Who is my real competitor?: Institutional analysis of organizational forms and niches of traditional medical hospitals in Korea

Traditionally, oriental medicine provided its service at a clinic, run by individual herb doctors. However, as new organizational forms, similar to western medical hospitals, emerged in the early 1970s, Korean Traditional Medical Hospitals (KTMH) have rapidly become a set of hospital population. From organization theory perspectives, two interesting questions can be raised. First, did institutional influences affecting western medical hospitals also play a role in shaping and changing KTMH with a similar pattern and pace? Second, which organization subpopulation was the real competitor of KTMH and why? Applying two organization theories (institutional theory and population ecology), we sought to find answers to these questions. First, in the institutional analysis, three distinct periods were characterized. This implies that both western and oriental hospitals were influenced by institutional forces but the pace of the impacts was slower for the latter. Second, KTMH have positioned themselves in the field as small and medium-sized, specialized hospitals. This means that KTMH chose the ‘specialist strategy', unofficially specializing in chronic diseases such as cerebrovascular disease. However, this niche strategy made KTMH begin to compete with long-term care hospitals (LCH), operating with legal supports and legitimacy. Considering evidence that the closure rate of KTMH was higher than its foundation rate since the emergence of LCH, the loser is likely to be KTMH. This was because Korean government increased supports for LCH through health insurance system, which helps lower out-of-pocket payment. More research on the role of traditional health care organizations in sustaining national health system would be needed.