The Differential Effects of Governmental Direct and Indirect Subsidies on Healthcare Organization’s Profitability in South Korea

In Korea, National Healthcare Insurance is managed by public agencies. These agencies are responsible for determining the insurance unit cost of each medical service and for monitoring the management performance of healthcare organizations (HCOs). These organizations in Korea are classified as not-for-profit (NFP), and the government provides direct and indirect support to ensure their profit to a certain extent . In reality, however, many HCOs often abuse or waste government subsidies. The government now is seeking policy solutions to address the agency problem and the challenges in such lax management practices. Some suggest cutting subsidies as a solution .