The government has approved the establishment of Korea’s first foreign-owned for-profit hospital. The green light, given to a Chinese investor, is expected to encourage more foreign investment in hospital construction in Korea. Foreign-owned hospitals will create many high-powered jobs, but policymakers should ensure that they do not destabilize Korea’s health insurance system.

The first foreign-owned hospital will be set up on Jejudo Island by Greenland Group of China, a state-owned Fortune Global 500 company built around the real estate business. Greenland plans to invest 77.8 billion won to open the Greenland International Hospital in March 2017.

The planned hospital will start small. It will initially have 47 beds, offer treatment in four areas -- plastic surgery, internal medicine, dermatology and family medicine -- and be staffed with nine doctors, 28 nurses, four medical technicians and 92 clerical employees. The hospital is expected to target Chinese nationals, especially those who want to have plastic surgery in Korea.

As the project marks the first time that Korea has approved the establishment of a foreign-owned for-profit hospital on its soil, it has rekindled the long-running debate on the benefits and harms that such hospitals may have on the Korean economy and health care system.

Medical service is one area where Korea can excel in the world. Korea is known for its world-class treatment of cancers, cardiac and vascular diseases, and spinal disc and organ transplantation. It is also considered a world leader in cosmetic surgery, dermatology and dentistry.

Despite its advanced and reliable medical services, however, Korea lags behind other countries in the region in terms of international patient arrivals. One reason is insufficient investment in hospitals that are suited to foreign patients.

Nevertheless, the present law on medical services discourages private investment in hospitals. Under the law, a private company that wants to operate a hospital is required to set up a nonprofit corporation, which must reinvest any gains it earns in the operation of the hospital.

Under these circumstances, one option left for the government to stimulate investment in hospital construction is to allow foreign investors to operate for-profit hospitals. This approach allows foreign investors to make money by tapping into Korea’s world-class medical professionals. It will also benefit Korea by creating high-powered health care jobs.

But critics assert that the approach will ultimately end up dismantling Korea’s health insurance system. For-profit hospitals, they argue, will hire talented doctors from Korea and other parts of the world to provide top-notch services. They will attract not only foreign patients but wealthy Koreans, as they can receive treatment there only if they forgo health insurance coverage. This will not only increase inequalities in access to medical care but undermine the health insurance system.

Furthermore, opponents say, for-profit hospitals will drive up medical costs in Korea as domestic hospitals will seek to introduce expensive medical equipment and use other costly methods so as not to lose their patients.

These concerns should not be dismissed as far-fetched. Policymakers need to be prepared for the unintended consequences of their initiative. Creating medical jobs and making Korea a regional medical hub is important and desirable. Yet they need to bear in mind that keeping Korea’s efficient health insurance system intact is much more important.