A closer look at the Healthcare System in Japan – Part 1

Japan is the third largest economy in the world behind the USA and China. Japan has some of the best vital statistics in the world, including the lowest infant mortality rate and highest adult life expectancy. However, a rapidly ageing population has burdened the healthcare system both in terms of funding and facilities and is of great concern for the Japanese government.

The hospitals

Japan is the home to some of the world’s most famous and accomplished doctors. Japanese hospital performance for high level medical treatment is generally competitive with that of the US.

In Japan, medical services are provided either through regional/national public hospitals or through private hospitals/clinics, and patients have universal access to any facility, though hospitals tend to charge more to those patients without a referral. The costs in Japan tend to be quite low compared to those in other developed countries, but utilization rates are much higher. Most clinics do not require reservations and same day appointments are the rule rather than the exception. Japanese patients favour medical technology such as CT scans and MRIs, and they receive MRIs at a per capita rate 8 times higher than the British and twice as high as Americans.

Due to large numbers of people visiting hospitals for relatively minor problems, shortage of medical resources can be an issue in some regions. The problem has become a wide concern in Japan, particularly in Tokyo. Emergency care services are inundated with patients seeking routine treatments, and chronic disease management and preventative care are not so good. There is also a GP shortage in some areas, particularly in the cities. The system is stretched to the limit and opens to over-medication and over-testing with low out-of-pocket expenses incurred by patients. However, surgery rates are low, as operations are culturally considered invasive procedures and there is no financial incentive for surgeons, since they are paid fixed salaries.

Japan has fewer physicians per capita than most other Organization for Economic Co-operation and Development (OECD) countries. Despite an overall increase of 3,500-4,500 physicians per year, there seems to be shortages of physicians, particularly obstetricians, gynaecologists and paediatricians. There is a relatively stable number of other health care professionals. The low number of healthcare workers per hospital bed, particularly physicians, is a considerable issue. In 2008, the number of practicing physicians was 2.2 per 1000 population, which was almost the same as that in the U.S.

The number of acute care beds per 1000 total population was 8.1, which was higher than in other countries such as the U.S. (2.7). One exceptional feature of the Japanese health care system is the number of hospital beds and the length of the average stay, which are both about 4 times longer than the OECD average. One reason is the role of hospitals in providing long-term care. Even after excluding long-term care beds, the number of acute-care hospital beds remains doubles the OECD average Medical policy.

The health insurance

The healthcare in Japan provides healthcare services, including screening examinations, prenatal care and infectious disease control. The patient accepts responsibility for 30% of these costs while the government pays the remaining 70%. Payment for personal medical services is offered through a universal health care insurance system that provides relative equality of access, with fees set by a government committee. All residents of Japan are required by law to have health insurance coverage. People without insurance through employers can participate in a national health insurance program administered by local governments. Patients are free to select physicians or facilities of their choice and cannot be denied coverage. Hospitals, by law, must be run as non-profit and be managed by physicians.

There are a total of 8 health insurance systems in Japan and they can be divided into two categories: Employees’ Health Insurance and National Health Insurance. National Health Insurance is generally reserved for self-employed people and students. Public health insurance covers most citizens/residents and the system pays 70% or more of medical and prescription drug costs; as mentioned, the remainder is covered by the patient. The monthly insurance premium is paid per household and scaled to annual income. Supplementary private health insurance is available only to cover the co-payments or non-covered costs.

Medical fees are strictly regulated by the government to keep them affordable. Depending on the family income and the age of the insured, patients are responsible for paying 10%, 20% or 30% of medical fees (co-payment), whilst the government pays the remaining fee.

Monthly thresholds are set for each household. Depending on income and age, medical fees exceeding the threshold are waived or reimbursed by the government. Uninsured patients are responsible for paying 100% of their medical fees, but fees are waived for low-income households receiving a government subsidy. Fees are also waived for homeless people when they are brought to the hospital by ambulance.

The healthcare sector in Japan is heavily focused on elderly care, due to the country having the largest geriatric population in the world. The policy to reduce the length of hospital stay and shift the treatment to home care centers is one of the major priorities in Japan’s healthcare reform. The healthcare authorities in Japan provide less co-pay for the treatment of patients aged 75 years and above.

In the second blog in this series we will have a closer look at the medical devices market in Japan and recent reforms in national healthcare policies.

Want to learn more about our services in the AsiaPac region?

Leave your details here and we will contact you within the same day.

About Zhen Nie

Zhen is in charge of Asian Operations at TforG, with more than 6 years of experience in project management and business consulting for local and international companies. She works in a continuous basis with an extensive network of Key Opinion Leaders and Health Policy makers in Asian markets. She graduated at the University of Antwerp and has a Master Degree in Finance. Tel: +32 3 201 64 24 Mobile: +32 485 89 98 84 Email: z.nie@tforg.com