Hirokatsu Kinoshita Comments on Hospital Bankruptcies: “It’s Only Natural for Management to Become Unsustainable” – Sponichi Annex

News Highlights

Hirokatsu Kinoshita points out that the recent increase in hospital bankruptcies is a natural consequence, stating, “It’s only natural for management to become unsustainable.” According to a Sponichi report, he emphasizes the importance of early consultation with experts, negotiating the release of personal guarantees, and the significance of choosing business succession over closure out of consideration for regional healthcare. He suggests that consulting with experts as soon as management indicators such as a deteriorating current ratio and consecutive years of operating losses begin to worsen can maximize options and lead to a smooth succession.

M&A Medical Editorial Department’s Perspective

Hirokatsu Kinoshita’s remarks once again highlight the harsh realities of medical institution management. In particular, his reference to specific management indicators like a deteriorating current ratio and consecutive years of operating losses aligns with the practical experience in M&A brokerage. Considering M&A before these indicators worsen, that is, while the institution is still “healthy,” is key to favorably negotiating terms such as the release of the director’s personal guarantees. For example, in a regional clinic, M&A was executed before the issues of lack of successor and debt burden became apparent. The director was freed from personal guarantees, and local residents continued to receive the same medical services. Closure has a significant impact on patients, staff, and the local community. As Mr. Kinoshita points out, business succession is not merely a transfer of management rights but also involves the continuation of regional healthcare. This perspective is indispensable in M&A brokerage, not just for closing a deal but also for structuring schemes from the viewpoint of contributing to regional healthcare.

Points Raised by This News

• The “deteriorating current ratio” and “consecutive years of operating losses” specifically pointed out by Mr. Kinoshita serve as concrete triggers for considering M&A.
• Practical advice that M&A while the institution is “healthy” creates room for negotiating the release of the director’s personal guarantees.
• Choosing business succession over closure contributes to regional healthcare by maintaining the patient base and staff employment.
• Mr. Kinoshita’s remarks urge medical institution managers to seek early consultation with experts when signs of management deterioration appear.

Practical Questions Arising from This News

• Specifically, at what point of deterioration in management indicators should M&A be considered?
• Under what management conditions is the release of personal guarantees negotiable?
• If a successor cannot be found and closure is unavoidable, what methods can be used to minimize the impact on regional healthcare?

If You Feel “Should I Consult Too?”

Managers and successors who feel “this is relevant to us too” upon hearing Mr. Kinoshita’s remarks should first start by objectively assessing their current management indicators (current ratio, operating profit margin, debt situation, etc.). If you have concerns about these indicators or are worried about a future lack of successors, consulting with an expert early on can significantly broaden your options. In particular, the possibility of negotiating terms such as the release of personal guarantees and contributions to regional healthcare increases. Early consultation is crucial to avoid the worst-case scenario of closure.

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 full success fee basis. Consultations are accepted with strict confidentiality. Free consultation here