In the first half of 2025, Japan saw a record 35 bankruptcies among medical institutions, signaling a growing crisis in the healthcare sector. The financial deterioration of hospitals and dental clinics, which form the backbone of community healthcare, has worsened amid rising costs, labor shortages, and stagnant reimbursement rates. Fundamental reforms are urgently needed to prevent the collapse of regional medical systems.
- The Background Behind the Record-High Number of Medical Institution Bankruptcies
- Why Hospitals and Dental Clinics Are Hit the Hardest
- The Limitations of the Medical Fee System and Growing Financial Pressure
- Labor Shortages and the Risk of Healthcare Collapse
- Structural Reform Is Key to Rebuilding Medical Management
- Conclusion
The Background Behind the Record-High Number of Medical Institution Bankruptcies
In the first half of 2025, 35 medical institutions went bankrupt, marking the highest figure on record. Compared to the same period last year, this represents an increase of approximately 40%, with small and medium-sized facilities suffering the most. The primary causes include rising operational costs, a shortage of healthcare professionals, and a growing gap between inflation and stagnant medical reimbursement rates.
| Main Cause of Bankruptcy | Description | Impact Level |
|---|---|---|
| Rising energy and material costs | Electricity and equipment maintenance costs increased by 20–30% | ★★★★★ |
| Rising labor expenses | Higher wages due to severe staffing shortages | ★★★★☆ |
| Low medical fee revisions | Government revisions not keeping pace with inflation | ★★★★★ |
| Interest rate increases | Larger repayment burdens on long-term loans | ★★★☆☆ |
| Decrease in patient numbers | Population decline and patient restraint | ★★★★☆ |
In rural areas, the decline in population directly translates into fewer patients, reducing revenue and making it difficult to cover fixed costs. As a result, more facilities are closing their doors, especially where the managing physicians are aging without successors.
Why Hospitals and Dental Clinics Are Hit the Hardest
The most striking trend in the current wave of bankruptcies is the sharp increase among hospitals and dental clinics. Hospitals bear high fixed costs due to inpatient facilities, while dental clinics rely heavily on out-of-pocket procedures and are therefore vulnerable to economic fluctuations.
| Type of Institution | Bankruptcies (First Half of 2025) | Year-on-Year Change | Main Cause |
|---|---|---|---|
| Hospitals | 10 | +43% | Costly equipment investments, staffing shortages |
| Dental Clinics | 15 | +50% | Reliance on private treatments, market oversaturation |
| Clinics | 10 | +30% | Patient decline, lack of successors |
For hospitals, the drop in inpatient occupancy rates has been particularly damaging, as more patients shift to home-based or outpatient care.
For dental clinics, an excess of new openings has led to fierce competition, and many are suffering as patients avoid expensive cosmetic or elective treatments during economic uncertainty.
Furthermore, the lack of generational transition among practitioners means that when older doctors retire or face red ink, many simply close their practices altogether, creating medical deserts in some regions.
The Limitations of the Medical Fee System and Growing Financial Pressure
The current medical reimbursement system has become detached from economic realities. In 2024, the official fee revision was +0.88%, while inflation rose by about 3%, effectively cutting real income for medical providers. This mismatch is eroding hospital profits year after year.
| Fiscal Year | Fee Revision Rate | Inflation Rate | Real Difference |
|---|---|---|---|
| 2023 | +0.43% | +2.8% | -2.4% |
| 2024 | +0.88% | +3.1% | -2.2% |
| 2025 (Estimate) | +0.7% | +2.5% | -1.8% |
This cumulative loss has driven many hospitals into chronic deficits.
Rising energy costs have added further strain. For facilities operating high-output equipment such as MRIs and CT scanners, electricity bills have climbed by hundreds of thousands of yen, prompting concerns that “even performing medical services no longer yields profit.”
Labor Shortages and the Risk of Healthcare Collapse
Japan’s healthcare system is facing an acute shortage of medical professionals, including nurses, technicians, and physicians. Recruitment efforts in rural areas often fail, and many institutions are forced to operate with one employee performing multiple roles, leading to overwork and burnout.
| Occupation | Job-Opening Ratio | Key Challenges | Impact |
|---|---|---|---|
| Nurses | 2.9x | Heavy night shifts, poor work-life balance | Rising turnover |
| Medical Technicians | 2.4x | Regional wage gaps | Equipment underuse |
| Physicians | 1.8x | Avoidance of rural posts, overwork | Restricted operations |
As staffing levels fall, many hospitals are reducing clinic hours or closing certain departments, limiting patient access to essential care. In rural regions, the retirement of senior doctors without successors has led to the disappearance of entire clinics, leaving local residents without medical options.
In urban areas, burnout and mental stress among doctors are becoming increasingly common, making workforce reform and retention a top priority for ensuring sustainable healthcare.
Structural Reform Is Key to Rebuilding Medical Management
Preventing further bankruptcies requires comprehensive structural reform, not just cost-cutting. The focus must shift toward building a sustainable, community-based healthcare model through collaboration, digital transformation, and financial resilience.
| Reform Initiative | Description | Expected Effect |
|---|---|---|
| Regional Collaboration | Sharing patient data and treatment roles among institutions | Reduced duplication and resource efficiency |
| Digital Transformation | Introducing electronic records and online consultations | Lower administrative and labor costs |
| Financial Management Expertise | Employing healthcare management specialists | Improved financial stability |
| Public Subsidy Utilization | Maximizing access to government grants | Enhanced liquidity and investment capacity |
Local governments and medical associations will play a vital role in coordinating these efforts. The goal should be “regional healthcare management” — a system where communities, rather than individual institutions, collectively sustain healthcare services.
Conclusion
The rise in medical bankruptcies is not merely a financial issue but a social emergency that could destabilize regional healthcare infrastructure. The disappearance of hospitals and clinics means fewer treatment options and growing healthcare inequality.
Moving forward, cooperation between governments, local authorities, and the private sector will be essential to safeguard access to care. Comprehensive strategies covering financial aid, workforce retention, and system reform must be prioritized.
To restore public trust and ensure that patients can continue receiving medical attention when needed, Japan must embrace shared responsibility and long-term investment in healthcare sustainability. Now is the time to act — to protect the healthcare system that supports every citizen.
