Most Japanese citizens have public health insurance which covers a minimum of 70 percent of medical costs. Citizens pay between 10 and 30 percent of the medical fees depending on their income with the government subsidizing the remaining costs for low-income households. Japanese citizens can freely choose from any medical care institutions in the country for their treatments and services. Close to 70 percent of the hospitals in Japan are private and governed by medical corporations. Japan’s care system is therefore unique because on one hand it is publicly financed, and the fees are heavily regulated. On the other hand, hospitals are mainly privately owned and need to ‘compete’ for patients to financially break even or make a profit to survive long term.
The current financial status of hospitals in Japan is precarious, as revealed in surveys conducted in 2019. Close to 43 percent of hospitals experienced a loss of operating income for the fiscal year 2018. Additionally, cases of hospitals that went bankrupt were reported throughout the last decade. The annual medical care expenditure of the nation, nevertheless, has shown an upward trend in recent years, reaching around 340 thousand Japanese yen in fiscal 2017.
Japan is also continuously facing a shortage of qualified medical personnel, leading to a severe workload for hospital staff. Due to the aging demographic and projected increase in hospital admissions, this labor shortage is expected to further progress in the coming decade. The Japanese government has been promoting community-based health care as a possible solution. The general intention is that various types of medical facilities form community health information networks to collaborate and share the treatment of patients nationwide. Furthermore, the government also proposed an expansion in the use of artificial intelligence (AI), big data, and medical robots.
The coronavirus disease outbreak (COVID-19) had an additional negative financial impact on hospitals in Japan, with a strong decline in the number of outpatients reported in April 2020.