📖 Approx. 3 minutes ／ Updated 2026.06.18
Will it end with distribution to creditors through bankruptcy, or secure funds by transferring the business while it is still healthy? A comparative analysis of net proceeds for the seller, tax treatment, and impact on staff and patients.
Current Status of Medical Corporation Bankruptcies and Successions 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 been at a high level in recent years. In 2024, the business environment is becoming increasingly severe, especially for small and 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 on Medical Institutions shows that there are months where the number of clinic closures exceeds new openings, making early consideration of business succession essential for maintaining regional healthcare.
Major Factors Leading to Deterioration of Management
- Impact of Medical Fee Revisions: Reductions in insurance medical fee 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 medical 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 loans and difficulty in refinancing
10 Early Warning Signs of Management Crisis
- Current ratio falls below 100% (worsening short-term solvency)
- Medical 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
- 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
When facing management difficulties, options are considered in stages according to the severity of the situation.
- Phase 1: Business Improvement (Early Stage) – Cost structure reform, revenue enhancement measures, expansion of credit lines
- Phase 2: Business Succession M&A (Mid-term) – Secure transfer proceeds through group participation or third-party succession
- Phase 3: Private Workout / Sponsor M&A (When Debt Adjustment is Necessary) – Succession to a sponsor company after creditor consultation
- 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 bankrupt, the transfer proceeds are often zero or negative, with only the director’s personal guarantee debts remaining.
On the other hand, by choosing third-party succession while the business is still profitable, you can secure transfer proceeds that appropriately reflect the business value, and simultaneously achieve preservation of staff employment, continuity of patient care, and sustainability 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 at the first sign of management deterioration 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 find out if I consult 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 the net proceeds from succession higher than from bankruptcy?
A. Almost certainly, yes. In bankruptcy, there is almost nothing left after liquidation costs and debt repayment, whereas with succession, proceeds based on business value can be secured.
Related Columns
- 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 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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