Characteristics of Healthcare
In Taiwan's medical industry, there are two types of hospital ownership-state-run and privately-owned. Private medical institutions can be divided into profit-seeking organizations and non-profit ones. Only licensed physicians can own a profit-seeking hospital, which is similar to German regulations (Sloan 2000). According to a 2003 study, Taiwan's medical system is characterized by the following five properties (Lu Ruei-fen & Sie Ci-ruei 2003):

1. It is a closed system
Physicians hired by hospitals must not hold a part-time job during the contract period.

2. Patients have the freedom to choose whatever medical care they need
Patients in Taiwan are free to choose whether to go to outpatient clinics with specialty or large hospitals without consulting primary care physicians and being referred. In addition, patients are seldom faced with obstacles when they are searching for medical help. Medical care is highly accessible due to the number of hospitals and the high coverage rate and of the National Health Insurance program (NHI).

3. Labor Insurance Hospitals in Taiwan provide a variety of services encompassing outpatient services, hospitalization, and emergency services. Large-scale outpatient services in hospitals become the main source from which hospitals accept patients who need hospitalization. According to 1998

◆ Provide quick inpatient service

statistics, about 34 percent of outpatient services were provided by hospitals, accounting to 64.57 percent of total outpatient expenses (Bureau of NHI, 2005). Among total expenses of the NHI program, the ratio of hospital outpatient expenses to hospitalization expenses is 58:42, while the ratio of actual payment from the Bureau of NHI (BNHI) for these two services is supposed to be 45:55 (Bureau of NHI 2005).

4. Tax discrepancy exists Current tax policy pertaining to hospitals differ according to the administrative level they belong to. Private hospitals owned by one individual physician or more partners are deemed as profit-seeking firms. Profits made by private hospitals are	◆ Provide quick inpatient service
regarded as the income of the owner and partners, and should be taxed according to income tax laws. Non-profit hospitals owned by juridical persons, on the other hand, can enjoy various tax breaks according to Taiwan's tax laws.

5. The government made strict laws for better control of the medical industry

(2) The qualifications and standards for setting up medical institutions:
There are strict laws governing the qualifications and standards of establishing medical organizations in Taiwan. The main governing law is the "Medical Care Law". In the Law, it is prescribed that "the establishment or expansion of a hospital shall be approved by the health authority before a construction license can be applied for pursuant to the relevant provisions of the Architecture Law". In addition, the Law also regulates that "only juridical persons and physicians can set up hospitals". In other words, the permission system is administered according to the establishment and expansion of hospitals which do not apply to the establishing procedures of profit-seeking corporations.

(3) Price control: In 1995, Taiwan initiated the universal NHI program and adopted the single payer system. The single payer system allows the Bureau of NHI, the executive agency of the NHI program, to be the monopoly buyer with influential market power in the medical service market. The

◆ Bilingual service in hospital

(4) Medical network program:
The main purpose of a medical network is to encourage private sectors to establish medical care institutions in areas lacking medical care resources. In areas with excess medical care facilities, the health authority may restrict either the establishment or expansion of hospitals.

◆ Professional surgery team

(5) Hospital evaluation: In order to attain the goal of "establishing a medical care system by level", the Department of Health (DOH) has conducted nationwide hospital evaluations since 1987. According to the evaluation standards listed by the DOH, hospitals can be divided into three levels according to

their software and hardware resources: (A) medical centers; (B) area hospitals; and(C) regional hospitals. In practice, however, there are six more levels including: potential medical centers, potential area hospitals, special functional and educational hospitals, regional and educational hospitals, mental profession educational hospitals and mental profession hospitals. Such evaluation policies affect distribution made by the BNHI. When a hospital ranks higher in the evaluation result, it will receive more payment from the BNHI.