Medical Institution Bankruptcies Exceed 40 for Second Consecutive Year; Focus Shifts to Clinics; Large-Scale Bankruptcies in Hospitals and Dental Clinics Push Debt to 10

According to an announcement by Teikoku Databank, the number of bankruptcies among medical institutions in fiscal year 2023 exceeded 40, marking the second consecutive year at this level. The occurrence of large-scale bankruptcies, particularly in hospitals and dental clinics, has driven the total debt to its highest level in the past decade. This highlights the current situation where revenue pressure from medical fee revisions, rising labor costs, and the burden of continuous investment in medical equipment are collectively straining management. The fact that even clinics, which have been relatively stable, are showing signs of deteriorating management suggests the need to closely monitor the future trends of the entire medical industry.

From the perspective of medical M&A and business succession, this increase in bankruptcies underscores the importance of considering business succession at an early stage. If M&A can be executed before total debt expands and insolvency occurs, succession under more favorable terms becomes possible, including securing a transfer price, releasing personal guarantees, and, most importantly, contributing to regional healthcare (ensuring continuity for patients and staff). In a situation where large-scale bankruptcies are occurring, the buyer's negotiating power increases, posing a risk of narrowing options for the seller.

For executives of medical institutions, especially those facing succession issues, it is crucial to re-recognize the value of promptly consulting with experts as soon as signs of deteriorating management appear. Before reaching the option of closure, there may be a path to continue past medical activities and fulfill responsibilities as a manager through business succession. With the increasing trend in bankruptcies, proactive information gathering and collaboration with experts, looking towards the future of one's own institution, are indispensable.