Franchised Hospital Opens

For the fist time in history, a franchisee hospital under license agreement with the foreign franchiser will open in Korea. Therefore, it is the first advancement of the foreign hospitals into the Korean market, signaling more openness of Korea to foreign hospitals and their franchising drive. Consequently, Korean HMOs and big hospitals are bracing for fierce competition with their foreign counterparts.

On Nov. 13th, Skin and Spa with its headquarters in New York, N.Y. announced that it would open its franchisee hospital on Nov. 27th in Shinsa Dong, Kangnam Gu, Seoul. Skin and Spa was founded 17 years ago in Park Ave. in Manhattan, New York, a rich neighborhood in the city. Thereafter, it has established its networks of skin clinics around the world. The Korean branch of Skin and Spa is the first hospital of its kind in Korea. The specialties of it cover various areas such as dermatology, plastic surgery and skin caring. Previously, Skin and Spa was only known for the supplier of DDF cosmetics, a kind of products used by plastic surgeons.

The hospital is named Skin and Spa Korea, targeting only the high class in society. For its targeted customers, the hospital has leased the 3rd and 4th floors of the four-story building owned by the Walker Hill Hotel. Then, it has remodeled the two stories into one with its ceiling reaching up to 13m.

The hospital spokesperson confirmed, "We hope to serve only the handful of the people belonging to the high class in this society. In order to cater to them and make them comfortable, we maximize the space by cutting down on the exam rooms." The hospital will provide only about 10 rooms for the inpatients, thereby minimizing the number of inpatients. In addition, it will charge higher fees for the service, and would not take in any patients on the walk-in basis. Therefore, it will exam a dozen of patients who make prior reservations. The clinic also plans to reserve some space only for "throwing parties" purposes.

To take the skin-care program of the clinic that runs 6 hours a day, a patient has to pay 570,000 won (approximately $500). Each unit of the Niagara Whirlpool, which is a massage machine providing 270 kinds of massaging experiences, costs more than 200 million won (approximately $180,000).

This clinic has reportedly hired more than 20 Korean doctors. To hire a foreign doctor, a prospective employer has to undergo numerous red tapes including obtaining of the government permit. Thus, the clinic will not import a doctor from overseas. The clinic has to pay for a certain portion of its sale to its headquarters in New York as the royalty. Min Yoon-gi, manager of the clinic, has verified, "The head of the New York headquarters will conduct various activities to give us medical advice such as holding a seminar and symposium."

Skin and Spa plans to open 4 more of its clinics in the Seoul metropolitan area by 2004. For example, it will open its second clinic within the W Hotel, which in turn is under construction by the Walker Hill Hotel.

Lee In-sung, director of the Korean Medical Association, commented, "It is in substance the signal heralding the opening of the medical market. Big foreign HMOs and hospitals will tap on the Korean market with their huge capital and advanced technology. Therefore, the government should come up with policies to protect the small and medium-sized clinics."

In-Jik Cho cij1999@donga.com