2015 health care outlook Japan

2015 health care
outlook
Japan
By developed-world standards, Japan spent a modest
amount on health care in 2013, at an estimated $480 billion
or 9.8 percent of gross domestic product (GDP).2 Driven by
a rapidly aging population and increasing chronic diseases,
health care spending is expected to rise by an average of
three percent a year in 2014-18, reaching 10 percent of GDP
by 2018. Health care spending will continue to outstrip GDP
growth, exerting further pressure on Japan’s budget deficit
and the national debt.3
Despite a number of governmentdriven initiatives to control social
security spending, the gap between
expenditure and premium income
is expected to continue to widen. It
is estimated that, in 2013, premium
income only covered 56 percent
of social security expenditure —
$622 billion income for $1.1 trillion)
expenditure.6
Estimated health care expenditure:
$480 billion in 2013
Health care as a share of GDP:
9.8 percent in 20131
Japan is the third-largest spender on health care in the
world after the U.S. and China, and the majority of health
care spending is publically funded.4 Every Japanese citizen,
including the unemployed, is required to participate in the
National Health Insurance (NHI) program. Despite a number
of government-driven initiatives to control social security
spending, the gap between expenditure and premium
income is expected to continue to widen. It is estimated
that, in 2013, premium income only covered 56 percent of
the social security expenditure — $622 billion income for
$1.1 trillion) expenditure (Figure 1).5
To safeguard the health care system’s viability, the Japanese
government is proceeding with social security system
reform, including re-allocating hospital beds, shifting from
hospital- to community-based care delivery, and raising the
consumption tax rate to close the gap in the social security
budget.
In Japan, the majority of medical facilities are privately
owned, run by small-sized medical corporations that are
usually established by individual physicians, and provide
fee-for-service-based care. Medical fees are controlled by
the government and revised in every even year. As part of its
cost-containment strategy, the government is discussing the
introduction of a holding company scheme that integrates
fragmented medical corporations to realize optimal
allocation of hospital beds and increase buying power
through group purchasing.
Industry Report, Healthcare: Japan, The Economist Intelligence Unit, June 2014
Ibid
3
Ibid
4
Industry Report, Healthcare: Japan, The Economist Intelligence Unit, June 2014
5
Ministry of Finance, Japanese Public Finance Fact Sheet, February 2014
6
Ministry of Finance, Japanese Public Finance Fact Sheet, February 2014
1
2
Figure 1:
Future projection of national
healthcare expenditure
Gap between social security expenditure
and premium income
Trillion JPY
Trillion JPY
99.9
100
Social security expenditure
80
75.0
72.1
69.4
67.5
64.7
60.5
56.8
57.4
56.1
56.9 55.4
55.0 55.0
56.2
55.9
54.8
54.5
52.7
47.2
54.6 54.7
51.2
44.9
53.8
47.5
42.5
45.9
40.7
44.3
38.6
42.5
35.7
39.5
33.6
35.1
32.0
32.3
30.1
30.5
27.6
29.2
24.8
27.6
53.8
33.1
30.1
30
27.0
25
20.6
20
15
Source: Ministry of Finance
Hospital facilities are another focus for cost-containment
efforts. Japan reportedly has too many acute hospitals —
which are more costly than nursing-type hospitals — and
this may be contributing to climbing health care costs. There
may be a government push for smaller acute hospitals to
switch to long-term care facilities within the next few years.
Also, there are increasing efforts by payers to control health
care spending by promoting healthier lifestyles through
various enrollee incentives.
To address government and payer current cost-control
initiatives, health care providers in Japan may need to
reconsider their current business models. Expanding
their service portfolio to cover the disease lifecycle, from
5
25
20
20
20
15
10
0
20
19
75
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
20
09
0
10
20
Premium income
05
20
20
22.0
25.1
19.8
23.7
22.5
16.9
20.1
14.5
18.6
11.8
16.5
10
15.0
13.3
11.3
9.5
35
40.6
37.4
00
30
CAGR
4.5%
40
20
40
50.1
45.7
CAGR
2.3%
45
95
50
50
61.8
53.8
55
19
60
CAGR
3.3%
Actual
Forecast
No data available
60
90
70
GAP
65
19
90
94.1
91.4
87.8 89.1
85.9
84.3
83.6
81.4
78.1
Source: The Ministry of Health, Labour and Welfare
preventive care to nursing care, could be an option.
This approach is also consistent with the concept of the
government’s “21st-century type social security scheme”
shift from hospital- to community-based care delivery.
Utilizing big data to streamline health care operations could
also be a key to increasing efficiency and reducing costs.
The Japanese government is going to provide a social
security number, the so-called My Number, to citizens and
allow utilization of health data by health care providers. If
this scheme is realized, medical facilities, as well as nursing
care providers, can share/access patients’ medical records
and eliminate unnecessary testing and/or medications.
Yoritomo Wada
Health Care Sector Leader
Deloitte Japan
+81 80 34652755
yoritomo.wada@tohmatsu.co.jp
To learn more about the global trends and issues impacting the health care sector, please visit our 2015 global health care
sector outlook at www.deloitte.com/healthcareoutlook.
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