Technology Investment by Hospitals in Korea

Abstract

There has been a rapid influx of high cost medical technologies into Korean hospital market. While some of the technologies prove to be beneficial, the government, the public and the hospital sector are concerned about the adverse impact the adoption of new technologies might have on the health care system. This study attempts to: i) explain why the issue of medical technology is important in Korea: ii) identify the factors that facilitate the aggressive import of foreign technologies: and iii) investigate the capital investment behavior of Korean hospitals. Empirical findings indicate that hospitals, especially private hospitals, aggressively acquire technologies and they seem to compete based on the acquisition of new technologies. Under cost-plus fee-for-service system, they purchase technologies even when they are not financially sound. This indirectly implies that unless some measures are to be taken by authorities, the health care sector is likely to be less efficient.