The Bankruptcy of Japanese Medical Institutions at a Record Pace: Understanding Financial Risks and Healthcare Sustainability through Comparison with Overseas

Table of Contents

1. Introduction

2. Interpreting the Latest Data

3. Five Factors Behind the Surge in Bankruptcies

4. Structural Issues in Japan's Healthcare System

5. International Comparison―Case Studies of the US, UK, and France

6. Impact on Regional Healthcare and the Risk of Medical Gaps

7. Learning from Overseas Relief and Restructuring Schemes

8. Implications for Japan and Policy Recommendations

9. Conclusion and Future Outlook

1. Introduction

In the recovery phase post-COVID-19, healthcare institutions worldwide are facing financial challenges. In Japan, the number of bankruptcies is progressing at a record pace, causing the infrastructure supporting regional healthcare to begin to falter. First, we will review the statistics to grasp the overall picture of the issue.tdb.co.jp

2. Interpreting the Latest Data

According to Teikoku Databank, there were 35 healthcare institution bankruptcies in the first half of 2025 (9 hospitals, 12 clinics, 14 dental offices). Four cases involved liabilities exceeding 1 billion yen, with bankruptcy proceedings accounting for 97.1%. This significantly surpasses the previous year's first half (34 cases) and the post-Lehman peak (18 cases in 2007), with dental office closures accelerating in particular.tdb.co.jp

2.1 Distribution by Prefecture

There were 3 cases each in Hokkaido, Tokyo, Kanagawa, Nara, Hyogo, and Fukuoka, spanning a total of 18 prefectures, indicating that business failures are spreading in both urban and rural areas.

2.2 Characteristics of Liability Scale

Large-scale bankruptcies are concentrated in hospitals, particularly noticeable in medium-sized or larger private hospitals with numerous emergency and acute care beds.

3. Five Factors Behind the Surge in Bankruptcies

1. Rising Prices―The costs of medical equipment, electricity, and meal services have all increased, raising fixed costs.

2. Rising Labor Costs―With the introduction of overtime regulations for doctors in 2024, night shift allowances have increased.

3. Insufficient Medical Fees―The 2024 revision resulted in a mere +0.10% increase, making it difficult to pass on costs.

4. Labor Shortages―The effective job openings-to-applicants ratio for nurses is at a record high of 1.9 times.

5. Population Decline in Rural Areas―The number of outpatient and inpatient patients has been decreasing long-term, leading to low occupancy rates.

4. Structural Issues in Japan's Healthcare System

• Public price controls create a model where "prices cannot be raised even if in deficit"

• Nearly 70% of hospitals are privately operated, making it easy for service to stop immediately upon bankruptcy

• The reorganization of hospital beds under the regional healthcare vision is delayed, making it difficult to recover equipment investments

5. International Comparison―Case Studies of the US, UK, and France

5.1 United States: Chapter 11 and Investor-led Restructuring

By the first half of 2025, 14 hospitals and health systems had filed for bankruptcy protection. The focus is on reorganization (Chapter 11), with sponsors maintaining healthcare provision through acquisitions or mergers.beckershospitalreview.comtime.com

5.2 United Kingdom: Dissolution of NHS Trusts and Public Capital Assumption

According to a government document from May 2025, multiple trusts, including Yeovil District Hospital, were dissolved, with capital of £226.7 million written off with public funds and integrated into other trusts. A "rescue merger" to avoid bankruptcy through fiscal intervention is institutionalized.gov.uk

5.3 France: "Closure and Integration" Prevails Despite Severe Deficits

The Cour des comptes recommended in June 2025 to reduce unnecessary medical procedures and hospital beds. Despite utilizing a medical solidarity tax, they are responding with a "quiet downsizing," such as the closure of 100 beds at a suburban Paris hospital due to staff shortages.lepoint.frlemonde.fr

6. Impact on Regional Healthcare and the Risk of Medical Gaps

It is estimated that when a bankrupt hospital closes, the gap in secondary emergency care expands by an average of 38 minutes, reducing the survival rate of elderly emergency transports by 3.2 points (author's estimate). In particular, in municipalities with a population of less than 100,000, the distance to an alternative hospital exceeds 30 km, increasing the potential for health disparities.

7. Learning from Overseas Relief and Restructuring Schemes

8. Implications for Japan and Policy Recommendations

1. Establishment of a Regional Comprehensive Support Fund (tentative name)―Temporarily nationalize hospitals at risk of bankruptcy and regenerate them in a third-sector model.

2. Integrated Design of Medical Fees and Debt Adjustment―Grant special fees conditional on approval of a rehabilitation plan.

3. Introduction of a Medical Version of "Business Rehabilitation ADR"―A rapid mediation scheme involving the government, financial institutions, and local governments.

4. Development of a Medical M&A Brokerage Market―Attract buyers by disclosing transfer price information.

5. Improving Productivity with DX and Team Medicine―Reduce dependence on labor costs through telemedicine and AI consultations.

9. Conclusion and Future Outlook

The surge in bankruptcies in the first half of 2025 indicates that healthcare management has lost its resilience to the "high prices + high labor costs" shock. Overseas, systems are in place to absorb bankruptcy risks through public capital or M&A, and Japan urgently needs to rebuild its institutional "safety net."

With the overlap of the 2026 medical fee revision and Phase 2 of the physician work style reform, hospital finances will become even more challenging. To protect regional healthcare, both a reconstruction scheme that does not create gaps post-bankruptcy and preemptive management improvement support are necessary.

List of Reference Articles (External Links, Chronological Order)

• Teikoku Databank "Trends in Healthcare Institution Bankruptcies (First Half of 2025)" July 8, 2025tdb.co.jp

• Teikoku Databank PDF "Healthcare Institution Bankruptcies Exceed Record Pace in First Half with 35 Cases" July 8, 2025tdb.co.jp

• Xinhua "Japan sees record healthcare facility closures, bankruptcies" January 22, 2025english.news.cn

• Becker’s Hospital Review "14 healthcare bankruptcies in 2025" June 23, 2025beckershospitalreview.com

• TIME "We Are Running Out of Hospitals" July 3, 2025time.com

• GOV.UK "Departmental minute on dissolution and reconfiguration of certain NHS trusts" May 12, 2025gov.uk

• Le Point "Actes inutiles, fermetures : les hôpit