Key Findings
By many comparative measures South Korea has an enviable healthcare system: one that covers the entire population, is relatively cheap to run (healthcare spending is around 7% of GDP, far lower than in many comparably wealthy economies) and gives patients access to a broad range of specialist advice and state-of-the-art treatments. Yet the sustainability of the system, funded in part by mandatory national insurance contributions and in part through patient co-payments, is far from assured.
In some respects it will become a victim of its own success. With the population’s rising longevity, healthcare spending by those aged over 65—an increasingly large part of the population—is forecast to surge in the next decade, putting significant strain on funding. Ageing is also driving change in the country’s disease profile, with the incidence of longer-term, costly-to-treat diseases like cancer and diabetes rising rapidly. For such treatments, out-of-pocket payments are as much as 50%, making them unaffordable for many. Such diseases will also require constant, long-term monitoring, greatly affecting patients’ quality of life. There is also much inefficiency in a system that allows patients to go anywhere they like whenever they like and which, though low fee-for-service charges, encourages unnecessary duplication of basic procedures.
This paper, Connect to care: The future of healthcare IT in South Korea, examines whether the country is set to use healthcare IT—particularly systems that enable data sharing across providers, and remote monitoring and diagnosis—to alleviate these problems. This is not a foregone conclusion. Despite the fact that South Korea leads the world in terms of mobile broadband Internet connections and is a worldleading exporter of consumer technology, many of its healthcare connectivity projects have not yet achieved broad success.
To be sure, the government has acknowledged the cost, quality and access benefits of connected healthcare, with the drive for standardised health informatics starting in earnest in 2004. And some technologies—such as electronic medical records (EMRs) and order communication systems—have been widely adopted, while pilot schemes for others (for instance under the “U-health”, or ubiquitous health, telemedicine banner) have been successful. Yet many health informatics programmes remained at the pilot stage, failing to get broader medical or private-sector buy-in.
Why is this the case, and what needs to be done to remedy the situation? To answer these questions, the Economist Intelligence Unit interviewed a series of healthcare experts and practitioners from key government, medical and academic bodies in South Korea. Their opinions, together with our own research and analysis, inform the paper’s key findings.
Regarding the first question, a number of barriers prevent the wider adoption of healthcare informatics in South Korea. These include:
- Slow regulatory reform. Many practitioners and experts—including at the Ministry of Health and Welfare (MoHW)—recognise that delays in regulatory reform are retarding the broader adoption of some healthcare IT. For instance, the national Medical Law recognises only face-to-face consultations between doctors and patients and does not permit doctors to issue medical advice or diagnoses via telemedicine. It also restricts the storage of medical information to providers’ physical premises. In addition, systems that enable the sharing of patient information run the risk of breaching South Korea’s strict personal data protection regime (although the new Personal Information Protection Act, which came into force as this report went to press, resolves some of these concerns). Legislation to address these issues is pending, but many doubt that it will be passed quickly.
- Divisions within the medical establishment. On the one side are large private hospitals, comparatively rich and popular, which are broadly supportive of introducing more technological innovation in healthcare and have already taken steps in that direction themselves. On the other are much more numerous smaller clinics and neighbourhood doctors, many of whom are suspicious of technology that may reduce the need for their services among the outpatients on whom their livelihood depends. This is far from a clear division, however: even representative bodies such as the Korea Hospital Association and Korea Medical Association struggle to find consensus among their members.
- Lack of incentives for practitioners and private-sector investors. Many think that the initial investment required for health informatics and telemedicine is too high and the short-term gains are too low to justify it—with the added concern that only large, already overburdened hospitals will be able to afford such technology, worsening inequalities in access. Smaller-scale medical organisations complain that the government is not subsidising investments sufficiently. Furthermore, the fact that the national insurance scheme does not yet provide reimbursements for much e-health reduces the likelihood that practitioners will adopt it. Meanwhile, although the government is keen to develop healthcare as a growth industry, regulatory concerns and the lack of widespread adoption have made the private sector reluctant to invest.
- Lack of widespread patient demand. Despite the quality-of-life benefits that much innovative healthcare IT can offer, particularly for sufferers of chronic disease, the vast majority of patients in South Korea have yet to witness them. Where trials have been conducted, the MoHW reports broad patient satisfaction, while some physicians interviewed for this report claim patients that have experienced such treatment are prepared to pay extra for its maintenance. But without widespread demand there is little public support for action to resolve legal and other barriers to the broader adoption of healthcare IT, and little incentive for private-sector investment.
- Regarding the second question, stakeholders in South Korea suggest a number of solutions to overcome the challenges outlined above. These include:
- Establish dedicated government organisations to oversee healthcare IT. Many interviewees say that the creation of a dedicated government organisation focusing exclusively on healthcare information technology—with sufficient clout—is necessary to drive progress. Some cite the Office of the National Coordinator for Health Information Technology, under the Department of Health and Human Services in the US, the National eHealth Transition Authority in Australia, or similar bodies elsewhere as examples. Others concur with the need for a dedicated organisation that promotes IT in the healthcare and medical services areas and mediates conflicts of interest among different groups, such as Canada’s Health Infoway. Such bodies may help reduce conflicts arising from differing priorities at various government agencies.
- Establish clinical buy-in through demonstrations and incentives. Part of the problem with promoting new technology is that many practitioners have yet to experience its benefits first-hand. Advocates suggest the government needs to secure buy-in through more numerous targeted trials and demonstrations. Smaller clinics should be enticed to participate in trials through referrals and financial incentives, while some physicians recommend making new IT training a mandatory aspect of doctors’ qualifications. Moreover, rather than allow competing private-sector interests to lead the way in national projects, some advocate committed government investment in the necessary infrastructure and systems to establish universal standards.
- Get patients involved. Top-down attestations of efficacy are rarely as successful in promoting a technology as personal experience. Promotions should therefore emphasise the communication and quality-of-life benefits of such technology more widely, some practitioners say. Increased demand would help promote the viability of the business to private-sector investors and generate support for legislative change to enable its broader adoption.
South Korea is certain to face more challenges in rolling out healthcare IT infrastructure—as even those countries at the forefront of this drive have experienced. For one thing, getting the most from new technology is not just a matter of putting the hardware in place: organisations and systems must be optimised to maximise potential efficiency gains. Then there is the matter of ensuring inter-operability: by following established standards from the outset South Korea could save itself future costs.
Resolving such issues assumes the barriers and challenges outlined in this paper can be effectively overcome. The government is certainly aware of the challenges it faces and appears to be committed to resolving them. The MoHW has committed to creating an “ongoing platform for discussion” of issues related to health records and data that will include civic groups, industry members and academics, with the aim of agreeing on standards for the management of electronic health records throughout their lifecycle. It is also promising closer co-operation with other ministries in various programmes to promote R&D and collaboration between interested parties. The future sustainability of the country’s healthcare system may depend on the success of such efforts.
