South Korean hospitals reluctant to expand integrated care wards due to financial losses

Despite the government's push to expand nursing and care integrated wards to reduce the burden of patient care on families, hospitals are showing significant reluctance. This hesitation stems from the financial losses incurred by operating these integrated wards, leading to a slow conversion rate, especially in non-metropolitan areas.

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It is difficult to compensate for increased labor costs with fee reimbursement.

Out of 14 regional responsibility medical institutions in non-Seoul areas, only one, Dankook University Hospital in Chungnam, has confirmed plans to convert its general wards to integrated wards in the latter half of this year. Others have no conversion plans or are still "reviewing" the possibility. Even extending the timeline to the first half of next year, only four institutions, including Dankook, Chungbuk, Jeonbuk, and Jeju National University Hospitals, have announced conversion plans.

Hospitals cite "difficulty in compensating for increased labor costs with fee reimbursement" (Busan National University Hospital) and "financial burdens for securing personnel and operating facilities" (Chungnam National University Hospital) as reasons for their hesitation. Internal financial analyses from a non-metropolitan university hospital, obtained by The Hankyoreh, show that the integrated wards incur greater losses as bed occupancy rates decrease. At a 90% occupancy rate, integrated wards generated about 100 million won less than general wards; at 70% occupancy, the deficit widened to nearly 400 million won.

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Financial burdens for securing personnel and operating facilities.

This financial strain is partly due to the requirement of nearly double the staff compared to general wards, with staffing levels needing to be maintained even when patient numbers drop. Some hospitals have even reduced their existing integrated ward capacity. Ulsan University Hospital, for instance, decreased its integrated wards from 15 in 2024 to 10 this year, with a nurse from the hospital explaining that the reduction was due to the financial deficit.

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The hospital reduced the number of integrated wards because operating them results in a deficit.

Experts point to flaws in the system's design. Firstly, the fee structure is problematic. While general ward fees significantly increased with the introduction of the highest nursing grade (S grade) in 2024, integrated ward fees did not keep pace with the increased staffing demands. This creates a situation where expanding integrated wards widens the profitability gap with general wards. Secondly, the application process, allowing individual ward applications rather than institutional ones, enables hospitals to selectively convert wards based on profitability, potentially excluding patients with high care needs. Health advocacy groups are urging the Ministry of Health and Welfare to reconsider the fee system and the application process to encourage wider adoption.

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The government designed the fee system in reverse while saying it would expand integrated wards.