Successor Shortage Leads to Clinic Closures; Ryukyu Bank and Chubu Medical Association Sign Agreement on Medical Practice Succession – Okinawa Times

News Highlights

Ryukyu Bank and the Okinawa Prefectural Chubu District Medical Association have signed a collaboration agreement on medical practice succession to prevent the closure of medical institutions due to a lack of successors. While closing a clinic incurs costs of several million yen, the general benchmark for medical practice succession is a consideration of 0.5 to 1.5 times the annual revenue. Succession of clinics without beds often completes within a standard period of 4 to 10 months from consultation to agreement, and early consultation can facilitate the continued employment of staff and the ongoing treatment of patients.

M&A Medical Editorial Department’s Perspective

The concrete steps being taken through the collaboration of regional financial institutions and medical associations, organizations with public character, to address the challenges of medical practice succession in the Chubu region of Okinawa Prefecture are noteworthy for healthcare institution managers nationwide. Specifically, the presentation of closure costs as a concrete figure of “several million yen” versus the guideline for succession consideration of “0.5 to 1.5 times annual revenue” provides extremely important insights for managers comparing the economic disadvantages of closure with the potential for business continuation through succession. The fact that the succession of clinics without beds can potentially be completed within a standard period of “4 to 10 months” suggests that there is a realistic timeframe to consider options other than closure when facing a successor shortage. Early consultation with specialists is key to achieving a smooth succession that accommodates both staff and patients.

Points Highlighted by This News

• Collaboration between regionally focused organizations, the Chubu District Medical Association and Ryukyu Bank, to support medical practice succession.
• Presentation of economic decision-making factors by comparing closure costs (several million yen) with succession consideration (0.5 to 1.5 times annual revenue).
• Indication that the succession period for clinics without beds can be completed in a relatively short period of 4 to 10 months.
• Emphasis on concrete benefits such as supporting the continued employment of staff and ongoing patient treatment through early consultation.

Practical Questions Arising from This News

• What are the specific succession support schemes and financing conditions offered by Ryukyu Bank in collaboration with the Chubu District Medical Association?
• What is the basis for calculating the consideration of 0.5 to 1.5 times annual revenue in the succession of clinics without beds?
• What are the approximate costs associated with choosing to close a clinic (e.g., business closure procedures, asset disposal)?

If You Feel “Should I Consult Too?”

Healthcare institution managers facing a successor shortage and considering closure should first start by concretely comparing the economic gains and losses of “closure” versus “succession.” As in the Okinawa case, while there is a benchmark for succession consideration of 0.5 to 1.5 times annual revenue, closure is said to incur costs of several million yen. For clinics without beds, information suggests succession may be possible within 4 to 10 months. Considering closure as a last resort, it is strongly recommended to first consult with specialists to explore options for business continuation and minimizing the impact on staff and patients.

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