a record number of patient beds as they abandon quantitative growth to shift their focus on quality service. The government will increase fees by 50 percent for the hospitals that jump aboard the new initiative.

The hospitals are now reducing the number of beds and focusing on treating severe illnesses, facing the need to transform into facilities with even more cutting-edge medical capabilities.

The Ministry of Health and Welfare on Wednesday began accepting applications from hospitals to participate in the pilot program for restructuring tertiary hospitals.

The government has proposed an incentive in the form of a 50 percent increase in medical fees as part of the pilot project. The so-called "Big Five" hospitals are set to participate in the project: Asan Medical Center, Samsung Medical Center, Seoul National University Hospital, Severance Hospital and Seoul St. Mary’s Hospital.

These hospitals are expected to submit their applications within one to two weeks. If they meet the criteria, they will immediately be eligible for the increased fees for the pilot project.

The key requirement is to reduce general hospital beds by five to 15 percent. Asan Medical Center plans to reduce 339 beds, Severance Hospital by more than 290, Seoul National University Hospital by 180, and Seoul St. Mary’s Hospital by around 140 beds.

Asan Medical Center in Songpa District, southern Seoul on Thursday. [KIM JONG-HO]

Seoul vs. Tokyo in numbers

Tertiary hospitals in Korea have treated thousands, with Asan Medical Center sometimes handling up to 15,000 outpatients daily. In contrast, the University of Tokyo Hospital treats about 3,500 per day. This quantitative growth has contributed to raising the proficiency of complex medical procedures, such as cancer treatment and organ transplants. The more patients treated, the more skilled the medical professionals became.

Resident doctors, who have worked under intense conditions exceeding 80 hours per week, were also a significant part of this growth. However, the departure of residents in February due to the doctors’ strike saw about 40 percent of the resident doctors leave their posts.

Tertiary hospitals have maintained a system for treating many outpatients, particularly new ones. They conduct various tests, admit them for surgery and discharge them quickly. Reducing the number of beds will make this system difficult to sustain.

The government will increase the fees for intensive care units, general inpatient wards, and surgery-related anesthesia by 50 percent. Fees for 910 major surgeries, including procedures, will also increase by 50 percent.

The restructuring plan will cost some 3.3 trillion won ($2.47 billion) in health insurance budget annually. Approximately 2 trillion won will be allocated to 24-hour care, intensive care unit increases, severe surgeries and anesthesia, and incentives for dedicated specialists in intensive care and inpatient care. One trillion won will be distributed among participating hospitals based on the evaluation of their performances in 2025.

Hospitals participating in the restructuring must increase the percentage of severe cases they handle. The average for all hospitals was 52.8 percent in 2022, which will need to be raised to 70 percent. One Hospital has a rate as low as 39.8 percent, and such hospitals cannot abruptly raise their rate to 70 percent.

The government will divide participating hospitals into several groups, setting specific targets for each. If they meet the targets, the groups will be rewarded accordingly.

Hospitals are doubtful whether the fee increases will help cover the losses of tertiary hospitals.

"Currently, one intensive care unit bed results in an annual deficit of 150 million won,” one of the directors of the Big Five hospitals said. “The more beds we add, the greater the losses. A 50 percent fee increase alone won’t cover the deficit.”

Doctors at Samsung Medical Center in Gangnam, southern Seoul, performing surgery [KT]

Professional referral system

This restructuring plan also introduces a new "professional referral system.” Tertiary hospitals must form partnerships with secondary and small-to-medium-sized hospitals in their regions and submit a list of cooperating hospitals.

A patient will first be seen by a doctor at a secondary hospital, and if the issue cannot be resolved, the patient will be referred to its partnered tertiary hospital. Patients currently choose their hospitals and doctors, but the doctor will take the lead under the referral system.

The current referral fee of 10,990 to 20,330 won, with an additional 3,350 won in non-metropolitan areas, will be significantly increased. The fee for referring patients back to secondary hospitals after treatment, currently 60,000 to 70,000 won and 90,000 to 100,000 won in emergencies, will also be increased.

The government has designated 11 regions where the professional referral system will be implemented, meaning that treatment must be completed within the region. If a patient from the countryside is referred to Seoul National University Hospital, it won’t be recognized as a valid referral.

The new system is expected to help reduce the concentration of patients in the Seoul metropolitan area. The Ministry of Health and Welfare is also considering additional compensation for hospitals that refer and receive patients within their region, as part of efforts to promote region-based health care . However, this does not mean that the current system, where a referral letter from a local clinic is used to go to a tertiary hospital, will be banned. The referral will still be allowed, but patients may face much longer wait times.

The Chonnam National University Hospital in Dong District, Gwangju [CHONNAM NATIONAL UNIVERSITY]

Exploitable loopholes The referral is meant to indirectly push patients to receive treatment in their regions, but it is hardly a foolproof plan, according to some experts.

“Koreans have a strong preference for tertiary hospitals,” said a health care expert who asked to remain anonymous. “In the past, they have often bypassed secondary hospitals by obtaining referral letters from them just to go straight to tertiary hospitals.”

“There are concerns that this could lead to loopholes for patients and hospitals to exploit,” said the expert. "This should be taken into account when evaluating the results of the pilot project."

"While the fee increase for 910 severe surgeries may benefit large hospitals in Seoul that perform many such surgeries, regional hospitals won’t see the same benefits,” a director of a Big Five hospital said.

"We will complete the essential health care reforms to protect the lives and safety of the people and for the sake of future generations,” Prime Minister Han Duck-soo said Thursday in his National Foundation Day address at Sejong Center for the Performing Arts in Jongno District, central Seoul. "We will do our best to actively communicate and minimize the burden and pain felt by the people during the reform process."

BY SHIN SUNG-SIK, ESTHER RHEE, KIM MIN-YOUNG [kim.minyoung5@joongang.co.kr]