📖 Approx. 3 minutes ／ Updated 2026.06.11
A thorough comparison of “closure” and “third-party succession” as options for retiring clinic directors. We organize the decision-making factors, covering net proceeds, taxes, staff and patient care, and the impact on regional healthcare.
Clinic Closures: Current Trends Based on Industry Data
According to research by Tokyo Shoko Research, the number of bankruptcies and closures in the medical industry (hospitals, clinics, dental clinics) has remained high in recent years. In 2024, the business environment is particularly challenging for small and medium-sized medical institutions due to revisions in medical fees, rising labor costs, and increased 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 rates, stricter facility standards
- Rising Labor Costs: Difficulty in hiring nurses, pharmacists, and administrative staff, and pressure for wage increases
- Burden of Capital Investment: Electronic health record updates, CT/MRI replacements, advancement of medical equipment
- Aging of Directors and Lack of Successors: Delays in decision-making and underdeveloped succession systems
- Decreasing Patient Numbers: Decline in outpatient numbers in depopulated areas, increase in competing medical institutions
- Rising Interest Rate Environment: Increased burden of interest on borrowings and difficulty in refinancing
10 Early Warning Signs of a Business Crisis
- Current ratio falls below 100% (deterioration of short-term payment ability)
- Medical business profit margin remains below the industry average (5-8%) for three consecutive periods
- Receipt of notice for seizure of medical fees or tax delinquency occurs
- Requests for additional loans from financial institutions are rejected
- Negotiations for deferral of lease payments or rent payments
- Delays in 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 director
Options and Resolution Schemes
When facing business difficulties, options are considered in stages depending on the severity of the situation.
- Phase 1: Business Improvement (Early Stage) – Cost structure reform, revenue enhancement measures, credit line expansion
- Phase 2: Business Succession M&A (Mid-term) – Group affiliation, securing transfer consideration through third-party succession
- Phase 3: Private Reorganization / Sponsor M&A (When Debt Adjustment is Necessary) – Succession to a sponsor company after consultation with creditors
- Phase 4: Legal Reorganization (Last Resort) – Reconstruction through civil rehabilitation/corporate reorganization, or liquidation through bankruptcy
Succession “While Still Healthy” is Overwhelmingly Advantageous
In cases of reorganization after becoming insolvent or facing bankruptcy, the transfer consideration is often zero or negative, and only the director’s personal guarantee liabilities may remain.
On the other hand, if third-party succession is chosen while the business is still profitable, it is possible to secure transfer consideration based on a fair valuation of the business value, while also ensuring the continuation of staff employment, ongoing patient care, and regional healthcare services.
Our company’s 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 at the first sign of business deterioration leads to the best possible 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 creditor adjustments. We have extensive experience supporting cases of insolvency.
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 director’s personal guarantee?
A. It depends on the transfer scheme. In group affiliation 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 net proceeds from a succession than from bankruptcy?
A. Almost certainly, yes. In bankruptcy, there is little left after liquidation costs and debt repayment, whereas with succession, you can secure consideration based on the business value.
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- The Complete Guide to Business Succession for Hospitals and Medical Corporations: Practicalities of Medical M&A from Successor Shortages to Success Stories
- The Complete Guide to Selling or Transferring a Clinic: Medical M&A Experts Explain Price Trends, Procedures, and Precautions
- The 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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