Medical Institutions’ Closures and Dissolutions Exceed 700 in FY2023, a Record High – Nikkei Medical

News Highlights

Closures and dissolutions of medical institutions in FY2023 exceeded 700, marking a record high. According to Nikkei Medical, while closing a clinic incurs costs of several million yen, the typical compensation for business succession is generally between 0.5 to 1.5 times the annual sales. For clinics without beds, succession cases are often completed within 4 to 10 months from consultation to agreement, suggesting that early consultation can lead to both continued staff employment and patient care.

Perspective from M&A Medical Editorial Department

The figure of over 700 medical institutions closing or dissolving in FY2023 signifies more than just an increasing trend; it indicates a turning point in the industry structure. The specific mention of a 4-10 month succession period for clinics without beds is particularly important. This supports the on-the-ground reality in M&A brokerage that choosing to “close down” is not always the optimal solution, considering the costs and impact on stakeholders. For instance, closing a clinic with annual sales in the hundreds of millions of yen not only incurs closure costs of several million yen but also halts its contribution to regional healthcare. On the other hand, by utilizing appropriate M&A schemes (e.g., business transfer, stock transfer) and consulting with experts early on, it is possible to achieve compensation of 0.5 to 1.5 times annual sales while maintaining staff employment and ensuring continuous patient care. This number clearly demonstrates that “early consultation” not only resolves succession issues but also leads to the continuation of regional healthcare and maximizes the financial returns for the selling management.

Key Discussion Points from This News

• The record high of over 700 cases suggests an increase in medical institutions exploring options beyond closure due to management difficulties.
• The comparison between closure costs (several million yen) and business succession compensation (0.5-1.5 times annual sales) concretely illustrates the economic benefits of M&A.
• Practical data showing a 4-10 month succession period for clinics without beds indicates the feasibility of planned business succession.
• The ability to maintain both staff employment and patient care emphasizes that M&A can serve as a tool for “business continuation” rather than just a “sale.”

Practical Questions Arising from This News

• I am considering closing my clinic, but what are the specific costs involved?
• Based on my clinic’s annual sales, what level of compensation can I expect from business succession?
• I don’t want my staff to leave, but is it truly possible to maintain their employment through M&A?

If You’re Thinking “Should I Consult?”

If the news of a record number of closures and dissolutions has made you concerned about your clinic’s future, we encourage you to start by “consulting.” While closure involves unavoidable costs and impacts regional healthcare, early consultation with M&A brokerage specialists can open possibilities for business succession under better terms, such as receiving compensation of 0.5 to 1.5 times annual sales while ensuring staff employment and continued patient care. Considering the succession period of 4-10 months, it is crucial to organize your current situation and explore your options promptly.

M&A Medical (CentralMedience Inc.) supports business succession for medical corporations, hospitals, and clinics as a certified M&A support institution by the Small and Medium Enterprise Agency, operating on a full success fee basis. Consultations are handled with strict confidentiality. Free consultations here.