Illegal 'Front Man' Hospitals Double in Korea Amid Drug Abuse Concerns

The number of illegally operated medical facilities using borrowed licenses has surged sharply in South Korea. Amid growing concerns over abuse of psychotropic drugs, experts are calling for tighter oversight of these illegal clinics that encourage excessive medical treatment.

According to National Health Insurance Service (NHIS) data obtained by Seoul Economic Daily through the office of Democratic Party lawmaker Min Hyung-bae, 77 illegally established medical facilities were detected nationwide last year. This represents nearly double the 44 cases from the previous year. The number has risen steadily from 15 in 2022 to 34 in 2023, then to 44 in 2024 and 77 in 2025.

Seoul recorded the highest number of violations, with 46 facilities detected over the past five years (2020-2025). Including Gyeonggi Province (32) and Incheon (14), nearly half of the 223 cases nationwide were concentrated in the Seoul metropolitan area.

However, the problem has recently spread to provincial areas. In Busan, detected cases jumped from 2 to 8 in the past year. Similar increases occurred in Daegu (3 to 6), South Gyeongsang Province (2 to 9), and Gangwon Province (5 to 12) during the same period.

Illegally established medical facilities refer to clinics opened and operated by individuals not authorized under the Medical Service Act, using borrowed credentials. The most common type is the so-called "front man hospital," where a non-medical professional—typically an office manager—holds actual control while using a licensed physician's name to establish and operate the facility. When caught, hospitals face license revocation while physicians may receive license suspension and criminal penalties including imprisonment and fines. The NHIS also pursues recovery of illegal profits. From 2009 to November last year, the total amount subject to recovery reached approximately 2.88 trillion won ($2.1 billion), but actual collections amounted to only 255 billion won (8.84%).

The fundamental driver behind these illegal facilities is demand for prescriptions that legitimate medical institutions refuse to provide. Some illegal clinics readily prescribe psychotropic drugs such as propofol, unlike regular hospitals. Last month, the Busan District Prosecutors' Office Eastern Branch indicted operators of a front man hospital who prescribed narcotics-containing medications through non-face-to-face consultations and proxy prescriptions.

Current law also contributes to the proliferation, as patients who claim ignorance of a facility's illegal status are difficult to prosecute.

Profit-driven illegal facilities engage in excessive treatment as their primary concern. In one case, a patient visiting for flu treatment underwent more than 30 tests. Many operate as corporate enterprises, falsifying medical records to make it appear patients received cosmetic procedures from dermatologists and manual therapy from orthopedic clinics. Management of psychotropic medications has emerged as a particularly urgent issue recently.

Experts are calling for the establishment of special judicial police units. Professor Chung Hyung-sun of Yonsei University's Department of Health Administration said, "Once special judicial police become operational, problems with illegally established medical facilities are expected to improve significantly."

Investigations into illegal medical facilities currently take an average of 11 months after referral. NHIS Chairman Chung Ki-suk said last month, "When investigations begin, illegal facilities immediately transfer funds to hidden accounts, leaving nothing to recover. With special judicial police, the NHIS could immediately access accounts and identify illegal facilities, reducing harm to the public."