📖 Approx. 3 minutes Updated: 2026.06.15
Insurance reimbursements are delayed by two months. This article explains working capital management and the use of M&A in emergencies to prevent cash shortages amid rising fixed costs, capital investments, and personnel expenses.
Clinic Cash Flow Status Based on Industry Data
According to a survey by Tokyo Shoko Research, the number of bankruptcies and business closures in the medical industry (hospitals, clinics, dental clinics) has remained high in recent years. In 2024, the business environment has become particularly challenging for small and medium-sized medical institutions due to medical fee revisions, soaring personnel costs, and rising energy costs.
The Ministry of Health, Labour and Welfare’s Survey on Medical Institutions shows months where the number of clinic closures has exceeded new openings, making early consideration of business succession essential for maintaining regional healthcare.
Major Factors Leading to Business Deterioration
- Impact of Medical Fee Revisions: Reductions in insurance medical fee unit prices, stricter facility standards
- Soaring Personnel Costs: Difficulty in hiring nurses, pharmacists, and administrative staff, and pressure for wage increases
- Burden of Capital Investment: Updates to electronic health records, replacement of CT/MRI, advancement of medical equipment
- Aging of Clinic Directors and Lack of Successors: Delays in decision-making and underdeveloped succession systems
- Decrease in Patient Numbers: Decline in outpatient numbers in depopulating areas, increase in competing medical institutions
- Rising Interest Rate Environment: Increased burden of interest on loans and difficulties in refinancing
10 Early Warning Signs of a Business Crisis
- Current ratio below 100% (deterioration of short-term payment ability)
- Medical profit margin below the industry average (5-8%) for three consecutive periods
- Receipt of notices for garnishment of medical insurance receivables or tax delinquency
- Rejection of requests for additional loans from financial institutions
- Negotiations for deferral of lease payments or rent payments
- Delayed salary payments, bonus cuts
- Cancellation of medical equipment maintenance contracts
- Demand for cash transactions from pharmaceutical wholesalers
- Successive resignations of staff
- Requests for additional personal guarantees from the clinic director
Options and Resolution Schemes
When facing business difficulties, options are considered in stages according to the severity of the situation.
- Stage 1: Business Improvement (Early) – Cost structure reform, revenue enhancement measures, expansion of credit lines
- Stage 2: Business Succession M&A (Mid-term) – Joining a group, securing transfer consideration through third-party succession
- Stage 3: Private Reorganization / Sponsor M&A (When debt adjustment is necessary) – Succession to a sponsor company after creditors’ agreement
- Stage 4: Legal Reorganization (Last resort) – Reconstruction through civil rehabilitation/corporate reorganization, or liquidation through bankruptcy
Succession While “Healthy” is Overwhelmingly Advantageous
In cases of reorganization after becoming insolvent or facing bankruptcy, the transfer consideration is often zero or negative, leaving only the clinic director’s personal guarantee liabilities.
On the other hand, if third-party succession is chosen while the business is profitable, it is possible to secure transfer consideration that appropriately values the business, while also achieving staff employment retention, continued patient care, and the continuity of regional healthcare.
Our support track record shows an average period from consultation to closing of 6-10 months for clinics without beds and 9-18 months for medical corporations. Early consultation when signs of business deterioration appear leads to the best outcome.
Frequently Asked Questions
Q. Is it possible to transfer the business even if it is insolvent?
A. Yes, it is possible. There are schemes such as sponsor M&A and third-party succession involving creditors’ adjustments. We have extensive experience supporting insolvent cases.
Q. Will my creditors or staff know that I have consulted you?
A. Information is disclosed only to a limited extent after signing an NDA, and there is no need to disclose it to related parties before the final contract. We strictly maintain confidentiality.
Q. What happens to the clinic director’s personal guarantee?
A. It depends on the transfer scheme. In group participation M&A, the release of guarantees is incorporated as a condition of transfer. The “Guidelines for Business Owner Guarantees” can also be utilized.
Q. Will I receive more proceeds from a succession than from bankruptcy?
A. Almost certainly, yes. In bankruptcy, there are liquidation costs and debt repayment, leaving little behind. In contrast, succession allows for securing consideration based on business value.
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- Complete Guide to Selling or Transferring a Clinic: Medical M&A Experts Explain Price Trends, Procedures, and Precautions
- Complete Guide to Tax Schemes for Medical Corporation M&A: Key Issues for Tax Accountants and CPAs
- Step-by-Step Guide to Medical M&A and Hospital Succession: Explaining the 6 Steps from Consultation to Closing with Real Examples
To Medical Institutions Facing Management Challenges
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