📖 Approx. 3 minutes ／ Updated 2026.06.09
The bankruptcy of a medical corporation does not happen overnight. This article explains 10 signals that can be detected early, such as prolonged medical fee payment cycles, increasing fixed costs, and signs of insolvency.
Current Status of Medical Corporation Bankruptcies 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 management environment is becoming increasingly severe, especially for small and medium-sized medical institutions, due to medical fee revisions, soaring labor costs, and rising energy costs.
The Ministry of Health, Labour and Welfare’s Survey on Medical Institutions shows that in some months, the number of clinic closures has exceeded the number of new openings, making early consideration of business succession essential for maintaining regional healthcare.
Major Causes Leading to Business Deterioration
- Impact of Medical Fee Revisions: Reductions in insurance medical treatment fees, 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 falls below 100% (deterioration of short-term solvency)
- Medical profit margin remains below the industry average (5-8%) for three consecutive periods
- Notices of seizure of medical fees or tax arrears occur
- Additional loan requests to 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 director
Options and Resolution Schemes
The options available in case of management difficulties are considered in stages depending on the severity of the situation.
- Stage 1: Business Improvement (Early) – Cost structure reform, revenue enhancement measures, credit line expansion
- Stage 2: Business Succession M&A (Mid-term) – Secure transfer consideration through group participation or third-party succession
- Stage 3: Private Workout / Sponsor M&A (When debt adjustment is necessary) – Succession to a sponsor company after consultation with creditors
- Stage 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 insolvency or bankruptcy, the transfer consideration is often zero or negative, leaving only the 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 based on a fair valuation of the business value, while also achieving staff employment retention, continuity of patient care, and sustainability of regional healthcare.
Our firm’s 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 when signs of management 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 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 participation M&A, the release of guarantees is incorporated into the transfer conditions. The use of the Management Guarantor Guidelines is also possible.
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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