Medical Institution Bankruptcies Exceed 40 for Second Consecutive Year, Total Liabilities Reach 25.372 Billion Yen, the Largest in 10 Years – @DIME

News Highlights

In 2023, the number of bankruptcies among medical institutions surpassed 40, marking the second consecutive year in the 40s. Total liabilities reached 25.372 billion yen, the highest in the past decade. This is thought to be a result of the combined impact of the end of COVID-19 support measures, rising prices, and increasing labor costs.

M&A Medical Editorial Department’s Perspective

Exceeding 40 cases for two consecutive years and reaching the highest total liabilities in a decade clearly illustrates the harsh realities of managing medical institutions. In particular, the total liabilities exceeding 25.3 billion yen, the largest in 10 years, suggests that not just cash flow issues, but a significant number of medical institutions have reached a point where continued operation is difficult. In addition to the cessation of public support during the COVID-19 pandemic, rising prices and labor costs are pressuring management. Under these circumstances, M&A becomes a realistic option for medical institutions finding it difficult to continue operating independently. Especially when considering the maintenance of regional healthcare and the continuation of staff employment, consulting with M&A intermediaries and other specialists early on to consider transfer schemes is highly likely to lead to a smoother succession under better terms, and consequently, to the stability of regional healthcare.

Key Issues Highlighted by This News

• The bankruptcy figures exceeding 40 for two consecutive years suggest structural difficulties in the management of medical institutions.
• Total liabilities exceeding 25.3 billion yen, the largest in 10 years, indicate a worsening severity in cases leading to the abandonment of business operations.
• The end of COVID-19 support, rising prices, and soaring labor costs are collectively pressuring management.
• The importance of business succession through M&A is increasing to maintain regional healthcare and secure staff employment.

Practical Questions Arising from This News

• In this situation, would a clinic of our size be a target for M&A?
• We have significant debt; is M&A still possible?
• If we consider business succession rather than closure, what specific procedures are necessary?

If You Feel “Should I Consult Too?”

The increase in bankruptcies and total liabilities suggests that your institution’s management environment may not be an exception. If you have concerns such as “I’m worried about the future as things stand” or “I can’t find a successor,” early M&A consultation can broaden your options. For example, by consulting while your practice is still healthy, the possibility of negotiating the release of the director’s personal guarantees and achieving transfer conditions such as contributing to regional healthcare increases.

M&A Medical (CentralMedience Inc.) supports the business succession of medical corporations, hospitals, and clinics as a Small and Medium Enterprise Agency-certified M&A support institution, with a completely success-fee-based system. Consultations are handled with strict confidentiality. Free consultations are available here.