TT-494 -- Hospitals in Crisis, ebiz news from Japan

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A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, November 16, 2008 Issue No. 494


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Late last Friday, the family an 82-year old woman living in
Koriyama, Fukushima, called in for emergency transport to
hospital. She was suffering from what could have been food
poisoning, and the Koriyama region fire department
dispatched an ambulance to pick her up. She was in a bad
way and the ambulance service called the nearest hospital
to gain admission. They said "no" on the basis that they
didn't have a suitable doctor on duty.

The ambulance service then called another four hospitals,
driving en route from one to the other, and again each
declined to accept the stricken women. Finally, after nine
separate calls to various hospitals, the Fukushima Medical
University Hospital, 40km and 60 minutes away, accepted
her. However, by this time she had gone into a coma, and
she died shortly after arriving at the facility.

This is not the first time that a shortage of doctors has
caused a patient in an ambulance to die after a significant
delay caused by having to chase available hospitals. In
fact, according to the Fire and Disaster Management Agency,
there were 14,387 cases in 2007 of seriously ill patients
being turned away from hospitals. In one case it took
ambulance coordinators 50 calls to find an open hospital,
and in 65 cases patients were ambulance-bound for more than
2 1/2 hours before gaining admittance.

The severe lack of hospital emergency availability came to
public attention with a highly publicized case in August of
2007, when a 38-year old 6-months pregnant woman from
Nara miscarried inside the ambulance after operators tried
frantically for THREE HOURS to find a hospital that would
take her. The nearest hospital was just 3 minutes from her
home and if they had accepted her, Japan would be one
baby better off.

To cap it all, the ambulance crashed into a minivan on its
way to the 9th hospital...

Clearly Japan's medical systems is in crisis. Is there a
shortage of doctors, or other reasons that are causing
people are dying while trying to find a hospital bed?

[Continued below...]

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[...Article continues]

The Fire Agency has said that their ambulances transported
4.89m patients in 2006, up 51% from 1996 -- a pretty good
effort. Out the patients served, there has been a 108%
increase in people aged 65 or older, and yet as a
proportion of the population the elderly have increased by
a much lower figure of 40%. As a result, a director from
the Health Ministry came up with the lame comment: "I do
not think elderly people have become that weak in just over
10 years," implying that ambulance services are being
mis-used by older people.

However, the official in question probably didn't think too
hard before putting his foot into his mouth, because not
only did the overall population increase for that decade,
but the absolute number of elderly (and especially those
aged over 100) substantially increased, too. An increase of
5m elderly is certainly going to result in an extra
500,000 or so ambulance call-outs, because even though as a
percentage of the population they are over represented, the
fact is that it is this age segment which is most likely to
need emergency services.

Furthermore, even though there has been an increase in
ambulance usage by older people, the problem isn't a
shortage of ambulances (as far as we know, none has been
reported), but rather of beds and doctors once the
ambulance arrives.

So what is behind the current medical crisis? Let's look at
some possible reasons.

1. Slow (and not very smart) government

Firstly, is there a shortage of doctors? Actually, in the
period between 1996 and 2006, the number of doctors in
Japan increased from 241,000 to 278,000 people, an increase
of 15%, and so there are young people entering the
profession. But this comprises only 3,500 or so fresh
graduates a year, and compared to other developed
countries, such as Germany or France, Japan still has 40%
fewer doctors per head of population.

Since 1982, the government has been maintaining that Japan
has too many doctors, and has restricted the output of
them by making the exams unreasonably difficult. Currently,
and at least until next year, it is easier to pass the
exam to become a DNA research scientist than it is to
become general medical doctor. Only in July of this year,
after the recent spate of death-in-ambulance incidents has
the Health Ministry admitted that maybe they got it wrong.
Now they plan to increase the student intake from next
year. The intake will increase by degrees, until a target
of 50% more doctors graduating is reached in 10 years time.

Another problem is mis-allocation of resources. The biggest
problem currently is a shortage of doctors in key areas
such as rural postings and also in specialties such as
obstetrics, trauma response, and surgery. New recruits are
assiduously avoiding these regions and areas of practice
because of the long hours, increase in malpractice
lawsuits, and low salaries. The government has finally
figured that some deregulation they enacted in 2002 led to
students preferring big city hospitals to intern at, and
says that from next year, interns will have to go where
they are sent -- which you can be sure will be the
farthest-flung reaches of the country.

2. Long hours

NHK carried a news item several weeks back of a typical
area hospital doctor's work day. Unbelievably, the doctor
featured had just worked 30 hours straight when he was
interviewed, something he did several times a week. After
the interview he headed out for the evening, not to go back
home or go drinking with his buddies, but instead to travel to
another hospital, where he is covering for them during the
evening shift! It's hard to imagine how doctors can expect
to even function properly let alone heal others when
they're suffering from such severe lack of sleep.

It's not surprising then, that doctors are leaving
hospitals at a high rate, and female doctors in particular
are not returning to hospitals after they have a baby.
Clearly, more intelligent rostering and part-time work
opportunities need to be made available, as they are in
other advanced countries. Indeed, we know of several young
med students who were originally going to go into general
medicine, but who on getting advice from parents and
friends have now switched to research instead, where they
can still have a social life and enjoy better pay.

3. Lousy pay

Next, is the ongoing attitude that somehow doctors are
expected to serve their fellow man without thought to self
or family. It would be great if doctors were specially bred
to think this way, however, in this modern and connected
world, such ideals harken back to the socialist age in Japan
after the war, not now. Instead, talented health
professionals are being tempted by the glamor of the
research world, especially now that Japan is winning more
Nobel prizes; or the clean, no-fuss business of opthmology
and other non-internal medicine; or the sheer cash rewards
of working for an international pharmaceutical company or
doing cosmetic surgery.

The government controls the nation's "medical currency" for
all health services delivered around the nation -- either
by salary or by volume of patients seen. This means that
doctors with their own clinics can push customers through
at a high rate, prescribe lots of medicine, and get a
fairly decent wage. Meanwhile, doctors working in a public
hospital make far less and have no control over the hours
they have to work.

Apparently the average salary for a physician with their
own clinic is around JPY25.3m, while a hospital-based
doctor makes only JPY14.1m. Not surprisingly, this has led
to the number of hospital doctors dropping from 64.6% of
the physician population in 1998 down to 60.6% in 2006.
Also not surprisingly, in those sectors which are not
regulated, such as cosmetic surgery, a doctor can expect to
make a very respectable JPY40m a year.

4. Drug dependence and weak private sector

It is interesting to learn that Japan has one of the OECD's
lowest rates of hospital usage per head of population, at
around 8.3%, and one of the highest numbers of in-patient
beds per person -- three times more than the USA. We guess
this means that your average Japanese is very healthy, and
that the state has made sure that there are plenty of
hospital beds. What is abnormal, however, is the hospital
staffing ratio once a bed is occupied. In Japan, it is
extremely low, the lowest in the OECD in fact. Further, the
average length of stay at 50.5 days is extremely high,
about 5 times longer than in the USA.

The conclusions we can draw from these statistics are: a)
there is a lack of medical staff to attend hospital
patients, and so people get less doctor time and take
longer to receive and thus respond to focused treatment,
and b) the current government-controlled medical payments
system rewards doctors for dispensing more medicine and
this is probably resulting in patients being kept in their
beds longer.

On making hospitals more efficient, yes, there needs to be
a quest for better cost control, especially since the demand
for medical services will soar in the future with the aging
population. However, reducing the number of staff is the
wrong area to focus on. Instead, the addiction to medicine
consumption needs more urgent attention. This myopic
attention to the "hard" aspects of something, in this case
medicine and machines, instead of respecting and paying for
"soft" skills is a hoary old nut for the Japanese and
something they need to get past. The situation could be
dramatically improved by recognizing technical and
execution skills with proper pay awards, and by introducing
ongoing physician education courses without having to
people overseas.

Lastly, because of the state commitment to providing equal
health care, to the point of obsession, the private sector
in Japan is extremely stunted. This means that people who
want high-quality specialty care and are willing to pay
for it invariably have to go overseas to do so -- or buy
one of those multi-million dollar apartments in the towers
next to Saint Luke's hospital in Tsukiji. Also, there are
the restrictions on hospital ownership to actual
physicians, as if a doctor is a better facilities manager
than a properly qualified hospital administration manager.
Both of these factors ensure there is very little
competitive activity, and consequently a lack of the
benefits that private investment and price competition
might bring.

We agree that having the state underwrite the medical
system is a good idea, and certainly is a good reason for
paying taxes. But state over-control in any industry
inevitably leads to a loss of human incentive and an
eventual break down of the system. Socialism as a national
policy found this out in the 1980's and 1990's. We wonder
why the Health Ministry is taking so long to learn the
same lesson?


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+++ NEWS

- Japan to allow dual nationality?
- MKS to substantially curtail investments
- Pensioners turn to crime
- Food survey finds domestic sources preferred
- Regional banks in trouble

-> Japan to allow dual nationality?

An innocuous article in the Japan Times this week may bring
hope to thousands of international families. Apparently LDP
member Taro Kono has submitted a proposal to change the
Nationality Law so as to let children of international
couples keep their nationality for both countries.
Currently kids have to decide by the age of 20 and are
compelled to choose between either their Japanese or
foreign parent's nationality by 22. The proposal will only
allow kids of mixed parentage be dual nationals. Apparently
it will also force Japanese who hold other nationalities to
report to the authorities. Currently, Japanese can
conveniently "forget" to report such events as acquiring a
second nationality and generally there are no major
repercussions (although theoretically they can be stripped
of their Japanese citizenship). The new proposal also
allows for foreigners to be able to become Japanese
nationals without having to give up their original
nationality...! ***Ed: Hmmm, is this for real? Or just
another trial balloon?** (Source: TT commentary from, Nov 14, 2008)

-> MKS to substantially curtail investments

You know that things have to be bad in the investment
community when one of the most respected pioneers of
Japan's private equity fund management business says that
it is cutting its holdings by 60%, and selling off what it
can. The company is MKS, and it has said it will also
stop investing in new businesses. MKS manages two funds
cashed up with about JPY60bn (US$627m). Apparently the main
reason for the decision to cut back was the difficulty of
finding funding for new deals and the cost of operations.
Thus, the company plans to cut its team from 15 to 10
people by next January. ***Ed: We're sorry to hear this.
Founder Nobuo Matsuki is well known in Tokyo for being a
savvy and fair investor, but he is also usually well ahead
of the curve. Therefore, if he is substantially getting out
of the private equity business, then this does not bode
well for other PE funds in Japan.** (Source: TT commentary
from, Nov 13, 2008)

-> Pensioners turn to crime

While it is hard to imagine an 79-year old mugging two
pedestrians by slashing them with a knife, this is what
happened back in August. As a result, the Ministry of
Justice has compiled a report which finds that crime by
people older then 65 doubled between 2003 and 2008, with
48,605 offences being reported. Shoplifting, pickpocketing,
and general theft account for 80% of the crime. University
researchers are saying that the trend is because of rising
poverty amongst older people -- due to government cutbacks
and rising food and energy prices. There are now 1.1m
households in Japan on welfare, out of a total of 49m
households in all. ***Ed: The trend for elderly crime is so
marked that apparently 18.9% of all crime in Japan is now
committed by someone over 60. This of course is not so
surprising when you realize that 20% of the population is
also aged 65 or more.** (Source:, Nov 13,

-> Food survey finds domestic sources preferred

Perhaps it's not surprising, especially amongst old people
who were brought up on natto and tofu anyway, but a
government survey on consumer preferences for food has
found that 89% of respondents prefer to buy products that
were produced domestically in Japan. While it is likely
that the poll was politically loaded, the China-based food
scandals earlier this year have no doubt impacted the
confidence of consumers to buy food grown in that country.
A full 89.1% of respondents said food safety was important
to them, followed by 56.7% stating quality, and 51.6%
saying freshness. Respondents were allowed multiple
answers. Only 0.5% of pollees said they preferred imported
food. ***Ed: We wonder which country those 25 people were
from?** (Source: TT commentary from, Nov 15,

-> Regional banks in trouble

While we may all have the impression of Japan's banks being
in better health than foreign ones, it depends just where
those banks are located. In the case of regional banks,
given that the economies outside the major cities have been
in trouble almost continuously since the bust of the
1990's, there is not a lot of fat saved up to live off. The
Nikkei reports that the regional banks have been hard hit
by the recent downturn, and that half of all 15 banks in
Tohoku, in the North of Honshu, reported net losses for the
first half of the financial year. Further to the south, 3
of the 5 Hokuriku banks posted losses as well. One bank in
Kyushu, the Bank of Fukuoka, said that its bad-loan cleanup
costs will soar 12 times the rate this time last year.
(Source: TT commentary from, Nov 15, 2008)

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.

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