Nursing industry gets hit by bankruptcies

In Japan, bankruptcies of nursing care providers for the elderly hit their highest-ever level in the first half of 2024.

Credit-reporting agency Tokyo Shoko Research says 81 care providers went bankrupt across Japan between January and June.

The figure is the highest since recordkeeping began in 2000, and is significantly larger than the previous record of 58 set in 2020.

Graph of number of bankruptcy cases

Forty of the failed businesses provided home visit nursing care, while 25 offered day care services or short-stay care. Nine were residential nursing homes. All three sectors reported the highest number of failures for this period.

What is behind the record number of bankruptcies?

Some 80 percent of the nursing care providers, 64 in all, cited low profitability as the cause.

Tokyo Shoko Research attributes the failures to an acute labor shortage and a surge in utility and other prices.

It notes that, in particular, a number of the businesses got caught in a negative cycle of failing to secure enough workers due to poor business performance.

Facility partly suspends services

One nursing care facility has decided to suspend part of its services due to the continuing fierce financial difficulties it faces.

Day care service facility in Atsugi City

The operator of a day care service in Atsugi City, Kanagawa Prefecture, where elderly people improve their muscle strength and do walking training, says that the number of users is on the rise.

Inside the day care service facility

But the company says monthly utility costs have increased by more than 140,000 yen, or more than 860 dollars.

Furthermore, in spring this year, the government revised its standards for compensation to facilities, and Atsugi City has reduced the grants it pays to facilities for providing care to people who need low levels of nursing care. As a result, it is often not profitable for facilities to continue accepting these customers.

The company has decided to suspend accepting some users from the end of this month.

Yabe Yutaka

Yabe Yutaka, 65 years old, has numbness in his legs. He has been going to this facility once a week, but he was told he can no longer use it. Yabe said that he is looking for another place that will accept him. He is worried about whether he will be able to continue moving his body, and maintain his physical strength.

Saito Makoto

Saito Makoto is the president of the company operating the facility. He says he has no choice but to make a tough decision. He added that many other elderly people use the facility, and that he thinks it is his responsibility to do his best to ensure they do not lose a place to go to, by preventing the facility from going bankrupt.

Expert: Home care and day care services face a difficult situation

Professor Hayasaka Toshihisa at Toyo University is well-versed in the management of nursing care providers. He says that nursing care grants alone can't cover various costs, such as personnel wages and utility bills.

Professor Hayasaka says that individual management efforts at small nursing care providers are no longer sufficient.

Hayasaka says the two types of businesses that have supported Japan's nursing care system — home care and day care services — are facing a very difficult situation. He says that this is a major issue that could lead to the loss of the community's nursing care base.

He points out that the number of single seniors is expected to rise across the country and if people can't receive nursing care services and their conditions deteriorate, future costs could rise.

To protect seniors living at home, he calls on the central government to consider reviewing nursing care grants in a flexible manner. He also urges local governments to seriously consider providing substantial public services by outsourcing work to private sector groups providing community welfare.