📖 Approx. 3 minutes Updated 2026.06.17
The cost of updating CT, MRI, and electronic health record systems can range from tens of millions to hundreds of millions of yen. This article introduces cases where small to medium-sized medical institutions, finding independent investment challenging, achieve equipment sharing and cost distribution through group M&A.
The Current State of Medical Equipment Investment, Seen Through Industry Data
According to a survey 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 management environment is particularly challenging for small to medium-sized medical institutions due to revisions in medical fees, soaring labor costs, and rising energy costs.
The Ministry of Health, Labour and Welfare’s Survey of 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.
Key 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 recruiting nurses, pharmacists, and administrative staff, and pressure for wage increases
- Burden of Capital Investment: Updating electronic health records, replacing CT/MRI, and advancing 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 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 falls below 100% (worsening short-term payment ability)
- Medical profit margin remains below the industry average (5-8%) for three consecutive periods
- Notices of seizure of medical fees or tax arrears occur
- Requests for additional loans from financial institutions are rejected
- 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 staff resignations
- Requests for additional personal guarantees from the clinic director
Options and Solution Schemes
When facing management difficulties, options 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) — Secure transfer consideration through group participation or third-party succession
- Phase 3: Private Workout/Sponsor M&A (When Debt Adjustment is Necessary) — Transfer to a sponsor company after creditors’ agreement
- 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, leaving only the clinic director’s personal guarantee liabilities.
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 achieving the maintenance of staff employment, continuous 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 management deterioration appear 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 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 Personal Guarantees of Management 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 with succession, consideration based on business value can be secured.
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- Complete Guide to Business Succession for Hospitals and Medical Corporations: From Successor Shortages to Success Stories, Practicalities of Medical M&A
- Complete Guide to Selling and Transferring Clinics: 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 Certified Public Accountants
- 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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