Despite 88.1% Bed Occupancy Rate, Huge Deficits… An Abnormal Situation Where Pursuing “Correct Medicine” Worsens Deficits Ranking of “Functional Evaluation Coefficient II” Reflecting Each Hospital’s Efforts – Toyo Keizai Online

News Highlights

The Toyo Keizai Online article points out the current situation where many hospitals are facing huge deficits despite a high bed occupancy rate of 88.1%. It particularly focuses on the paradoxical situation where pursuing “correct medicine” leads to expanding deficits, and also mentions the ranking of “Functional Evaluation Coefficient II,” which reflects the efforts of each hospital. The news highlights suggest points for M&A and business succession, such as early consultation when the current ratio deteriorates or continuous deficits are observed, negotiation for the release of personal guarantees, and consideration for regional medical care by choosing succession over closure.

Perspective from M&A Medical Editorial Department

While a bed occupancy rate of 88.1% is generally perceived as “smooth management,” this article highlights the structural issues of the medical fee system and the dilemma where the pursuit of medical quality burdens management. The statement that deficits expand the more “correct medicine” is practiced suggests the reality under the DPC (Diagnosis Procedure Combination) system, where addressing severe or complex diseases does not necessarily translate directly into revenue. The ranking of the Functional Evaluation Coefficient II suggests that hospitals’ efforts may not necessarily lead to financial improvement. To bridge this gap, business strategies that incorporate M&A for management efficiency, securing new revenue streams, or accurately grasping the trends of medical fee revisions are essential. It is likely time to consider fundamental management improvements through business succession or M&A before deficits become normalized.

Points Indicated by This News

• The paradoxical structure of “correct medicine” where deficits expand despite high occupancy rates highlights the challenges of the medical fee system.
• The current situation where efforts in the Functional Evaluation Coefficient II are difficult to reflect financially prompts a fundamental review of hospital management.
• Behind the huge deficits may lie issues with the profitability of addressing severe and complex diseases under the DPC system.
• To avoid closure and maintain regional medical care, early consideration of business succession/M&A leads to stability for patients and staff.

Practical Questions Arising from This News

• With a high bed occupancy rate but deficits, what specific medical practices are unprofitable?
• For hospitals with deficits even in the top rankings of the Functional Evaluation Coefficient II, what M&A schemes can lead to improvement?
• Is there room for negotiation to release personal guarantees even after deficits have become severe?

If You Feel “Should I Consult Too?”

The situation described in this article, “huge deficits despite an 88.1% occupancy rate,” is a management risk that could occur at your institution as well. Especially if you feel that your deficits are expanding as a result of pursuing “correct medicine” in your daily practice, you may be facing the limits of management improvement within the framework of the medical fee system. To avoid the option of closure, take the first step towards enhancing your institution’s sustainability by sharing your current financial situation and future outlook with experts and exploring the possibilities for management improvement through M&A or business succession.

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