KLRI : KOREA LEGISLATION RESEARCH INSTITUTE

Ⅰ. Background and Purpose of Research

▶ Background

○ In a global marketplace where demand and supply, regulation and standards, and trade and data-governance are being reconfigured simultaneously, the K–medical services industry has pursued normative adjustments and policy development along three distinct tracks—(i) medical devices, (ii) attraction of foreign patients, and (iii) overseas expansion of medical institutions—to secure global competitiveness.

- (Medical device manufacturing/export) The Ministry of Food and Drug Safety has recently amended several administrative rules—the Regulation on Approval, Notification, and Review of Medical Devices; the Regulation on Items and Item-Specific Classifications for In Vitro Diagnostic Medical Devices; and the Regulation on Authorization, Certification, Notification, Review, and Evaluation of Digital Medical Products—thereby establishing criteria across the medical-device sector that conform to international standards.

- (Attraction of foreign patients) Against the backdrop of rapid growth in attraction results, this sector has come to be assessed as generating broad economic spillovers across the domestic economy. Following the 21 December 2021 amendment to the Act on Support for Overseas Expansion of Medical Services and Attraction of Foreign Patients, the Government strengthened international trust in Korean healthcare; enhanced the qualitative level of registered attraction institutions; improved the registration and evaluation/designation systems; and devolved supervisory tasks to local governments. On this basis, the Government has formulated and implemented, on an annual basis, support and promotion measures pursuant to the Second Comprehensive Plan for Support of Overseas Expansion of Medical Services and Attraction of Foreign Patients (2022–2026).

- (Overseas expansion of medical institutions) Year-over-year results have increased. Under the Medical Service Act, the most frequent cases concern the establishment and operation of medical institutions. The Second Comprehensive Plan (2022–2026) sets out support for hub development for hospitals seeking to enter foreign markets; integrated biomedical clusters; construction and operation of public hospitals; support for innovative integrated overseas healthcare projects; creation of international networks for overseas expansion; and stage-specific support. In parallel, the Ministry of Health and Welfare, the Ministry of Trade, Industry and Energy, and the Ministry of Foreign Affairs have continued international cooperation in the health sector while identifying and supporting convergent entry models for the health industry.

○ Notwithstanding these measures, persistent domestic legal constraints in each track—medical-device manufacturing/export, attraction of foreign patients, and overseas expansion of medical institutions—have impeded the attainment of global export competitiveness. Long-standing burdens and contractionary factors across the K–medical services industry have not been resolved at a structural level.

▶ Purpose

○ This study undertakes a comprehensive, track-by-track analysis—medical-device manufacturing/export, sustainable attraction of foreign patients, and overseas expansion of medical institutions—of domestic conditions, industry burdens, and the status of current laws and institutions, with a view to securing global competitiveness in each field.

○ It examines regulatory and institutional trends in the European Union, the United States, Singapore, and Japan, and explores avenues for improving domestic law.

○ By proposing legal and institutional reforms to (i) secure export competitiveness for medical devices, (ii) expand global trust for the sustainable attraction of foreign patients, and (iii) promote the overseas expansion of large hospitals, the study aims to strengthen the global export competitiveness of the K–medical services industry and lay the foundation for Korea to emerge as a leading jurisdiction in overseas medical expansion.

Ⅱ. Contents

▶ Current limitations and impediments to strengthening global export competitiveness

○ In medical-device manufacturing/export, regulatory complexity across the manufacturing and sales stages delays commercialization of newly developed medical devices and new health technologies and functions as an impediment to corporate operations.

- Even after a product passes conformity assessment under the Ministry of Food and Drug Safety’s quality-management standards, separate certification remains necessary to demonstrate conformity with each MDSAP participating country’s quality-management system prior to export, which continues to constrain overseas market entry.

- Even after the Ministry’s approvals (manufacturer licensing and product authorization/certification), administrative and temporal burdens persist due to New Health Technology Assessment (nHTA) under Article 53 of the Medical Service Act and the subsequent health-insurance listing process. These burdens delay commercialization, threaten business operations, and, in turn, chill innovation and manufacturing across the industry.

○ In the attraction of foreign patients, several weaknesses coexist—lack of effectiveness and continuity in the visa regime; inequities between operators inside and outside the regulatory perimeter; regional concentration and specialty concentration; and the spread of unlicensed attraction—all of which erode market trust and distort the market.

- (Limited effectiveness of the current medical-tourism visa) Applications for the medical-tourism visa (C-3-3) and the long-term treatment visa (G-1-10) are procedurally burdensome and subject to limits on length of stay. Foreign nationals therefore often enter on a general tourist visa (C-3) and receive medical services after entry, undermining the reliability of attraction statistics and continuity for long-term care.

- (Equity concerns in the application of fee caps) Registered domestic attraction agencies are bound by maximum fee caps (15% for tertiary general hospitals; 20% for general hospitals/hospitals; 30% for clinics), whereas overseas general travel agencies are not bound by these limits. Consequently, attraction agencies that should be protected by law are, in practice, left without protection.

- (Regional imbalance and specialty concentration) Heightened concentration of foreign patients in Seoul and continued focus on dermatology and plastic surgery limit regional economic spillovers and broader regional industrial effects.

- (Spread of unlicensed attraction) Acts by overseas general travel agencies—unlicensed attraction of foreign patients, excessive fees, and conduct that undermines trust in medical institutions—remain a threat.

○ In the overseas expansion of medical institutions, although exporting Korea’s medical system as a whole—devices, attraction of foreign patients, health administration, operational know-how, and organizational capacity—has potential as a national growth engine, large hospitals face foundational constraints, including lack of experience in overseas expansion and the inability to attract large-scale investment.

- Because of organizational scale, large hospitals must manage numerous considerations when expanding abroad; yet personnel experience is limited, resulting in insufficient capability and willingness to expand.

- In practical terms, there is a shortage of a government-wide support system and a national control tower for finance, contracting, licensing, and international accreditation; fundamentally, the nonprofit status of large hospitals constrains large-scale investment and profit distribution.

▶ Legal and Institutional Reform Proposals to Strengthen Global Export Competitiveness

○ Medical-device manufacturing/export

- (Strengthening MDSAP-centered international cooperation) Since joining as a participating affiliate in October 2019, the Ministry of Food and Drug Safety has pursued full membership; however, limitations in cooperation with key countries and the absence of country-specific domestic MDSAP guidance render accession difficult. Because full membership would institutionalize stability and trust in export markets, the study proposes capacity-building, including training specialized personnel and augmenting staffing in the competent department.

- (Introducing “market-immediate entry” to reform nHTA) To address the post-approval sequence—nHTA under the Ministry of Health and Welfare and health-insurance listing—the study proposes a legal interpretation under which, immediately upon completion of nHTA, the new technology is listed as non-reimbursable and permitted to enter the market first, with reimbursement determination to follow thereafter.

○ Attraction of foreign patients

- (Shift to patient-centered care) Drawing on foreign principles that emphasize patient experience, safety, and transparency, the study proposes establishing explicit legal bases—e.g., in patient-safety law—for patient-centeredness and patient-experience evaluation, thereby strengthening Korea’s comparative advantage and export competitiveness.

- (Reform of long-term treatment visas) To secure sustainability and address the risks of visa-free medical tourism, the study proposes guaranteeing stays of three years or longer for foreign patients with serious, rare, or intractable diseases and issuing integrated visas for family members and caregivers, thus ensuring the effectiveness of the medical-tourism visa regime.

- (Introducing “telemedicine for foreign patients”) With reference to bills on telemedicine under the Medical Service Act, and prior to any telemedicine regime applicable to the general population, the study proposes first inserting into the Act on Support for Overseas Expansion of Medical Services and Attraction of Foreign Patients a provision on telemedicine for foreign patients (principles, scope, methods, limits, and standard guidelines) to enable phased institutionalization.

- (Market exclusion of unlicensed attraction and trust enhancement) Because stronger administrative sanctions under the Medical Service Act against medical institutions that utilize unlicensed attraction can eradicate such conduct, the study proposes statutory amendments that—beyond surcharges and penalties under the overseas-expansion act—link to cancellation of accreditation/permission and surcharges under the Medical Service Act.

○ Overseas expansion of medical institutions

- (Government-wide governance and one-stop support) Following Japan’s MEJ model, the study proposes creating a national, government-led control tower—linking the Ministry of Health and Welfare, the Korea Health Industry Development Institute, the Korea Overseas Infrastructure & Urban Development Corporation, the Korea Trade Insurance Corporation, and the Export–Import Bank of Korea—and, through it, providing a one-stop package to support overseas expansion by large hospitals.

- The study further emphasizes the need to concretize support across all stages—from pre-planning through stable post-entry operations—including data protection and cybersecurity.

Ⅲ. Expected Effects

○ Acceleration of medical-device manufacturing, commercialization, and export

- Alignment with MDSAP and standardized clinical and post-market surveillance systems is expected to shorten time-to-export and ease market-entry burdens, thereby reducing regulatory costs for government and industry and enhancing international trust in medical-device quality.

- Allowing “market-first entry” after nHTA, with non-reimbursable listing prior to reimbursement determination, is expected to facilitate the early diffusion of innovative technologies and stabilize corporate cash flows, contributing to technological development, innovation, and activation across the domestic medical industry.

○ Consolidation of patient safety and market order

- Strengthening patient-centeredness for foreign patients, introducing long-term treatment visas, and reinforcing market trust in the attraction sector are expected to enhance the perceived quality and reliability of Korean medical services and to secure export competitiveness as an attractive medical-tourism destination.

○ Promotion of, and higher success rates for, overseas expansion by large hospitals

- Building and operating government-wide governance and a one-stop package—ensuring continuity from planning through stable post-entry operations—are expected to activate the export of Korea’s medical system as a whole and, in turn, to enable industrial restructuring and the creation of new national growth engines.