Hospital Corporations Will Be Launched Next Year

A new type of corporations will emerge in the second half of next year. The corporations will integrate hospitals and medical centers into franchises and manage them professionally.

The new corporations are expected to increase the number of small and medium sized general hospitals that have the same name and medical facilities.

The Ministry of Finance and Economy and the Ministry of Health and Welfare said on December 4 that the government’s Comprehensive Plans for the Competitiveness of the Service Sector to be released next week included launching hospital management companies.

The government is expected to implement the plan in the second half of next year after amending the Medical Services Law between January and June 2007.

Hospital management corporations will be established by hospitals’ financing and serve as headquarters for the hospitals.

While the existing hospitals can be founded only by doctors and are non-profit legal entities, the corporations can be established by those who are not doctors and are run for profit.

The government initially intended to make hospitals incorporated to further advance the service sector, but changed its plan to launching hospital management companies due to strong opposition from the doctors.

Hospitals which financed the establishment of the corporations will pay a commission for using the same brand name; share beds, operating rooms, and medical devices; get help with nurses training; and provided with accounting service.

In addition, the government will allow the corporations to issue corporate bonds to facilitate purchasing expensive medical facilities and opening an overseas branch.

Companies such as Medipartner, which consulted hospitals under the same brand name such as Dentist’s Ye or Herb Clinic Ye, are projected to convert to hospital management corporations.

sanjuck@donga.com corekim@donga.com