Goodwill Group Inc. is considering selling subsidiary Comsn Inc., its home nursing-care service firm involved in a certification fraud scandal, to a nongroup company in the same industrial sector, Goodwill Chairman Masahiro Origuchi said Saturday.
Origuchi made the remarks after staffing agency Goodwill said Friday it will freeze its plan to hand over Comsn’s business to one of its group companies.
The plan, announced after the government decided to terminate the operating licenses of most Comsn nursing-care centers over the scandal, came under fire as an apparent move to dodge government punishment.
Origuchi said it is desirable to sell Comsn’s entire nationwide network of nursing-care centers to a nongroup company.
“It is important to maintain a safety net,” he said, emphasizing the need to continue to provide nursing-care services to existing Comsn customers.
Asked if he has a specific buyer in mind, Origuchi said it was “totally undecided,” but he added that five or six companies have contacted him, including a broker specializing in corporate acquisitions.
The scandal has become a big social problem as the termination of the licenses will affect around 1,600 centers nationwide serving an estimated 60,000 elderly people.
The Health, Labor and Welfare Ministry said Wednesday it will terminate the operating licenses of nearly 80 percent of the nursing-care centers run by Comsn.
The firm obtained some of the licenses for nursing-care service operators certified under a public insurance program through fraudulent applications, including those with an inflated number of employees, the ministry said.
On Thursday, Comsn signed a basic agreement with group company NSS Corp. to hand over its whole business, including 24,000 employees, but the ministry ordered Comsn to freeze the accord, saying it was too cozy.
Shinji Asonuma, head of the ministry’s health and welfare bureau for the elderly, told a news conference Friday that the freeze of the handover was a “step forward.”
The ministry is expected to allow Goodwill to hand over Comsn’s business to a nongroup firm.
Established in 1988, Comsn was operating 2,081 centers across Japan as of the end of May, offering at-home nursing care and paid nursing care facilities.
But nursing industry watchers pointed out the sale of Comsn to a third party may not proceed as smoothly as Goodwill expects.
Because service fees under the nursing insurance system are subject to government regulation, care providers are struggling to generate profit, they said.
In fact, the fee for each visit to an elderly person’s home by caregivers was reduced when the nursing insurance system was revised in April 2006. Therefore, the profitability of each home visit is decreasing despite Japan’s growing elderly population, they said.
Expanding the scale of business would be one solution, but the nursing industry’s labor-intensive structure means there is already a shortage of caregivers, they said.
Against this backdrop, Comsn’s earnings projection for its business year ending this month shows it will incur a pretax loss of 2 billion yen.
The ongoing certification fraud scandal hit Comsn just as it was focusing on more profitable areas, such as running condominium-style nursing homes targeting wealthy seniors who depend less on home visits subsidized by national nursing insurance.
With Comsn’s public image severely hurt by the scandal, however, a further business deterioration is inevitable, analysts said.
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