Medical Institutions’ Bankruptcies, Closures, and Dissolutions Hit Record High for Second Consecutive Year (Teikoku Databank) – Yahoo! News

News Highlights

According to a survey by Teikoku Databank, the number of bankruptcies, closures, and dissolutions of medical institutions in 2023 surpassed previous records, marking the second consecutive year of a new high. This highlights the severe operating environment for medical facilities. This issue provides important insights for strategizing medical M&A and business succession, focusing on the importance of early succession consultations, the possibility of negotiating the release of personal guarantees, and considerations for regional healthcare.

M&A Medical Editorial Department’s Perspective

The record-breaking increase in bankruptcies, closures, and dissolutions of medical institutions in 2023, as announced by Teikoku Databank, signifies more than just a numerical rise. In particular, factors such as recent price hikes, rising labor costs, and the stringency of post-pandemic medical fee revisions are thought to be having a combined impact, leading even medical institutions that have maintained profitability to show signs of deteriorating current ratios and consecutive years of operating losses. For example, even outside major urban centers, the increasing cost of recruitment is straining management amidst severe shortages of doctors and nurses in regional areas. In such circumstances, negotiating the release of personal guarantees held by the clinic directors is only possible through M&A while the business foundation is still sound. By transferring the facility to a healthy medical institution rather than closing it, M&A offers an option to maintain the patient base and staff employment, thereby preventing the cessation of regional healthcare services.

Points Raised by This News

• The number of bankruptcies, closures, and dissolutions of medical institutions in 2023 set a new record high, breaking the previous record for the second consecutive year.
• Price hikes, rising labor costs, and stringent medical fee revisions are likely pressuring management.
• Executing M&A while the business is still sound creates opportunities to negotiate the release of the director’s personal guarantees.
• Choosing succession over closure allows for the continuation of services for patients, staff, and regional healthcare.

Practical Questions Arising from This News

• Specifically, what financial indicators should deteriorate before M&A consideration should begin?
• To what extent of scale or profitability can a medical institution negotiate the release of personal guarantees?
• If a successor cannot be found, are there options other than closure?

If You Feel “Should I Consult Too?”

If your institution shows signs of a deteriorating current ratio or consecutive years of operating losses, early consultation regarding M&A is extremely important. Especially when the clinic director’s personal guarantees remain, exploring succession schemes in collaboration with experts before the business deteriorates further can increase the possibility of a business succession under favorable terms, including the release of personal guarantees. From the perspective of contributing to regional healthcare, considering a succession that serves as a platform for patients and staff, rather than closing the facility, is highly valuable.

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