As low birthrate and population aging emerge as social problems, the public’s interests in taking care of seniors and children are mounting. The decade-old long-term care insurance for elderly citizens has also exposed its limitations as a policy, stressing the need for improving quality and expanding service.

The Moon Jae-in administration recently announced it would set up “social service corporations”_{사회서비스공단} to let local governments integrate the management of social services for children and senior citizens. The central government has set about to put it into action, inducing local governments in Seoul, Gyeonggi Province and Daejeon to launch task forces to establish social service corps.

The central government has yet to fix draft bills and action plans, however, resulting in controversies over sharing roles with private facilities and how the government would raise financial resources for the project.

To have clear answers for these questions, Korea Biomedical Review has met Kim Yeon-myung_김연명, a social welfare professor at Chung-Ang University_중앙대.

Professor Kim initially introduced the concept of the “social service corporation” while serving as the chief of the Moon’s State Affairs Planning Advisory Committee. During the interview, he shared how he came up with the concept, what roles should social service corporations play and what kind of challenges they might face.

Kim made it clear that the detailed figures and content were not official data but personal views, saying, “The size of facilities and adjustment of relations with private facilities are still under discussion at the Ministry of Health and Welfare.”

Question: What made you devise the plan for regional social service corporations that make local autonomous governments directly manage long-term care for seniors and children?

Answer: In Korea, the number of social service providers spiked when the government allowed the private players to enter the childcare and senior care services market. But the competition among suppliers did not lead to more reasonable service and only resulted in side effects such as low service quality and high cost. Considering the low birthrate and rapidly aging society, the social cost of such services will go up even higher, and quality service management will become more difficult.

However, if provincial governments can establish social service organizations, manage them directly for better social services, and actively support private social service institutes, it will bring order back to the market. A good example is National Health Insurance Service Ilsan Hospital, which took the initiative to put four-bed rooms, not six-bed rooms, as basic wards, for better medical service. Residents in Ilsan would think that the state-run hospital is cheaper than private hospitals and that it does not provide overtreatments. I intended to repeat such examples elsewhere by setting up regional social service corporations.

Q: What kind of structure does a regional social service corporation have?

A: We should start from “a region” in providing medical and social service. So, I designed it to enhance regional authority. Initially, I began with the double axes of “social service corporations” and “public health corporations.” Setting up public health corporations meant reorganizing the existing public health system. But I could not follow up with a detailed study, so I excluded it from President Moon’s pledges at the end.

But social service corporations are something that I have planned for a long time since Park Won-soon became the Seoul mayor (in 2011). I had come to get more confident about them after I completed a two-year feasibility study through an organization named the Seoul City Social Service Foundation.

The point is to make local governments establish a social service corporation, separate child and senior care from other social services, and directly run a facility which can serve as a standard for private facilities. Heads of local administrations should have their operational authority to be able to reflect local demands and regional characteristics better. A related law will define the basic roles and duties of social service corporations, and the Ministry of Health and Welfare will play the role of a rule-maker, presenting a standardized model to operate the system efficiently.

Then, social service corporations will directly provide their service, support human resources for private facilities within the region, and seek ways to co-exist with them.

Q: The social norm was that a market competition would be best for improving service quality. And the government’s policy direction had been the same. How do you think we can improve the service quality by expanding public facilities while the private market is already saturated?

A: Korea introduced a competition system to encourage reasonable services by private facilities, but it doesn’t work anymore. To make them compete, the government should not intervene in the medical payment system and let them decide on medical pricing.

The reality was different, but private operators continued to jump into the fray. Low prices led to overcrowding of patients and overtreatments and fall in medical workers’ wages, which combined to result in lowered service quality.

Among the institutions for care for the aged, nursing homes tripled to 5,063 in 2015 from 1,832 in 2008. In-home cares facilities also increased to 3,089 from 2,298 during the same period. But two-thirds of them are small-sized with fewer than 50 patients, and individuals are running two-thirds of the latter, making it difficult to secure quality service. With a surge of such facilities in so short a period, the treatments of employees at these facilities have aggravated. Now is the time for the government to improve the supply and demand system and help the private sector attain economies of scale.

Q: How many public facilities should social service corporations run, across the nation?

A: As of the end of 2015, 2,935 long-term senior care facilities had a combined 180,000 patients, way above the optimal capacity of 140,000. Only about 2.6 percent of the 6.77 million seniors aged over 65 were admitted. Out of them, only 2.2 percent, or 99 facilities with 7,544 patients, were public.

Of course, it would be good if the central government expands public facilities. It is not easy, though, due to budgetary limits and other reasons. However, if we build one or two public facilities under social service corporations in each city, county or district within the next five years, the number of public facilities will rise to 500 at maximum. If we set the number of accommodation at 150 people per public facility, just like Seoul Care Center, we will be able to accommodate up to 75,000 seniors. If we assume that the senior population goes up to 9 million in the next five years, the number of facility users will also rise to 270,000, but, at the same time, these public facilities can accommodate a quarter of them, or 70,000.

If 25 percent of those accommodated in senior care facilities are admitted to state-run institutions, the private institutions will feel the urge to “upgrade” them. If local governments can support them, the overall service quality will improve, and employees at senior care facilities will be able to work under better condition.

Q: You took an example of Seoul Care Center. Can we apply that model to other local autonomous governments?

A: Seoul Care Center, run by the National Health Insurance Service, has 800 patients waiting to be admitted. It can surely be a reference model. The center has been built on 4,173 square meters of land with four floors and one basement. It has nursing units and weekly care facilities. The initial construction cost totaled nearly 6.09 billion won ($5.39 million), including 290 million won for land purchase, 1.5 billion won for asset purchase, 4.25 billion won for construction. The accommodation is set at 150, including 40 for day and night care facilities. The center has 110 employees.

Seoul Care Center has got land for free thanks to the support of Seoul Metropolitan Government. Otherwise, it would have cost an additional 15 billion won. Applying the formula to other local governments is hard. Therefore, we suggested the National Pension Fund supports initial establishment cost and the government guarantees optimal levels of medical fees with sufficient insurance coverage.

Seoul Care Center recorded the loss of 200 million won ($176, 680) in the first year of establishment. But the next year, it produced profits of 120 million won the following year, excluding expenditure. Except for the land purchase and construction cost, it can provide sufficient service for 150 seniors with the current level of fees.

Q: There is much controversy over the use of the National Pension Fund for this purpose.

A: It is true we had a considerable difference of views with economic ministries on who should shoulder the costs to establish and operate the public facilities at initial stages. Eventually, however, the government will move toward using the National Pension Fund. We can do so even now without causing any legal problems. Some people and media outlets, however, have the mistaken notion that we are taking out money from the pension fund. But the National Pension Service is now expanding its fund size by investing in bonds, including 12 trillion won worth of housing bonds. It is a good idea to borrow money from the NPS to secure some public facilities for senior care in this aged society, and pay it back in installments.

Q: Since the government’s announcement to set up social service corporations, some raised the need to expand their service to include regional mental health enhancement centers.

A: Yes, of course. That is what I have asserted from the beginning. If we reorganize many other facilities and projects, such as mental health enhancement center, addiction prevention center, suicide prevention center and child abuse prevention project, and integrate them into social service corporations, it will be more efficient. We can separate the corporations into divisions deal with social welfare, psychiatry, and addiction, and dispatch capable workers to there. And the heads of social service corporations will be able to check different projects at once and more efficiently operate limited resources.

For example, when people do not know where to get advice for dementia patients, a dementia care center under a social service corporation will play its role as a gatekeeper, taking care of dementia patients from counseling to treatment and management.

Q: When you mentioned about establishing a public health corporation earlier, did you mean improving the medical service delivery system centered on the local community?

A: Establishing a public health corporation came out of the idea that we have to correct the order of the public healthcare. In each region, I suggested making a cooperative system centering on university hospitals and enhancing the primary medical service system to reorganize the structure of the medical governance. There is too much competition among medical institutions now, resulting in severe side effects.

To do so, my idea was to move the jurisdiction of national university hospitals from the education ministry to the health ministry and make the government purchase private medical institutions with 100-300 beds and turn them into state-run hospitals. The important thing is that we efficiently manage the public health and social service system at regional levels. If one of the two remains insufficient, it will weigh on the general public, in particular on the seniors who have to pay higher medical charges.

Based on this concept, the Federation of Korea Trade Unions is pushing a Public Health Medical Corporation Project. If we don’t improve the efficiency of the medical service system, increases in medical costs will become a huge financial burden on our society. We need the health-welfare ministry’s bold steps now.

Q: Long-term senior care can have many problems, including a vague distinction between nursing facilities and nursing hospitals. If social service corporations are established, they will affect not just nursing facilities but hospitals as well.

A: That’s true. There are too many nursing hospitals now. Due to the previous governments’ wrong policies over the past decade, the senior care hospital market has expanded. In the case of Japan, such hospitals have shrunk, and some of them have become nursing facilities or in-home care facilities. We’re going the opposite way. I doubt that these senior care hospitals are being effectively run. An increased number of quality nursing facilities will affect the nursing hospitals, too. If social service corporations offer in-home care as well, there will be some changes in the overall nursing services. Market’s pressure for restructuring and business change will affect all parties involved urging them to improve service quality.

Q: The National Health Insurance Service has run the long-term insurance system for the seniors. Will the establishment of social service corporations affect the NHIS’s work?

A: It will not have a direct and immediate impact on the NHIS. Social service corporations are to expand public facilities and improve service quality. If the health-welfare ministry wants to put the function of facility certification and evaluation in one place, then, it will have some conflict with the NHIS, but the issue will emerge later.

However, if social service corporations integrate the management of the human resources, education and service quality, it will be better to let them take over all related work. But employees at the NHIS will not need to move to social service corporations. No more than 70 officials will be able to manage the social service corporation of, say, Seoul. Most of the employees at a social service corporation will be nursing instructors, caregivers, and social welfare workers, managing the standard model the government has provided. Mayors and provincial governors will appoint the head of a social service corporation according to the health-welfare ministry’s qualification criteria.

Q: Besides setting up social service corporations, what should we do to improve social services?

A: The government should enhance regulations on social service providers to curb the growth of small private senior care facilities. The existing facilities should be integrated for economies of scale. This is just an idea yet, but we can suggest that social service corporations group three or four private facilities and manage them as a consortium. The current small senior care service providers have little future. So, we should make them bigger to provide quality service for both patients and their families.

Also, existing employees at such facilities should have a better working environment. Now, most of the caregivers have two shifts, and they are under severe stress. We cannot pin the blame on individuals because this is an issue of a bad system. We are pushing bill to exclude the social welfare service industry from industries that allow more than 12-hour work per day, and hold a public hearing soon.

Q: Seoul City has recently pushed for establishing a social service corporation. When can we see an actual model?

A: We can start it as early as next year. I put top priority on this when I was in President Moon’s transition team. I have prepared measures to support the system already. An establishment of a facility under a provincial government is subject to the Provincial State-run Act. We have secured the agreement from the Ministry of Public Administration and Security and completed the interpretation of the regulation. Just two days before the disintegration of the Moon’s transition team, I gave out briefings for provincial heads and told them to prepare. The Seoul City has set up a task force, and Gyeonggi Province has also begun preparations. In Seoul, the government is expected to build eight nursing facilities by 2018. There will be some changes when the next year’s budget is confirmed. As far as I know, the health-welfare ministry recently presented a briefing on this for officials at provincial governments. Within the next five years, we will see the basic structure of social service corporations. The local government will purchase daycare centers for childcare, and one or two public senior care facilities will be built per city or province with the local government’s support.

Q: Do you have anything to add on or any request to the medical service industry?

A: I feel somewhat sorry that I could not complete my plan to launch public health corporations. Social service corporations are small-sized, compared to public health corporations. It will be hard to reorganize the medical service delivery system at local community levels in a short period, but I think we must do it.

In the healthcare industry, we are facing a significant time as we have to make a social consensus on how to secure medical service quality and reward such service through appropriate pricing. Although private medical institutions make every effort to make profits and survive, there are side effects from the viewpoint of a whole society. If the private sector keeps growing their size to make profits only, there will be a severe medical service crisis in Korea, just like the one experienced in the U.S.

So, our society should come up with an appropriate medical service payment system, where doctors can maintain their expertise and pride by getting what they deserve for providing quality services.