Amid dwindling revenues, university hospitals tighten their belts to stay afloat

University hospitals' financial crunches are intensifying, as the mass resignation of trainee doctors protesting against the increase in medical school admissions exceeds 100 days.

Many tertiary hospitals, which have been in emergency management for over three months, said they are tightening their belts but have no choice but to hold on.

Hospitals are minimizing expenses after months of sharp declines in revenue due to fewer inpatients and surgeries. They are reducing labor costs by putting employees on “unpaid leave” and extending the timing of payments to medical device makers and pharmaceutical companies.

Even the “Big Five” hospitals are no exception. According to medical sources, Severance Hospital has expanded the number of days of (unpaid) sabbatical leave for general employees from 20 to 40 working days. Asan Medical Center, which is accepting applications for unpaid leave, also accepted applications for voluntary retirement until mid-April.

The situation is similar at hospitals other than the Big Five. Kyung Hee University Medical Center is implementing unpaid leaves, and the payment of employee allowances and faculty performance bonuses has been suspended. Hanyang University Seoul Hospital has also suspended the payment of employee allowances other than basic salaries.

There are no differences in financial difficulties between hospitals in the Seoul metro region and those in the provinces.

Kyungpook National University Hospital in Daegu declared “emergency management” on Tuesday and went into cost cuts. It is determined to survive by minimizing the amount of money spent on non-essential projects.

Payments to medical device makers and pharmaceutical companies have also been delayed.

An official from one of the Big Five hospitals in Seoul said, “It is common for hospitals to pay medical device companies and pharmaceutical companies after they have supplied products. However, even Severance Hospital and Seoul National University Hospital have delayed their monthly payment to two months later, and I heard that Hanyang University Seoul Hospital has postponed it to a year later.”

The official continued, “Medical device makers are also struggling hard. The aftermath of the increase in medical school enrollment quota is hurting the medical industry. There are reports of companies that have seen their sales drop by up to half.”

Hospitals’ financial crunches are also leading to shrinkage in medical research.

Tightening their belts, hospitals have begun to limit research grants and subsidies to attend conferences and seminars for academic research. Last Thursday, Yonsei University Health System informed its professors that it would withhold the payment of the thesis achievement allowance for 2023.

Some point out that the aftermath of the increase in medical school students is also hurting the medical research environment.

Professor Kim Jong-il of the Laboratory of Genomic Medicine at Seoul National University Hospital (SNUH), also the head of SNUH College of Medicine's faculty council, said, “I don't know of any cases of reductions in research funding at SNUH or its College of Medicine. However, I heard that the hospital has limited the money for professors to attend conferences and seminars.”

Professor Kim continued, “Even if there is no visible damage now, the research environment in medical schools could deteriorate if the situation is prolonged. This is because the share of medical school research funding from hospitals will inevitably decrease.”

A Hanyang University Seoul Hospital professor said, “Professors who have been torturing themselves with vague hopes that the medical and political situation will be resolved in May are getting tired. There is news of hospitals that should be concerned about bankruptcy soon. It seems that they are trying to hold on somehow. However, there are reports from the field that they would rather close the hospital doors than keep shouldering huge labor costs.”