FY2025 Deficit Budget Approved for Reporting at June General Meeting – All Japan Hospital Association (AJHA)

News Highlights

The All Japan Hospital Association (AJHA) has approved the reporting of a deficit budget for fiscal year 2025 at its general meeting in June. This situation underscores the importance of early consultation for business succession and M&A among medical institutions. Consulting with experts when signs such as a worsening current ratio or consecutive deficits in operating profit margin appear can broaden options, including negotiating the release of personal guarantees and facilitating succession that considers regional medical care rather than outright closure.

M&A Medical Editorial Department’s Perspective

The news that the AJHA has approved the reporting of its FY2025 deficit budget at the general meeting highlights not only the financial difficulties faced by individual hospitals but also structural challenges within the industry as a whole. In particular, deteriorating financial indicators such as declining operating profit margins and worsening current ratios should be viewed as “precursors” to issues like a lack of successors and physician shortages becoming apparent. If, at this stage, individual medical institutions like “XX Hospital” had proactively considered the possibilities of business succession or M&A in parallel with implementing measures to improve their financial situation, and consulted with experts (M&A intermediaries, tax accountants, lawyers, etc.), it is highly likely that a smooth succession scheme could have been established, allowing the経営者 (management owner) to be released from personal joint and several liability while maintaining the patient base and staff employment. The reporting of a deficit budget suggests that the time to act is no longer “after a problem has occurred,” but rather to capture “precursors to a problem” and take necessary measures.

Points Raised by This News

• The AJHA’s budget report suggests a risk that the deteriorating financial health of individual medical institutions could spread throughout the industry.
• Declining operating profit margins and worsening current ratios should be interpreted as “early warning signs” before successor issues become apparent.
• Negotiating the release of personal joint and several liability is difficult to propose as an option unless the financial situation is still sound.
• To avoid the option of closure, early consideration of succession schemes that also take into account contributions to regional medical care is essential.

Practical Questions Arising from This News

• What specific M&A schemes can be considered after a deficit budget is reported?
• Under what conditions can the release of joint and several liability be negotiated?
• What is the process for business succession to fulfill accountability to patients and staff?

If You Feel “Should I Consult Too?”

If your institution shows signs such as a declining operating profit margin for several consecutive years or a worsening current ratio, it may be a “sign” before issues like a lack of successors or management difficulties become apparent. Consulting with experts at this stage can expand your options for business succession or M&A under more favorable terms, including the release of the director’s personal joint and several liability. We recommend an early consultation to aim for a succession that continues regional medical care, rather than 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 kept strictly confidential. Free consultations are available here.