Analysis of Korea’s Competitiveness in the Global

Healthcare Market

2016 Medical Korea

Ki Nam Jin

Dept of Health Administration

Yonsei University

I. Introduction

The Korean government considered the globalization of healthcare as a growth engine for economic development.

For the globalization of healthcare, inbound & outbound policies were adopted.

There has been a steep increase of foreign patients from 16,000(2009) to 300,000(2015).

As of 2015, nearly 140 medical institutions have opened overseas offices.

Background

However, we saw a decrease in the growth rate of foreign patients coming to Korea thanks to fierce competition, and a change in the market environment.

We need to review the factors that influenced our competitiveness in the global healthcare market and to suggest solutions for sustainable development.

Background

The objectives of this presentation are:

1) To analyze the competitiveness of Korea in the global healthcare

market

2) To analyze the competitiveness of Korea for target nations

3) To suggest the strategies for improving the competitiveness of Korea

in the global healthcare market

Objective

II. Competitiveness of Korea in Global

Healthcare Market

Analytical Framework: Porter's Diamond Model

Diamond Model

Factor Conditions

Input Conditions

Firm Strategy,

Structure & Rivary

Related & Supporting

Industry

Nations

Chances

Factor conditions refer to inputs used as factors of service

provision – such as medical technology, healthcare providers,

capital and infrastructure.

Factor Conditions

Clinical

Effectiveness

• Cancer survival rate

• Cosmetic surgery

• Robot surgery

Efficiency

• Ranked as the World’s 5th Most Efficient Healthcare

•Source: Bloomberg

Academic achievement

• Ranked 346th in medical schools (Criteria: Number of publications and Citations)

•Source: National Research Foundation of Korea

Human capital &

Infrastructure

• Cultural competence

• Language

• IT infrastructure

• Modern facilities & equipment

Efficient Healthcare Service

This element of the Diamond model refers to how medical

institutions are organized and managed, their objectives and the

nature of rivalry in the healthcare market:

1) Management styles and strategies best suited to the global

healthcare market can produce competitiveness.

2) Intense competition among healthcare providers spurs

innovation.

Firm Strategy, Structure & Rivalry

Strategy: diversification of target markets

Management style

How medical institutions are organized and managed influences

the competitiveness:

1) Two-tier pricing

2) Cultural competence of organization

3) Global networks

3,013

Rivalry: keen competition

Demand conditions involve such factors as early home demand,

market size, market growth and sophistication.

1) The more demanding the patients, the greater the pressure facing

healthcare providers to constantly improve their competitiveness

via innovative services, through high quality, etc.

Demand Conditions

Demand for beauty

Spatial proximity of upstream or downstream industries facilitates

the exchange of information and promotes a continuous exchange

of ideas and innovations

Related Supporting Industries

Nation

Health Tourism

Medical

Care

Wellness

Resources

Tourism

Thailand

Medical

Service

Massage

Shopping India Yoga

Hungary Spa

South Africa Safari

Korea ?

Wellness Tourism Resources

Wellness

Resources

Cosmetics:

Beauty &

Personal care

market($14

billion)

Skin Care

SPA:

Red Ginseng SPA

Temple

Stay

Café:

Herb tea café,

Healing cafe

Healing

Food:

Fermented food

Figure 1. Wellness tourism resources

Globalized

Less Globalized

Medical tourism facilitators

Chance refers to random events that are beyond the control of the

healthcare providers. Chance events may be fluctuations in

exchange rates, political decisions by foreign government, changes

in the global economy, etc.

Chance

China

• Negative media(e.g., CCTV, Beijing news) coverage(e.g., overcharging, malpractice)

Japan

• Political disputes between Korea & Japan

Russia

• Economic crisis stemming from oil price collapse

UAE

• Budget deficit stemming from oil price collapse

• Government encouraging home care

Government

The Government’s proper role is to encourage healthcare providers

to raise their aspirations and move to higher levels of competitive

performance.

Strategy

Legal & institutional

System

G2G Network

HR Development

Information System

Project Support

Marketing

Government strategy 1) V.A.T refund

2) Insurance for foreign

patients

3) Liability insurance

4) Certification of

medical institutions

5) Medical Visa

6) Task force team

1) Price range chart

2) Statistics on foreign

patients

3) Market information

Information System

1) Korea Human Resources

Development Institute for

Health & Welfare

2) National Certificate of MT

coordinator

3) Certificate of medical

translator

1) $400 million fund

2) Business consultation

service

3) Supporting provinces

to develop medical

tourism products

1) Medical Korea

Conference

2) FAM tour

3) Exhibition show

4) MT support center

5) MT award

6) Online website

1) G2G MOU

2) Visiting physician

temporary permit

Lack of human resources

· Personnel change at all levels(government, institutes, hospitals)

- Few experts

- Weak international network

- Insufficient information on the global market

Problems

III. Analysis of Competitiveness of Korea for

Target Nations

Specialties Rank

1 2 3 4 5

Internal Medicine Russia China USA Mongolia Kazakhstan

16,107(20.3) 14,493(18.3) 12,483(15.7) 5,385(6.98) 3,792(4.8)

Health Examination Russia China USA Kazakhstan Mongolia

10,251(28.6) 6,117(17.1) 4,219(11.8) 3,087(8.6) 2,012(5.6)

Dermatology China Japan USA Russia Kazakhstan

12,739(42.5) 3,542(11.8) 3,261(10.9) 2,928(9.8) 1,169(3.9)

Plastic Surgery China Japan Russia USA Kazakhstan

24,854(68.6) 1,561(4.3) 1,506(4.2) 1,212(3.3) 748(2.1)

Obstetrics &

Gynecology

Russia China USA Mongolia Kazakhstan

4,348(22.8) 3,681(19.3) 2,304(12.1) 2,073(10.9) 714(3.8)

Orthopedics USA China Russia Mongolia Kazakhstan

3,359(17.5) 3,235(16.8) 2,777(14.5) 1,225(6.4) 605(3.1)

General Surgery Russia China USA Mongolia Kazakhstan

2,843(22.8) 2,319(18.6) 1,433(11.5) 894(7.2) 687(5.5)

Oriental Medicine Japan China Russia USA Kazakhstan

4,586(39.1) 1,210(10.3) 882(7.5) 608(5.2) 359(3.1)

(Unit : person, %)

Table 2. Nationality of medical tourists by major specialties (2014)

Factor

conditions

Hospital

strategy,

structure,

Rivalry

Supporting

industries

Government

Chances

Demand

conditions

Figure 2. Competitiveness of Korea in the beauty market targeting China

China: Target of beauty market (Cosmetic surgery & Dermatology)

1) Clinical competence:

Customized techniques

for Asians

- Surgery

- Dermatology

2) Negative aspect

- Malpractice

- Shadow doctor

1) Good operation

& Service

management

2) Two-tier pricing

3) Lack of

accountability

4) Lack of strategy 1) Beauty industry:

- Cosmetics

2) Hallyu (Korean

Cultural Wave)

3) Medical tourism

facilitators:

- Lack of connection

in China

Negative framing

from Chinese Media

1) Price range chart

2) V.A.T refund

3) Insurance for

foreign patients

4) Liability

insurance

5) Certification

6) Medical Visa

7) Visiting physician

temporary permit

1) Korean patients:

high demand for

quality & beauty

Beauty

Market

Factor

conditions

Hospital

strategy,

structure,

Rivalry

Supporting

industries

Government

Chances

Demand

conditions

Figure 3. Competitiveness of Korea in wellness market targeting Japan

Japan: Target of wellness market (Oriental medicine & Dermatology)

1) Differentiation:

- Oriental medicine

for beauty

2) Poor reputation for

clinical excellence of

Western medicine

1) Low competition

2) Lack of strategy

1) Beauty industry:

- Cosmetics

2) Hallyu (Korean

Cultural Wave)

1) Political dispute

2) Currency

exchange rate

1) Korean patients:

high demanding

for quality &

beauty

1) Funding for

enhancing CAM

services

Wellness

Market

Factor

conditions

Hospital

strategy,

structure,

Rivalry

Supporting

industries

Government

Chances

Demand

conditions

Figure 4. Competitiveness of Korea in primary care market targeting Russia

Russia: Primary care market (Internal medicine & Health exam)

1) Clinical

Competence:

- Primary care

- IVF

2) Poor reputation in

Western region

1) Good operation

& Service

management

2) Lack of Human

resources

3) Two-tier pricing

1) Medical tourism

facilitators

2) Wellness tourism

resources (Hot

SPA)

1) Currency

exchange rate

- Economic crisis

1) Korean patients:

high demanding

for quality

1) Certification

2) Medical Visa

Primary care

market

Factor

conditions

Hospital

strategy,

structure,

Rivalry

Supporting

industries

Government

Chances

Demand

conditions

Figure 5. Competitiveness of Korea in critical care market targeting UAE

UAE: Critical care market (Cancer & Rehabilitation)

1) Clinical

Competence:

- Cancer survival rate

2) Poor reputation

1) Good Operation

& Service

management

2) Lack of human

resources

3) Low competition

1) Ecological system

2) Translators

3) Halal food

4) Lack of

connection:

- Medical tourism

facilitators

1) Budget deficit:

- Oil price

1) Korean patients:

high demanding

for quality

1) G2G

2) Certification

Critical care

market

IV. Strategy for Improving the Competitiveness

of Korea in Global Healthcare Market

Strategy

Factor Condition

Demand Condition

Hospital Strategy,

Structure, Rivalry

Related & Supporting Industries

Chances

Government

Strategy 1) Continuous

improvement of

clinical excellence

2) Improvement of

visibility of Korean

medicine

1) Development of

wellness tourism

2) Tourism infrastructure

3) Medical tourism

facilitators (Concierge

services)

Information System

1) R&D activities

2) Globalization of human

resources

3) Networking with foreign

hospitals & insurance

companies

4) Effective marketing

5) Enhancing morale as a

global player

1) Information on global

market

2) Media relationship

management

1) Reconfiguring the goal

2) Reconfiguring the role of

the state

3) Coordination

- Central & municipal

government

- Government institutions

4) Destination brand

Factor Condition

1) Continuous improvement of clinical excellence

2) Improvement of visibility of Korean medicine (e.g., doctors, IT)

- Publications

- Participation in global conferences

- Collaborating with foreign experts or hospitals

Hospital Strategy, Structure & Rivalry

1) Supporting R&D activities

2) Globalization of human resources

3) Networking with foreign hospitals / insurance companies

4) Effective marketing

- Developing a message related to core values

- Developing a message related to extra value

- Developing effective marketing channel for target nations

- Developing viral marketing strategies

5) Enhancing the morale as a global player

Related & Supporting Industries

1) Development of wellness tourism industries (e.g., Skincare, SPA)

2) Development of tourism infrastructure

3) Medical tourism facilitators

- Development of profit model

- Development of concierge services

Chances

1) Information on the global market

- Systematic collection & dissemination

2) Media relationship management

Government

1) Reconfiguring the goal

- Incompatible goals (positioning for critical care market vs 1 million foreign

patients)

- Balance between qualitative (e.g., safety, transparency, accountability) and

quantitative goals (e.g., number of foreign patients, income)

2) Reconfiguring the role of the state

- from Leader model to Partner model (partnership between Government &

private sector)

3) Coordination

- Central & municipal government

- Government institutions (KHIDI, KTO, etc.)

4) Destination brand

- Key word

- Visual cue

Thank you

Ki Nam Jin

Dept of Health Administration

Yonsei University

Korea