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Japan’s hospitals weigh overseas branches, medical tourism in search for profit

by

Staff Writer

Mount Fuji, medieval castles and amusement parks are among the most popular destinations for tourists coming to Japan. Now the government wants a visit to a clinic for a full-body medical checkup or a meeting with a nutritionist to become part of the itinerary.

The 2015 Japan Revitalization Strategy, a government policy strategy announced last month, says the health care sector — which has long been heavily regulated and shielded from pressures of capitalism — should be turned into a moneymaker and even a driver of national economic growth.

“Health care and nursing care fields are facing a big turning point,” declares the document, adopted by the Cabinet on June 30. “Medical needs are diversifying on the back of rise in public awareness on health and preventive medicine, while demand for health care services has gone up rapidly due to population aging. … We need to think about how to revitalize health care as an industry and raise its productivity.”

In particular, the government wants to boost medical tourism, or the acceptance of foreign tourists at hospitals and clinics in Japan, and help Japanese medical institutions branch out overseas, especially in emerging economies where medical needs are surging.

But experts are divided on both the need for — and the ability of — Japanese hospitals to drastically increase the number of foreign patients, either in Japan or abroad.

Japan has been long famed for its egalitarian, universal health care, whereby everyone has access to affordable care. Hospitals and doctors can charge only the amount set by the government for medical procedures and prescriptions. Unlike in some countries in the West, there is no geographic restriction on the clinics patients can visit, though this sometimes results in hours of waiting for a quick consultation with a doctor.

Doctors and hospitals should change their mindsets and look overseas for business, said Koji Fujimoto, a counselor for the Cabinet Secretariat’s Office of Health Care Policy.

Formerly a bureaucrat at the Ministry of Economy, Trade and Industry, Fujimoto said the current health insurance scheme is not sustainable, as 40 percent of its annual ¥39 trillion in costs are financed through taxes. Also, universal health care, introduced in 1961, is out of touch with the medical needs of today, he said.

For example, while more patients are aging and in need of longtime management for chronic conditions, many hospitals still focus on emergency care, he said, noting that there is an excess of acute-stage care in regions such as Kansai and Hokkaido.

But if hospitals start cutting back on acute-stage care, Japan as a whole would lose opportunities to maintain its medical standards in the field. It needs to export its health care overseas to make up for falling demand at home, Fujimoto argued.

“Domestic pharmaceutical companies are already reluctant to develop drugs for children because the market is shrinking,” he said. “If we keep going as it is there will be even fewer drugs for children. But if we decide to be the center of pediatric care in Asia, opportunities would open up. We need to look outside Japan to protect health care at home.”

Fujimoto said the government will thus aim to increase the number of sites abroad where Japanese hospitals will offer services as well as the number of hospitals in Japan where foreign medical tourists would be accepted.

For outbound services, projects to build hospitals are currently under way in several countries, including Russia, Cambodia, India and China.

Kitahara International Hospital in Hachioji, western Tokyo, is building an emergency care unit in Phnom Penh with help from state-backed investment fund Innovation Network Corp. of Japan and the Japan International Cooperation Agency. It has also secured funding from engineering firm JGC Corp., and plans to begin operations there in February.

To boost inbound medical demand, meanwhile, the government plans to accredit companies that match foreign patients with domestic hospitals and offer a range of liaison services, such as making arrangements for patients and providing medical translations for them.

Within a year or so, the government will also create a list of hospitals that are willing to accept medical tourists from abroad. Some 300 hospitals in Japan have already expressed interest in being accredited as what has been tentatively called the “Japan International Hospital,” Fujimoto said.

Such patients can be charged much higher fees than domestic patients covered by public health insurance, and increasing their numbers would allow hospitals to make a profit, he added.

The government believes Japan’s health care industry can potentially access ¥20 trillion of the global market for medical services, assuming 5 percent of the affluent class around the world would buy health care services and equipment from Japan.

While medical tourism in Japan is still in its infancy, some hospitals are ahead of others in accepting patients from abroad. In May 2013, St. Luke’s International Hospital created a new department to deal exclusively with non-Japanese patients. The hospital’s international department has five full-time and three part-time staffers, who provide on-site translations and handle all the paperwork in foreign languages, such as settling insurance claims.

Last year, St. Luke’s handled 21,000 visits by non-Japanese patients, including longtime residents, who account for around 3 percent of total visits. The hospital hopes to increase the ratio to 10 percent, said Asami Takeno of the department.

At St. Luke’s main hospital in Tokyo’s Tsukiji district, all signs are in four languages, with English shown most prominently at the top, followed by Japanese, Chinese and Korean. The hospital also has a growing number of patients from Russia, especially from the eastern cities of Vladivostok and Khabarovsk, said Pavel Kovalenko, an executive medical coordinator at the hospital.

“Many Russian patients want to speak Russian when they receive care and have felt frustrated not being able to communicate their medical needs well in Japan,” he said.

Kovalenko added that Japan’s health care has a good public image in Russia, helped by the image of Japanese automakers and other manufacturing companies, which are known for their rigorous quality control.

‘Too little, too late’

But some experts are skeptical. John Wocher, executive vice president at Kameda Medical Center in Kamogawa, Chiba Prefecture, said Japan’s push for medical tourism is “too little, too late.”

Wocher said the nation’s stakeholders, including government agencies, hospitals and doctors, are in disarray over basic stances on medical tourism. The Japan Medical Association, comprised mostly of doctors in private practice and whose members have huge influence over the Liberal Democratic Party-led government policy, has long been opposed to expansion of medical tourism, on grounds it could erode universal health care. The association is known as a vote-gathering machine for the LDP.

“Although the prime minister’s heart is in the right place, and the METI sees this as a potential growth engine for Japan’s economy, I don’t think this is very well supported by the Japan Hospital Association, the Japan Medical Association or any of the hospitals that might receive foreign patients,” Wocher said. “They don’t seem to be aligned.”

In addition, compared with established medical tourism destinations such as Singapore, South Korea, Thailand and India, Japanese hospitals lack price competitiveness due to their high personnel costs, he said. He added that they also have too few staff capable of dealing with patients in foreign languages or a system to deal with the often rigorous demands of medical travelers.

“Foreign patients are high-maintenance patients,” he said. “They take a lot more time. Most of the medical tourism patients that have come to any site are probably unhappy with health care in countries they are coming from … (so) they become demanding patients when they go overseas, expecting that you will fix all the evils they were unable to overcome.”

Toshiki Mano, a professor at Tama University’s health care and nursing care solutions center, said some of Japan’s services are unique and marketable to overseas patients, such as ningen dokku (comprehensive medical checkup) and detailed instructions for diabetes patients by doctors and nutritionists. He said regenerative medicine could also prove popular, including that using iPS cells, an emerging science that is currently in clinical trials.

But outbound efforts would have their limits, as most hospitals are too small to compete with counterparts in foreign capitals, Mano said.

“Prime Minister Shinzo Abe said at the Davos meeting last year that he wants to create large-scale health care companies in Japan, like the Mayo Clinic in the U.S.,” he said.

“The Mayo Clinic rakes in an annual revenue of ¥1 trillion, and there are many other big hospitals like that in the U.S. Japan’s largest private hospital group, Tokushukai, probably has revenue of less than ¥400 billion. I doubt Japanese hospitals can compete with such big institutions overseas.”

  • Stephen Kent

    Keep the financial profit motive out of healthcare, that’s what I say.

  • Sara2586d

    >

  • Joe Kurosu, M.D.

    Not sure I understand how treating medical tourists is going to help sustain the national health insurance scheme…

  • Steve Jackman

    Another article here in The Japan Times published at the same time says that the Japanese government will allow 5 foreign doctors to practice in 4 Tokyo area hospitals for the sole purpose of treating foreign patients (presumably, because Japanese doctors cannot properly treat foreigners). So, if Japanese doctors are not qualified to treat foreigners in Japan, what makes the Japanese government think that inbound medical tourism or exporting Japanese medical services to other countries are viable options? Japan is indeed a strange country.