Facing a critical financial challenge due to a resident doctors’ strike, major hospitals in South Korea are taking emergency measures to overcome the crisis.
Seoul National University Hospital and Asan Medical Center began accepting applications for ‘unpaid leave’ for nurses and staff starting on Mar. 4. This was done in an effort to cut labor costs because the number of hospitalized and surgical patients has been reduced by half due to the strike of residents and interns. These losses have exceeded 1 billion won ($762 thousand) per day.
Only two weeks after the absence of residents and interns, two of Seoul’s ‘Big 5′ hospitals - Seoul National and Asan Medical Center - have already started emergency management. This represents a significant challenge among these leading hospitals in South Korea.
Major hospitals in Korea are currently facing severe financial difficulties, causing concern among the medical community. While national university hospitals can receive government support to cover deficits, private university hospitals, and private major hospitals must issue bonds to fund their operational costs.
An insider from one of the major hospitals in the nation stated “The financial difficulties are so severe that something must be done to save the hospitals.”
The medical industry points out that this situation has revealed the vulnerable financial reality of top-tier general hospitals in the nation.
The main reason for this financial shortfall is cited as the high dependency on residents in Korea’s major hospitals. A representative from Samsung Seoul Hospital said, “Even a single surgery involves 6 to 8 people, including the surgeon, anesthesiologist, and nurses.”
In general hospitals with more than 100 beds, half of the medical revenue goes to labor costs. Even the ‘Big 5′ hospitals with better operating conditions than others spend about 40% of their medical revenue (sales) on labor costs.
A representative from Severance Hospital mentioned, “The rate of increase in fees (money given to hospitals by the Health Insurance Review & Assessment Service) cannot keep up with the rate of wage increases.”
