📖 Approx. 3 minutes ／ Updated 2026.06.10
A thorough analysis of the increasing number of hospital bankruptcy cases in recent years. Comparing common patterns leading to failure, such as the impact of medical fee revisions, soaring labor costs, and the burden of capital investment, with success stories of avoidance through early succession.
The Current State of Hospital Bankruptcies 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 revisions in medical fees, rising labor costs, and increased energy costs.
The Ministry of Health, Labour and Welfare’s Survey of Medical Institutions shows that in some months, the number of clinic closures has exceeded new openings, making early consideration of business succession essential for maintaining regional healthcare.
Major Factors Leading to Deteriorating Management
- Impact of Medical Fee Revisions: Reductions in insurance medical treatment unit prices, stricter facility standards.
- Soaring Labor 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 Directors and Lack of Successors: Delays in decision-making and underdeveloped succession systems.
- Decrease in 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 difficulties in refinancing.
10 Early Warning Signs of Management Crisis
- Current ratio below 100% (deterioration of short-term payment ability).
- Medical business profit margin below the industry average (5-8%) for three consecutive periods.
- Receipt of notices for seizure of medical fees or tax delinquency.
- Rejection of requests for additional loans from financial institutions.
- Negotiation for deferred payments of lease fees or rent.
- 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 director.
Options and Resolution Schemes
The options available in case of management difficulties are considered in stages according to the severity of the situation.
- Phase 1: Management Improvement (Early Stage) — Cost structure reform, revenue enhancement measures, credit line expansion.
- Phase 2: Business Succession M&A (Mid-Term) — Joining a group, 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 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 remain.
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 ensuring the maintenance of staff employment, continuous patient care, and the continuity of regional healthcare.
Our support track record shows that the period from consultation to closing is an average of 6-10 months for clinics without beds and 9-18 months for medical corporations. Early consultation at the first sign of deteriorating management 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 creditor 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 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 Management Guarantees can also be utilized.
Q. Is succession more profitable than bankruptcy?
A. It is almost certainly more profitable. In bankruptcy, there is little left after liquidation costs and debt repayment, whereas in succession, consideration based on business value can be secured.
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To Medical Institutions Facing Management Challenges
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