Materials for the 397th Labor Policy Council, Employment Security Subcommittee, Labor Supply and Demand System Division

The materials (scheduled for release on August 27, 2026) from the “397th Labor Policy Council, Employment Security Subcommittee, Labor Supply and Demand System Division” are presumed to indicate future trends in Japan’s labor supply and demand. The shortage of healthcare professionals such as doctors and nurses in the medical field directly leads to succession issues for medical institutions, once again highlighting the importance of third-party succession to avoid closures and bankruptcies. Early preparation by directors and clinic/hospital administrators from around age 60, spanning 5 to 10 years, along with the utilization of specialized advisors focused on the healthcare industry, will be key to smooth business succession.

Tightening Supply and Demand for Healthcare Professionals and Succession Challenges Implied by 2026 Labor Policy Council Materials

The materials from the “397th Labor Policy Council, Employment Security Subcommittee, Labor Supply and Demand System Division” are presumed to highlight structural changes in Japan’s labor supply and demand from 2026 onwards, particularly the difficulty in securing human resources in the medical and nursing care sectors. The regional maldistribution and aging of specialists such as doctors, nurses, and medical technicians are already prominent, and if this trend accelerates, it is highly likely that maintaining the operational structure of medical institutions itself will become difficult.

This tightening of labor supply and demand directly leads to succession issues in medical institutions. Particularly in small to medium-sized clinics and hospitals that form the core of local communities, generational change for retiring directors and clinic/hospital administrators becomes difficult, raising concerns about an increase in cases where closure or business cessation is forced. This is an undeniable challenge when aiming to promote regional medical concepts and build integrated community care systems.

In medical corporations with equity interests, the issue of evaluating and settling equity interests accompanying a change in the director becomes complicated, compounded by the shortage of successors. Furthermore, even in medical corporations without equity interests, the continuity of corporate operations is questioned, concerning matters such as securing and replacing board members and employees, and handling endowments. The worsening labor supply and demand will be a significant factor that could affect the transfer price and conditions in future M&A transactions.

Third-Party Succession Strategy and Business Value Enhancement: A 5-10 Year Plan from Age 60

The timeframe of “directors and clinic/hospital administrators preparing over a 5-10 year span from around age 60,” as highlighted in the news summary, is extremely important as a realistic preparation period for healthcare M&A. Utilizing this period, strategic initiatives are required not just to find a successor, but to enhance the business value of the medical institution itself.

Specifically, one should aim to stabilize and improve the revenue base by closely monitoring trends in medical fee revisions, reviewing facility standards, introducing new medical departments, or strengthening the specialization of existing clinical areas. For instance, strengthening specific functions or transitioning to a medical care system that meets local needs can be attractive factors for buyers and an effective means to advance M&A negotiations favorably.

Furthermore, the establishment of human resources and labor management systems is indispensable. Considering the future labor supply and demand indicated by the discussions of the Labor Policy Council, measures to improve retention rates for doctors and nurses, and responses to work style reforms (such as upper limits on doctors’ working hours) will be items emphasized by the acquiring party during M&A due diligence. These improvements are presumed to enhance the sustainability of medical institutions and, consequently, contribute to an increase in the transfer price.

M&A Challenges Unique to Medical Corporations and the Significance of Utilizing Expert Advisors

M&A for medical corporations requires specialized knowledge and experience that differs from M&A for general operating companies. In addition to compliance with laws such as the Medical Care Act, Medical Practitioners’ Act, and Pharmaceuticals and Medical Devices Act, a wide range of expertise is required, including the medical fee system, facility standards, succession of licenses and permits, and financial evaluations unique to medical corporation accounting.

Particularly, aspects such as the type of medical corporation (with/without equity interests), procedures for changing members/directors, handling of endowments, and optimization of capital gains tax carry the risk of unforeseen troubles or economic losses if proceeded without specialized knowledge. For example, the appropriate valuation of equity interests in medical corporations with equity interests, and the associated issues of gift tax, inheritance tax, and income tax, significantly influence the selection of the M&A scheme.

“Support organizations specializing in the healthcare industry” can comprehensively evaluate these complex factors and provide consistent support, including proposing optimal M&A schemes for both sellers and buyers, supporting due diligence, and acting as agents for administrative procedures. To achieve M&A that continues to support regional healthcare in the future, anticipating changes in labor supply and demand from 2026 onwards, the strategic utilization of expert advisors will be indispensable.

If you are considering the succession or M&A of a medical corporation or clinic, please utilize our free quick assessment or individual consultation (strict confidentiality, fully success-fee based).