【Aging, safety net and fiscal crisis in Japan】No.24: Reform Plan 2025 for Private-owned Public Healthcare Institutions

In this column series, Yukihiro Matsuyama, Research Director at CIGS introduces the latest information about aging, safety net and fiscal crisis in Japan with data of international comparison.

In Japan, there are private hospital groups that benefit the public in ways comparable to national hospitals and public hospitals, and these hospitals receive preferential, tax-free treatment. These hospitals are classified as Private-owned Public Healthcare Institutions, and Table 1 shows typical examples. Among them, Saiseikai and Hokkaido Social Work are social welfare corporations; KKR (Kokkakomuin Kyousaikumiai Rengokai) is the Federation of National Public Service Mutual Aid Associations; and Koseiren was developed from hospitals built in rural areas where there were no doctors in the past.

The common problem is that the entire group is polarized, such that there are surplus and deficit hospitals, and all groups except the KKR group are currently facing deficits. While these groups cannot afford to indefinitely maintain their deficit hospitals, it is not politically easy to close them, either, as they play a major role in community medicine. Therefore, the Ministry of Health, Labor, and Welfare demands that Private-owned Public Healthcare Institutions prepare plans for management reform, with objectives to be achieved by 2025.

These Private-owned Public Healthcare Institution hospitals compete with one another in each locality, and they also compete with national and public hospitals, leading to redundancy and overinvestment. This is one of the causes of deteriorating profitability. Therefore, in order to improve performance, it may be beneficial for these hospitals to integrate management in joint venture agreements by medical area.

Table 1 Data of Private-owned Public Healthcare Institutions(billion JPY)


(Note)Number of hospitals is as of October 2017
(Source)Data for Japan Red Cross, Saiseikai, Hokkaido Social Work, and KKR are based on financial statements published on their web sites. Data for Koseiren come from the Ministry of Agriculture, Forestry, and Fisheries.

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