Internationally, Japan is considered to have a balanced healthcare and medical care system, including a universal health insurance system and medical care, welfare, and nursing care facility. The first author has been working in primary care (PC) medicine and community healthcare for years in Tokushima Prefecture [1] (Figure 1). We have covered medical care, welfare, and nursing care through hospitals, clinics, and nursing homes, and also involvement in emergency and disaster medicine with operating a helicopter year-round. Recently, urgent issues have arisen in medical administration, and then some perspectives are described in this article.

Figure 1: The Map of South-West part of Japan.

Healthcare in Japan has a long history and has been managed by the Ministry of Health, Labour and Welfare (MHLW) [2]. Among developed countries worldwide, Japan's population is aging rapidly, which requires for a variety of solving measures. Within this context, the Welfare and Medical Service Agency (WAM) plays a key role [3], which was established in 2003 as an independent administrative institution under the jurisdiction of the MHLW. WAM provides funding and management support to facilities and businesses related to social welfare and healthcare, including welfare projects for elderly and the disabled, and childcare support.

WAM's main roles can be summarized in four areas: i) Financing, ii) Management support and information provision, iii) Grant programs, and iv) Research and policy support [3]. Concerning the details of the last v) Item, research has been conducted on issues such as the declining birth-rate, aging population and the establishment of a community-based comprehensive care system. Obtained results have been used to help formulate policies at the national and local levels. Consequently, WAM functions as both a financial institution and a research/support organization, and has supported the development of social welfare and medical care in the light of not only funding but also know-how and data. As a result, it contributes to the provision of sustainable and equitable welfare and medical care services throughout Japan.

The WAM survey compiled a report titled "Annual Trends in Hospital Medical Profit Margins"[4]. The report includes the results of a survey of hospitals’ operating profit margins in Japan, as shown in Figure 2. This data covers a 20-year period from 2005 to 2024. Hospitals are classified into three categories: i) Chronic care (convalescent hospitals, green), ii) Psychiatric care (psychiatric hospitals, blue), and iii) Acute care (general hospitals, red). Looking at the trends in the three graphs, the management situation for medical profit margins of hospitals in Japan has been deteriorating. Among 3 groups, acute care (general hospitals) will see a remarkable acute decline to -2.3% level as below zero in fiscal year 2023.

The hospital medical profit margins will be evaluated in detail in Figure 2. Maximum/minimum with difference of 3 groups are 7.2/0.9 with 6.3, 4.7/-0.9 with 5.6, 3.7/-2.3 with 6.0. Therefore, while it would be desirable to recover these 6.0 differences, it is unlikely that the government will suddenly raise medical fees. The changing data during 2011-2019 would be evaluated. Three groups had showed almost stable results for 9 years, and their changing patterns were similar. In particular, acute care moved roughly in parallel with the other two, from 3.4% to 1.2%. An astonishing data were found in 2020, where 3 groups showed sudden drop from 5.7% to 2.1%, 2.4% to 0.4%, and 1.2% to -2.3%, respectively.

Figure 2: Annual Trends in Hospital’s Operating Profit Margins.

Necessary revision has been performed by MHLW so far, such as drug pricing [5]. In the previous time, simultaneous revision of medical and nursing care services were conducted. Then, medical fee revisions were scheduled to coincide with the 2025 problem. It was 2025 that medical and nursing care services had probably reached the limits from financial point of view. However, the speculation was not correct due to COVID-19 pandemic and others. Social and economic changes cannot be expected for rising prices, rise in labor costs and other related influences. In 2024, 68% of private hospitals in Japan showed running at a loss (red). During 2024 to 2025, the proportion of the hospital with monthly deficits has increased, where most hospitals are now almost in the red. Although public hospitals can receive financial budget from the government, private hospitals receive no assistance. About half of these hospitals seem to have difficulty obtaining bank loans, leading to a rapid decline in the number of medical institutions in near future.

In Houetsu hospital in Tokushima, we have provided secondary emergency care for long. Since COVID-19 pandemic, the number of patients visiting at night and outside of business hours has been actually decreased. However, doctors, nurses, and other professionals remain and work on duty 24 hours as usual. Therefore, we have been worried about hospital financial difficulties. From mentioned above, various hospitals in Japan will have the risk for protecting and maintaining local medical care, regardless of public and/or private sectors.

The meeting of Japan municipal hospital association (JMHA) was held in July 17, 2025, and reported the crucial current situation in Japan [6]. Large survey of municipal hospitals nationwide for fiscal year 2024 have been in progress and the interim results were reported. Remarkable abnormal states are found in almost hospitals, where 85% are in the red for operating profits, and 95% are in the red for medical revenues. Since hospital management will become unsustainable if this continues, JMHA will strongly request significant upward revision of medical fees in fiscal year 2026, as well as management support through mid-year revisions during this fiscal year (2025).

Japan's medical care has shifted from an initial focus on hospitalization to a gradual shift toward home-based care. Demand for hospitalized care in Japan is expected to peak by 2040, with medical expenses in 2040 projected to reach approximately 89 trillion Japanese yen (about 600 billion US dollars), more than 1.6 times of 2023 [7]. While Japan is currently an aging society, its overall population is actually declining. Even if the current generation of elderly people in their late 70s (baby boomers) increases slightly, the elderly population will decline rapidly in the future, resulting in a less elderly with requiring care [8]. The population of Tokushima prefecture had 832 thousands in 1995, which was decreased to 679 thousands in 2025 with equivalent to 81.6% for 30 years (one generation). Table 1 shows the changes in population in Tokushima, and presumed population would be 481 thousands in 2050.

Table 1: Population in Tokushima.

From mentioned above, the population of Tokushima will decline rapidly in the future, where the population decline across Japan will follow a similar curve 30 years later. Then, population decline and age structure also affect medical care. Japan is unique in that it boasts a world-class "Universal Health Insurance System." Even within the long-term care insurance system, intergenerational support exists, with both first-generation (40-64 years old) and second-generation (65 years old and older) people supporting elderly care. However, with the population expected to decline rapidly in the future, particularly among those aged 15-64, both hospital medical care and institutional nursing care will face challenges. Clinical efficacy of the long-term care service in Japan was evaluated by cohort study from all Japan (n=332,766) [9]. As a result, similar data were found in urban-rural evaluation of Japan.

Japan is a society with a declining population, and a useful report was found on hospital sustainability and regional medical planning in this situation [10]. The number of hospitals / hospital beds in Japanese medical corporations showed reduction from 5,670 / 848,174 in 2017 to 5,486 / 814,462 in 2021, respectively. In order to measure hospital market concentration in all prefectures, the Herfindahl-Hirschman Index (HHI) was evaluated. As a result, horizontal and vertical integration among medical corporation facilities revealed a gradual upward tendency. It means both integration revealed gradual progression, and it will contribute to adequate policymaking and optimal health care services in Japan.

In conclusion, all hospitals, clinics (public and private) and other medical institutions must carefully consider all changing situation in medical field. They include profit margins, occupancy rates, patient numbers, bed allocation, medical care provided, and nursing care provided. Unless each hospital examines its condition and characteristics, or solves the problem, it will be difficult to survive in the current medical world.

In conclusion, all hospitals, clinics (public and private) and other medical institutions must carefully consider all changing situation in medical field. They include profit margins, occupancy rates, patient numbers, bed allocation, medical care provided, and nursing care provided. Unless each hospital examines its condition and characteristics, or solves the problem, it will be difficult to survive in the current medical world.

Conflict of Interest

The authors have read and approved the final version of the manuscript. The authors have no conflicts of interest to declare.

Funding

There was no funding received for this paper.

1. Houetsu hospital.
2. Ministry of Health, Labour and Welfare (MHLW).
3. Welfare and Medical Service Agency (WAM).
4. Hospital management situation. 2025.
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