TT-684 -- Making Hospitals More Commercially Viable, ebiz news from Japan

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, October 28, 2012, Issue No. 684


- What's New -- Making Hospitals More Commercially Viable
- News -- 24% of companies re-evaluate China
- Upcoming Events
- Corrections/Feedback
- Travel Picks -- Utena Beach, Ehime & cormorants in Aichi
- News Credits

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In August, the government announced that it was going to
help stimulate the medical sector by creating new
guidelines to encourage Real Estate Investment Trusts
(REITs) to invest in hospitals, clinics, and similar
medical facilities. To date there are no health care REITs
in Japan, and we imagine that's because the high risks
involved, specifically that there is no recourse for the
REIT if a hospital gets into financial trouble and can't
pay its bills. This is so because by law hospitals can only
be owned and operated by a licenced doctor, meaning that
the REIT is hamstrung if the doctor decides he/she doesn't
want to play ball.

The government says that its new guidelines will clarify
the relationship between a potential REIT and the hospital
owner/management. The guidelines are not yet published, but
according to the Nikkei they will go some way to balancing
rent and security deposit protections for the hospital
operator against the needs of the investing REIT to take
action if the hospital gets into financial trouble. We
imagine this will include the ability for the REIT to bring
in a temporary facility manager, who would be tasked with
turning things around financially, and the ability to sell
the facility to a suitably licenced third-party.

Both arrangements would require the REIT to be more than
just a property investor, which will still hold back many,
but given the amount of investment needed by Japan for aged
care facilities over the next 20 years, there is some
serious money to be made in the sector for the REIT willing
to learn some new skills. Accordingly, we think there will
be a boom in this sector if the guidelines are done right.

Let's see if the Land and Infrastructure and Health and
Welfare Ministries are really serious about helping
cash-strapped doctor-owners to lease instead of buy their

[Continued below...]

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[...Article continues]

Unfortunately, the declining quality of hospitals around
Japan is not just a function of lack of cash and
imaginative ways to return a facility back into the black.
Rather, the sector itself is falling behind
international quality standards, which makes it more
difficult to bring new technologies and treatments to
Japan and therefore new, better-paying customers. Right
now most people avoid hospitals and don't see them as being
worth the investment, instead preferring to suffer in
silence at home. Furthermore, if Japanese hospitals were to
become more internationally competitive, they would be able
to solicit more foreign patients looking to receive
advanced surgery -- something the government has been
trying to promote as medical tourism, but without much
success. Instead, while there is a lot of talk about
looking after foreign patients, the reality is that
Japanese hospitals are woefully unprepared to look after
non-Japanese speakers. Instead, if you're wealthy and want
the best care and handling, Thailand and Malaysia are the
better places to go. They have the multilingual doctors,
the leading edge treatment options, and the international

But that situation is starting to change, because a number
of more commercially advanced hospitals in Japan appear to
be breaking away from the pack.

We recently heard from John Wocher, a senior manager in the
Kameda Medical Center in Chiba. John told us that in 2009,
Kameda became the first hospital in Japan to be accredited
by the Joint Commission International (JCI), a US-based
non-profit accreditation agency. Following Kameda, in 2010,
the NTT Higashi Kanto Medical Center was successfully
accredited, then St. Luke's International Hospital in July
of 2012, and just recently a long term care facility in
Yokohama. Next will be the Shonan Kamakura hospital, and
in 2013 the Aizawa Hospital in Matsumoto City and Seirei
Hamamatsu Hospital in Hamamatsu.

In case you didn't notice, and thanks to the accreditations,
this is a short-list of hospitals with proven procedures
and facilities, and are places that international patients
can have confidence in...

Indeed, the JCI testing covers more more than 300
standards, comprising over 1,100 separate scored measures
of compliance. In Kameda's case, JCI had three
international surveyors in the hospital for five full
days, spending about 120 hours looking into every nook and
cranny of the hospital and evaluating patient quality and
safety from every possible aspect. The testing is
sufficiently tough that St. Luke's in Tsukiji did not pass
the first time around and needed to be re-surveyed to
ensure compliance. But it did eventually pass, which is
saying more than what most Japanese hospitals could.

Wocher told us that getting a JCI accreditation is a kind
of "Michelin" ranking for hospitals. As such, JCI focuses
on only the top 1% to 2% of hospitals worldwide --
obviously important if you're trying to attract wealthy
businesspeople and dignitaries from other nations to come
and get treated here. Interestingly, however, for all the
talk in Japan of medical tourism, the Japan Council on
Quality Health Care (JCQHC), which is a voluntary
accreditation organization that has evaluated and passed
just over 30% of Japanese hospitals (yes, 70% of hospitals
have not passed testing or have not been tested), does NOT
plan to collaborate with JCI. Most likely this is because
MOST of the hospitals in Japan would fail the JCI survey,
which would be embarrassing to all concerned.

... And not particularly confidence inspiring in those of
us living here, either.

...The information janitors/


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+++ NEWS

- Zynga pulling out of Japan
- Mizuho is now top dog in M&A
- 24% of companies re-evaluate China
- LCCs stimulating competition and more tourism
- Terumo subsidiary makes patent claim in USA

=> Zynga pulling out of Japan

Facebook-based games company Zynga has announced that it
is closing its Zynga Japan subsidiary, to reduce costs
while it tries to recover from recent earnings and stock
market set backs. The back story is that Zynga failed to
capitalize on a US$150m investment that Softbank made in
the company back in 2010. As the article we're linking to
states, Zynga could have used Softbank's considerable
mobile content delivery know-how to win a place in the
mobile market. Instead, they left Softbank out in the cold
and now it's not clear whether Softbank even remains as an
investor or not. ***Ed: Our guess is that Softbank is still
in Zynga shares, since they are in no need to hurry out of
an investment that might earn a lot more for them in the
long run.** (Source: TT commentary from, Oct 26,

=> Mizuho is now top dog in M&A

Mizuho Financial Group has overtaken Nomura Holdings as the
top advisor/manager for M&A in Japan, after winning a role
in Softbank's US$20bn bid for Sprint in the USA. Prior to
this deal, Nomura had been top of the advisor tables for
four consecutive years. Bloomberg puts the ranking change
down to clients shying away from the company after the
insider trading scandal came to public attention earlier
this year. Overall, Nomura's profit fell 90% in Q1 as news
of the scandal started to surface. (Source: TT commentary
from, Oct 27, 2012)

=> 24% of companies re-evaluate China

A Reuters corporate survey of 400 companies has found that
24% of Japanese manufacturers in China are re-evaluating
their positions in the country, with 18% looking to
possibly move their production facilities elsewhere.
Further, about 50% of the companies polled said that they
expect lower sales in China. Reuters says that altogether
20,000 Japanese companies have invested about US$1trn into
China in the last 22 years, and employ more than 1.6m
people. ***Ed: China was never a "safe" option, and the
Senkaku's spat is one more point of proof that it is fast
becoming a high risk option.** (Source: TT commentary from, Oct 28, 2012)

=> LCCs stimulating competition and more tourism

Apparently the arrival of JetStar, Peach, and AirAsia in
Japan has had a galvanizing effect on both travel costs and
travel numbers in the last few months. The Nikkei reports
that Skymark is offering a one-way trip to Naha, Okinawa
from November for just JPY10,000, in competition to two LCC
airlines with similar prices. Further, JR West is offering
an JPY18,000 round trip tick from Shin-Osaka to Hakata
(Kyushu), about 2/3 the normal price. JTB reports that it
has sold 20% more trips with JetStar than originally
planned for this Q2 period mainly because the trips are up
to 50% less than charged by conventional airlines. (Source:
TT commentary from, Oct 27, 2012)

=> Terumo subsidiary makes patent claim in USA

As a sign that Japanese companies are getting more
sophisticated about patents and protecting them, medical
devices maker Terumo's US subsidiary, called Harvest
Technology, is suing the ThermoGenesis Corporation of
California for patent infringement concerning cell
generation technology used to produce high-density platelet
rich plasma and other products. (Source: TT commentary from
press release from

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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=> No events this week.



In this section we run comments and corrections submitted
by readers. We encourage you to spot our mistakes and
amplify our points, by email, to

=> No comments or corrections this week



Utena Bathing Resort, Omishima
One of the loveliest beaches in Ehime

The Seto Inland Sea separates the island of Shikoku from
Honshu, the main island of Japan. A chain of islands dots
the sea between Imabari in Ehime, and Onomichi in
Hiroshima, and this route is linked by the Shimanami Kaido,
an expressway with spectacular suspension bridges over the
sea passages.

The last major island on the Ehime side is Omishima. The
island has a rugged coastline with many bays and sandy
coves. One of these beaches rejoices in the grandiose name
Utena Bathing Resort. I confess that as I drove around the
narrow coast road through tiny hamlets and pine scrub, I
snorted with laughter when I came upon the blue sign
pointing to the “resort”. I took the turning and the road
became even narrower. In a few seconds, I was in the car
park, which has space for about 20 cars.

As I walked up to the sea wall to the beautiful circular
inlet, a big bird of prey swooped down from one the pines
on the other side and dived on a fish with a loud splash.
Welcome to the Utena Bathing Resort!

=> Ukai at Inuyama, Aichi
Fishing with the birds

The sun had long gone down, the steep mountains surrounding
the inky river only heightened the blackness. On one of the
hilltops overlooking the wide, lazy river was a castle.
Below it long, narrow boats made their way from upstream
towards the fortress. Surely those in the castle could see
the large steel baskets of fire hanging from the front of
the boats? Indeed they could, and they were no doubt
enjoying the spectacle!

For over 1300 years, the traditional art of Ukai, or
cormorant fishing has been practiced on the rivers of
Japan. Today the practice can only be seen in 5 places
across the nation, and one of the better known is on the
Kiso River, just upstream from the National Treasure listed
Inuyama Castle in Aichi Prefecture, about 30 minutes north
of Nagoya City.

Watching Ukai was a popular pastime amongst feudal lords
and the rich from the 8th to the 19th Centuries. The
practice later gained special support from the Emperor.
These days there are very few people authorized to perform
the traditional fishing practice, and the rarer the art
becomes, the more popular it has become amongst tourists.
Laying claim to have seen Ukai puts one in a class of their
own amongst the Japanese, who look with envy and awe at
anyone having enjoyed the ancient discipline.



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