Japan: What are the challenges facing the second largest healthcare system in the world?

Japan is the world’s third largest economy (based on GDP, current prices) with a GDP of €3320 bn in 2016. The economic growth of the past 5 years has averaged 0.62%. It has the second largest medtech market in the world, valued around €36.9 bn. Its pharma market in 2015 was valued around €66 bn.

A quick introduction to Japan’s macroeconomics and its healthcare organization

The healthcare expenditure in Japan in 2015 was around €380 bn, equivalent to 10.2% of its nominal GDP.

Japan’s healthcare (HC) system is delivered through universal insurance coverage, including services such as illness screenings, infectious disease control and prenatal care. On average, the patient pays 30% of these universal services, and the state the remainder.

As defined by law, hospitals in Japan are not allowed to be managed on a for-profit basis. Japan has one of the highest volumes of hospitals per population, with a total of 7,426 hospitals nationwide, of which 80% are privately owned.

What are the challenges facing the Japanese healthcare system?

Studies reveal that the healthcare system in Japan is highly fragmented, from care-delivery to its funding.

The rapidly ageing population -arguably the most rapidly ageing population in the world- is driving many of the challenges, structural changes, and reforms.

A lack of communication between service providers, patient data and management systems have led to overlapping investments, and opportunities have been missed in regards to technological progress and care delivery.

These and other challenges are:

Ageing society straining HC financing and demanding changes in service infrastructure

  • The most urgent strain and challenge for the healthcare system is the rapidly ageing population, paired with the low birthrate, and stringent immigration control; all contributing to a high imbalance between non-contributing healthcare users and healthy healthcare payers.
  • The large and continuously increasing elderly population requires nursing homes or other long-term care options, demanding a drastic alteration or addition to the current care delivery model.
  • Proposed solutions to this challenge:
    • Clearly delineating acute care beds and long-term care beds in order to focus strengths and resources as appropriate, rather than having inconsistent and or undefined bed functions in general hospitals.
    • Elaborating and expanding domestic care services.
    • Seeking incentives and measures to balance out the unequal distribution of medical professionals across specialisms as well as regions.

Financial sustainability

  • Closely related to the previous challenge of the ageing society, is the matter of funding. Due to the workforce reducing in volume annually, insurance premium incomes are dwindling, whilst medical expenditure is increasing.
  • The Long-Term Care Insurance (2002) was a response to this challenge, yet shortages remain, and debates over the premium rates to be contributed by its members and beneficiaries continue.

Coordination of resources and public HC management

  • The organization of public healthcare resources and the in-house structure/organization of existing facilities could be more efficient and targeted to address the strains of Japan’s current health/sickness profile:
    • Hospital in-stay duration remains very high
    • The high proportion of private care facilities paired with lose regulation is driving supply in unnecessary – though profitable – care sectors (and regions), leaving other less lucrative sectors with bottlenecks.
    • The private ownership of the majority of facilities pushes competition, yet is averse to systemically sharing patient data and cross-facility references to serve the optimization of the patient care path.
  • Supply and demand are not well matched in various sectors and specialties. For example:
    • Hospitals offering highly acute care is around 40%, although the government has calculated that an ideal share would be closer to under 20%.
    • An excessive number of long-term care beds are allocated within hospital settings, rather than in exterior specialized LTC facilities.
    • A remaining deficit in domestic care options for the elderly, LTC patients, etc.

Hospital overcrowding; emergency room availability

  • Since hospitals serve as primary care points, where no reference is required, many patients seek GP attention at emergency rooms, causing extreme overcrowding.
  • Particularly in large cities such as Tokyo, this problem –in extreme cases- has led to patients being rejected from treatment/consultation in as many as 3 different hospitals prior to getting to see a doctor.

Insufficient professionals to meet national quotas

  • The central government has pronounced the required numbers of physicians and nurses for each type of hospital bed, based on the necessary volumes to ensure qualitative care, yet there are not enough professionals in Japan to fill these figures.

Lack of integrating and using IT solutions

  • In 2014, 64% of large hospitals, 23% of medium, 11% of small-sized hospitals, and 20% of clinics used electronic health records.
  • Japan is insufficiently employing electronic data systems and other IT healthcare solutions, in order to facilitate and enhance large-scale data mining and wide-reaching studies on national health patterns, along with suitable solutions and improvements for nationwide healthcare concerns and observations.

Challenges of small to medium sized hospitals

A survey conducted in 2016 of 45 corporate/privately-owned hospitals, with 40-100 beds, used for integrated community care systems, revealed the following:

  • 80% of respondents reported a shortage of staff, 51% reported a deterioration of the buildings, and 33% reported declining patient numbers.
  • Despite government efforts to create a more integrated community care HC management, only 42% of the surveyed hospitals had structured in-home medical services.

The issues that were reported the least, and seen as the least problematic, were:

  • Short and long-term funding
  • Longer average hospital stay
  • Revenue decreases from drug sales

For further quantitative and qualitative information on the Japanese healthcare system and the macroeconomic climate, please look into our Business intelligence platform or order the Japanese Healthcare Scan incl. Surgical Procedures Volumes (all specialisms) – product license containing volumes of 984 surgical procedures in 13 specialisms.
Other licenses to our business intelligence platform depending on your needs are also available.

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