January

According to a survey by Tokyo Shoko Research, the number of bankruptcies among “medical institutions” in the January-September 2026 period reached a record high of 59 cases, with business difficulties becoming particularly evident for local clinics and dental offices. This figure suggests an increasing trend of small and medium-sized medical institutions facing business failure due to a combination of factors such as soaring prices, rising labor costs, and the impact of medical fee revisions. Consequently, the importance of early business improvement and consideration of business succession or M&A is further increasing.

Structural Challenges for Small and Medium-Sized Medical Institutions Indicated by Record Bankruptcies

The record 59 bankruptcies of medical institutions in the January-September 2026 period highlight the severe business environment faced particularly by “local clinics and dental offices.” It is presumed that multiple factors are intertwined in this background. Firstly, soaring prices and persistently high energy costs are pushing up fixed expenses such as medical material costs and utility fees, putting pressure on management. Furthermore, chronic labor shortages are creating upward pressure on personnel costs for nurses and medical administrative staff, and it is believed that the revenue increases from medical fee revisions are currently insufficient to absorb these rising costs. Especially in cases where the positive revision margin of medical fees falls below the inflation rate, it can lead to a de facto decline in profitability. Small and medium-sized clinics and dental offices tend to find it more difficult to respond to such changes in the external environment because economies of scale, like those seen in large hospitals, are less effective, and management resources are limited. In many cases, the clinic director’s personal joint guarantee is involved, meaning bankruptcy carries the risk of directly leading to personal bankruptcy.

M&A Strategies for Avoiding Bankruptcy and Ensuring Business Continuity

The increase in the number of bankruptcies suggests that options, including M&A, become significantly limited once business conditions deteriorate. As highlighted in the news, consulting with a specialist should be considered as soon as “deterioration in the current ratio or consecutive deficits in medical operating profit margins” are observed. By considering M&A while in a sound financial state, not only can the sale price be maximized, but also the negotiation leverage for releasing the clinic director’s personal joint guarantee expands. Depending on the scheme, such as an business transfer scheme, conversion to a medical corporation without equity interests, or succession to a medical corporation with a fund contribution system, it may be possible to release personal guarantees and mitigate management risks. Furthermore, choosing succession instead of closure carries social significance by protecting the patient base cultivated over many years, safeguarding the employment of staff who have worked together, and continuing to contribute to local healthcare. For buyers, M&A that allows for the succession of existing patient bases, facilities, and staff can be a lower-risk and more efficient opportunity for business expansion compared to starting a new practice.

Practical Considerations for M&A Depending on Medical Corporation Type

When proceeding with M&A for medical institutions, practical considerations vary significantly depending on the type of medical corporation involved. For instance, in the case of a “medical corporation with equity interests,” which can no longer be newly established, the valuation and transfer of equity interests are central to the M&A. However, a high valuation of equity interests can lead to capital gains tax or, if the buyer is an individual, the risk of deemed gift tax. Conversely, for “medical corporations without equity interests” or “medical corporations with a fund contribution system,” there is no concept of equity interests, so the main procedures involve changing the director, obtaining approval at a general meeting of members, and the return of funds (in the case of a fund contribution system). If a private clinic has not been incorporated as a medical corporation, common schemes include performing a business transfer simultaneously with the establishment of a medical corporation, or the buyer establishing a medical corporation and then acquiring the business through a business transfer. Understanding these legal differences and selecting the appropriate scheme is essential for a smooth M&A. Specialists play a crucial role in formulating the optimal M&A strategy by considering these complex legal, tax, and financial aspects.

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