Most of the victims were in their 70s as the hospital specializes in taking care of senior citizens with chronic health conditions.
According to Yonhap News Agency on Wednesday, 21 people were killed, while eight others are still receiving treatment but the number of dead is likely to rise as six are said to be in serious condition.
Firefighters say the blaze was brought under control within half-an-hour but many died or were affected from inhaling smoke and toxic gases.
Police have taken an 81-year-old male dementia patient into custody on charges of arson.
Officers say they have surveillance camera footage of the suspect, identified only by his last name Kim, going in and out of the room two minutes before the fire was ignited in the room.
The hospital, which had claimed.. an electrical short sparked the fire, is suspected of having only three nurses on the night shift for the ward.
They were taking care of some 80 elderly stroke and dementia patients who would have needed help escaping.
Because the lack of medical staff on duty may have contributed to the high death toll, authorities are investigating whether the hospital broke the law by not having enough staff on stand-by.
It was one of three major fires in the country Wednesday.
Just hours after the hospital blaze, a 71-year-old man started a fire with highly flammable liquid inside a subway car in Seoul.
There were no injured reported.
The suspect reportedly confessed to police of starting the fire and said he was trying to commit suicide.
Kim Hyun-bin, Arirang News.