Health Insurance Finance Gradually Drained by 'Samujang Hospitals' and 'Myeondae Pharmacies'... Long-Term Care Hospitals Top Recovery Amounts

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Among institutions illegally established by non-medical personnel such as hospitals and clinics, long-term care hospitals had the largest amount of funds recovered.

The National Health Insurance Service (NHIS) disclosed on the 14th the status of recovery decisions by medical institution type, region, and illegal establishment recognition route for illegally established medical institutions and pharmacies from 2009 to 2021. An illegal institution established and operated by a non-physician is called a ‘Samu-jang Byeongwon’ (office manager hospital), and a pharmacy opened by a non-pharmacist is called a ‘license-lending pharmacy.’ Both are considered factors that worsen the health insurance finances.

The total amount recovered over 13 years reached 3.3674 trillion KRW. The amount recovered from medical institutions was 2.8091 trillion KRW (83.4%), and pharmacies accounted for 558.3 billion KRW (16.6%). During this period, a total of 1,698 illegally established institutions were subject to recovery decisions, of which medical institutions accounted for 1,494 (88.0%) and pharmacies 204 (12.0%).

By type of illegally established institution, clinics accounted for 38.7% (657 institutions), the largest share. Next were long-term care hospitals (18.2%, 309 institutions), Korean medicine clinics (13.7%, 232 institutions), and pharmacies (12.0%, 204 institutions) in that order. Regarding the fact that 4 out of 10 detected cases were clinics, the NHIS analyzed that “this is due to the large number of clinics and the ease of establishing them as Samu-jang Byeongwon (office manager hospitals).”

The amount recovered per illegally established institution was highest for long-term care hospitals at 6.3 billion KRW. This is because the illegal operation period was the longest at 2 years and 7 months. Next were pharmacies at 2.7 billion KRW (3 years), hospitals and clinics at 2.4 billion KRW (1 year 6 months) and 700 million KRW (1 year 10 months), respectively.

Nearly half of the detected illegally established institutions were concentrated in the metropolitan area (Gyeonggi-do 20.2%, Seoul 19.4%, Incheon 9.7%). In Busan, the figure was 11.7%, ranking third among the 17 cities and provinces. Daegu and Gwangju were 4.3% and 3.9%, respectively, and Daejeon was 1.9%.

There were 986 individual institutions, 1.4 times more than corporate institutions (712). However, an NHIS official stated, “The pattern differed slightly depending on whether the investigation was conducted by the NHIS or investigative agencies,” adding, “Among NHIS administrative investigations, corporate establishments were 1.7 times more than individual establishments, whereas in investigations conducted by investigative agencies themselves, individuals were 1.8 times more than corporations.”

The most common method of detecting illegally established institutions through administrative investigations was NHIS’s own analysis at 73.7% (269 institutions). Complaints accounted for 26.3% (96 institutions). The NHIS stated, “Thanks to the introduction of an advanced system (BMS) and the development of network indicators that map the complex relationships of various participants, including past employment history at the same institution, the number of cases detected through NHIS’s own analysis is increasing.”

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