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‘Too many regulatory grey zones suffocate smart healthcare’
  • By Marian Chu
  • Published 2018.07.04 17:28
  • Updated 2018.07.04 17:28
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Exciting new developments powered by technologies of the Fourth Industrial Revolution have the potential to impact the healthcare industry, but ambiguous and undefined regulations are hindering progress, experts said Wednesday.

H3 System CEO Kim Min-joon and Insung Information Manager Kwak Bong-jo made these and other points during a panel session at the “2018 Smart Healthcare Seminar to Lead the 4th Industrial Revolution.”

H3 System CEO Kim Min-joon (far right) and Insung Information Manager Kwak Bong-jo (second from right) point out the deficiencies in Korea’s regulatory environment that hinder the progress of smart healthcare, at the “2018 Smart Healthcare Seminar to Lead the 4th Industrial Revolution” held in Gangnam-gu, Seoul, Wednesday.

The seminar was hosted by the Korea Ubiquitous Health Association, Telecommunications Technology Association, and Korea Testing Laboratory in southern Seoul.

Smart healthcare technology developed by IBM Watsons, Enlitic, and Lunit are working to augment the physician in diagnosis and treatment, and more are coming. Advanced technologies of the Fourth Industrial Revolution such as artificial intelligence (AI) and Big Data are increasingly applied to the healthcare industry, with the domestic AI healthcare market expected to hit 25.6 billion won ($22.9 million) by 2020.

Despite the advent of these technologies, ambiguous regulations are causing firms to spend extensively to navigate the uncertain, undefined emerging landscape, and it’s causing them to drop out from continually being in the red or not entering the market at all.

“Companies need to meet the breakeven point. To do that, firms can either increase profit or decrease investments. Although relaxing all regulations is probably not going to lead to companies making tons of money, right now there are significant problems,” Kim said.

Regarding investment, Kim noted that firms are spending in three major areas: money that is justifiably spent, money wasted in the process of figuring out the “unknown,” and money spent because of the difficulty of the approval process.

“You’re only supposed to spend on category 1 – justified expenditures – but because there are so many grey zones where regulations are not clear, there’s much spending on the “unknown” areas where they’re figuring out what regulations apply to what product or service. Companies are spending a significant amount of time and money just in the process of understanding the approval process,” Kim said.

Kim pointed out that although other countries such as the U.S. also faced hurdles with regulatory ambiguity, the U.S. Food and Drug Administration in time set up clear regulations that decreased the time and money involved in the process of getting a product approved

“Korea is currently creating regulations, but there are still many grey zones. When we come up with a service and think it’s a good idea – and people around us think it’s a good idea – we have no idea whether the service classifies as a health product or a wellness product and whether and how to get it reimbursed, among numerous issues,” he said.

Firms, therefore, are forced to take an “extremely conservative” stance.

Kim called for eliminating the grey zones and making clear standards so firms can solidify their service and product plans and meet the breakeven point, leading to the successful use of emerging technologies.

Kwak also noted that smart healthcare has a long way to go concerning commercialization.

“I’ve been working in healthcare for 18 years, and one thing I’ve noticed is that firms and the government start these pilot projects and - if I could compare it to boiling water to 100 degrees - only see it through to about 50 to 60 degrees,” he said.

For smart healthcare, it takes around one to five years to develop a medical device. Exporting it requires an undergoing an approval process that lasts anywhere from six months to one year, at a minimum. Getting all that done does not mean product sales, however, Kwak added.

“The service could be advanced, next-generation technology but it doesn’t translate into products that sell in the market. People buying products talk about accuracy – accuracy requires clinical data on a wide variety of people, and most don’t have that,” he stressed.

Korean firms, therefore, should first create some pay flow that results in profit. Firms should target what consumers are willing to pay for and build off of how to commercialize the product by creating a profit model, Kwak went on to say.

“For healthcare, many firms end the project if the return-on-investment (ROI) does not occur within one or two years. Conglomerates such as Samsung as well as several telecommunication companies all used to have healthcare divisions but closed them down within three years due to a lot of trial and error in trying to enter the healthcare industry,” he said.

It’s because healthcare doesn’t lead to profit. Then services should be created so that money flows in. Companies should also look extensively into niche markets to do so, Kwak added.


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