Under a new compensation scheme beginning in April, compensation for entities operating facilities or providing nursing care services for the elderly will go down, while the amount paid out to service providers providing home care for the elderly and looking after patients with senile dementia will rise. The new compensation scheme also includes funds to enable service providers to raise the monthly pay for care workers by an average ¥12,000 if steps are taken to improve their working conditions. Still, overall compensation will be cut by an average 2.27 percent, not only causing financial difficulties for some operators but also sapping the morale of people working in the field, thereby causing a decline in the quality of services.
The compensation under the public nursing care insurance system is reviewed every third year in principle. It was raised 3 percent for fiscal 2009 through 2011 and 1.2 percent for fiscal 2012 to 2014. The cuts this time represent the government's attempt to put a brake on ballooning expenses for the nation's nursing-care services, which hit ¥10 trillion in fiscal 2014.
Many operators of intensive nursing-care homes for the elderly, known as tokuyo, are expected to suffer losses as the government will cut their basic compensation by about 6 percent — on the grounds that their average profitability is higher than that of small and medium-size businesses in general. According to the tokuyo operator association, roughly 30 percent of tokuyo facilities are operating in the red. If this is true, many of them will likely be financially squeezed by the compensation reduction, raising the possibility that some will close.