KOREA: Overview of trends and opportunities in the medical and health sector
SEOUL: The medical and health sector in Korea is rapidly growing on the back of economic growth in Korea, improved standard of living and the most rapidly ageing population in the OECD. Still, major part of Korea’s health system is private, with income from private means or company medical plans, and hospitals and clinics are therefore competing fiercely. As a result, medical institutions are increasingly investing in IT technology, geriatric facilitation and medical aid equipment and technology.
According to World Economic Forum’s (WEF) report in October 2007, Korea was evaluated as the 11th most competitive country in the world with a rapidly growing economy. In spite of that, the service level of Korea’s medical/health sector is lagging that of other OECD countries. Korea’s medical and health expenditure as a share of GDP is far below the average of OECD countries: OECD average at 8.9% and Korea at 5.6% in 2004.
The main reason for the relatively low share of GDP spent on medical and health services in Korea is the fact that Koreans pay out of their own pockets for health services, or through contribution through company schemes, in addition to the public
support. Koreans pay 36,9 percent, whereas the OECD average is 20,5 percent and in Norway just 15,7 percent. When it comes to the number of medical doctors, Korea has 1.6 doctors per thousand inhabitants as compared to 3.1 of OECD average.
Health sector growth rate increasing
Despite these somewhat unfavourable circumstances, life expectancy at birth has dramatically risen - up from 52.4 in the 1960s to 77.4 in 2005. Considering that the OECD average is 78.1 years and Norway is 79.67, Korea’s life expectancy rate at birth is very close to that of the developed countries. In fact, in 2007, Korea’s rate reached 79.18 years.
This implies that the medical service quality has been improved during the time despite the lack of medical infrastructure. On top of that, thanks to the economic development and the improved standard of living in Korea, the growth rate of medical spending has increased substantially in recent years.
All of this and other relevant statistics indicate that Korea medical/health sector is now in the growth stage propelled by the accelerating economic power and the improved standard of living.
Intelligent Hospital & Wireless Healthcare
Being different from that of Norway, 80 % of Korea health system is private hospitals and clinics. Since there is not much public support, the market competition is fairly tough. Thus, hospitals are trying their best to be more competitive in this open-competition market: they want to be more efficient and attractive for their patients. Without capital for investment, it is not easy to stay afloat competing with its peers.
In this environment, by its nature, there are only a small number of winners and they are all large hospitals: some of these are hospitals owned by Korean conglomerate, Chaebols like Samsung and Hyundai, but some University hospitals such as Yonsei and Seoul National University are also important participants.In this highly competitive arena, large hospitals are forced to process more work with limited resources, at the same time creating new and unconventional services to attract their customers.
Among the above, many of the large hospitals have already been equipped with IT innovations for their operation such as PACS – Picture Archiving Communication Systems and OCS – Order Communication Systems etc. During the past few years, some major hospitals began to use wireless and sensor-based IT technology such as SmartCard, RFID (Radio Frequency Identification) solutions. This trend will eventually go toward the use of WSN – Wireless Sensor Network - for medical services and environments.
Interest in telemedicine
These days, interest is picking up in the remote/home healthcare service among developers, construction companies, hospitals, telecom companies and local governments, what we call ‘telemedicine’ for commercial purposes..
Using specially designed sensors for certain purposes, the service body can deliver remote healthcare service on a real-time basis. Though there are not many cases yet, new cities like Song-do IFEZ (Free Economic Zone) and other planned new construction sites are considered as good test beds for its commercialization.
Ageing Society Healthcare
Korea is heading straight toward an ageing society. According to the Korea National Statistical Office (NSO), the number of the people over 65 years will dramatically increase - from 9.1% in 2005 to 37.3% in 2050. This estimate was calculated based on the historical and current trend of demographic data and survey on the new birth rate in the future.
Considering that it might take Korea only 19 years to get into this ageing society, Japan 24 years U.K. 47 years, Norway 76 years and Sweden 85 years, it is very evident and urgent that Korea must prepare itself for the up-coming new environment.
Figure 1: Demographic change in Korea's population
Figure 2: Time span for countries to enter an ageing society
Korea’s medical service infrastructure and system are not yet well prepared for this future demand. Most of all, they do not have the experience and the skills for medical services to the senior citizen and the social infrastructure is not yet ready for the demand.
New insurance program starts in 2008
The Korean government is going to invest huge amounts of money to launch a new insurance program from July this year, 2008. The authorities are going to cover certain parts of the medical fee as a subsidy, where hospitals and potential patients get benefits from this insurance policy. Since there are some prerequisites for the qualification for hospitals and patients, service providers must find suitable technology, products and services to compete.
Opportunities
In short, these three areas are possible target areas where Norwegian companies and organizations can take advantage from their long experience and skills:
1. Medical equipment and applications for an intelligent hospital
2. Smart/home healthcare technologies and applications, including telemedicine
3. Medical aids for elderly people
Though Korea’s medical/health sector historically has not been much attractive to foreigners, the size of the market is getting bigger and the quality of service is being improved. On top of that, as Korea is heading rapidly to an ageing society, the medical service bodies, including other profit-making companies, are trying to meet this new demand in the near future. Resulting from fierce competition among medical service players, many of them have been trying to purchase high-end medical equipment and deliver new technology-based services to their customers.
Norway has already run into the problems of an ageing society, so there are many experienced experts and developed technologies in this area. Additionally, Norwegian medical sector has long developed its telemedicine and sensor technologies. This strong point sufficiently can meet new needs of medical innovation through the use of IT technology in Korea.
As mentioned above, the Korean government is trying to make its medical service more competitive compared to foreign medical service bodies, and they are going to invest a huge amount of money for a new insurance policy for geriatric patients. From the short history of qualified medical service and the lack of high technologies, however, it clearly appears that Korea needs to develop this area in cooperation with external experts, say, experts and companies in Norway.
Delegations to be arranged in May and November
Innovation Norway in Korea are frequently arranging delegations, networking and matchmaking events for Norwegian medical technology and medical aid companies. In 2008 delegations, are planned in May and in November. For more information, please contact station manager Reidar Grevskott on: reidar.grevskott@invanor.no