THE ORGANIZATION OF MEDICAL CARE IN JAPAN

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Hospitals

    Despite Japan's relatively high hospital bed-to-population ratio (Appendix 1, Table 3), the number of hospital beds is not decreasing Between 1970 and 1988, in fact, it increased by 25.8 percent.¹ This reflects at least five characteristics of Japan's broader health system First, until the late 1980s, few barriers were placed on entry into the hospital market in Japan's rapidly growing postwar economy. Second the organization of medical care in Japan is heavily centered around hospitals. Third, 81 percent of hospitals are privately owned, and the) have had few restrictions on their capital investments. Fourth because hospitals have competed fiercely with one another, expansion has served as a key strategy to gain a competitive edge. Finally, al least until the mid 1980s, the Ministry of Health and Welfare has not played an active role in containing the total number of hospital beds.

    Close to 90 percent of hospital facilities with 20 or more beds are classified as "general hospitals." The remainder are mental health facilities or tuberculosis and leprosy centers. General hospitals are dominated by small, privately owned and operated "nonprofit" facilities. The average number of beds in a Japanese hospital is 163 -slightly fewer than the 190 in an average American hospital - and half have fewer than 100 beds.² Although the last few years have witnessed a proliferation of national hospital chains, the majority of small hospitals continue to be privately owned and managed by physicians As in public hospitals, physicians in private hospitals are salaried.

    With 283 beds, the average public hospital is larger than its private counterpart. Although 19 percent of hospitals are public, they account for 33 percent of all beds. About 75 percent of public hospitals are under the jurisdiction of municipal and prefectural governments the remainder are national institutions. About 1 percent of hospitals are owned and operated by quasi-public agencies and organizations such as the Red Cross, social insurance agencies and employment related groups.

    Despite these distinctions, all hospitals in Japan tend to be viewed as recuperative centers rather than as merely therapeutic institutions, Even large teaching hospitals do not limit themselves to providing acute-care services. Hospitals have traditionally functioned, in part, as long-term care facilities. Of the nearly 400 hospitals that have more than 500 beds, only about 60 percent have adult intensive care units, and only 30 percent of them have neonatal intensive care units, the majority of which have only five to seven beds.

    As a result of this orientation, patients in Japanese hospitals have the longest average length of stay in the world.³ Even accounting for the lengthy stays of psychiatric patients, the average patient's stay in a Japanese hospital far exceeds that of most other OECD countries both in the aggregate and by specific disease categories (Appendix 1, Table 5). In addition to the nursing home functions played by hospitals, other factors accounting for the lengthy stays are probably the large number of beds, the low admission rates, the per diem form of hospital reimbursement, and the emphasis on recuperation over invasive medical and surgical interventions.

    As is the case with intensive care units, there are far fewer emergency rooms in Japan than in the United States. But while Japan has roughly half the population of the United States, it has only 7 percent of the murders, 2 percent of the reported rapes, and 0.3 percent of the armed robberies, so there would seem to be less of a need for extensive trauma facilities.⁴ In addition, unimpeded access to health care through the clinic system has the effect of steering non-urgent care away from emergency rooms. An integrated system of primary, secondary and tertiary-level emergency facilities appears to meet the need for emergency and trauma care.⁵

    As in the United States, university hospitals in Japan are centers for research, teaching and the delivery of tertiary-level "cutting edge" medical care. In contrast to America's 129 academic medical centers with an average size of 664 beds, Japan has 131 university hospitals (half of them public) with an average size of 735 beds.⁶ Despite their larger average size, Japanese teaching hospitals have far fewer inpatient admissions, less than 30 percent of the American rate. And the 36.2 day average length of stay in these hospitals far exceeds the 7.9 days in American teaching hospitals.⁷

    Although Japanese university hospitals generally incur higher costs, they also have shorter lengths of stay and higher staffing ratios than other Japanese hospitals. Increasingly, the public perceives these facilities as preferred sites for receiving medical care.

    A recent innovation for the delivery of high-tech medical care has been the establishment of officially designated centers for such procedures as open-heart surgery. This "Highly Advanced Medical Technology System" provides a mechanism by which new medical devices can receive broader use and evaluation despite their ineligibility for reimbursement under the normal benefits plan of Japan's health insurance program. Most often, highly advanced medical procedures are performed at teaching facilities.⁸ For third-party reimbursement to be awarded, these procedures must now be performed at these centers, which are required to have appropriate equipment and personnel.

Clinics and Ambulatory Care

    Japanese physicians have traditionally operated on a small scale, working out of their homes to provide health care services to their community. Although these clinics have typically provided a low-level intensity of care, many have recently acquired a wide range of sophisticated medical equipment including ultrasonic testing and gastrointestinal fiberscopes.⁹

    Small, privately owned clinics provided most outpatient services until the 1970s. In addition, roughly 25,000 physicians' offices, equipped with up to 19 beds and also referred to as "clinics," function as small hospitals. They add 276,000 beds to Japan's already high number (15.8 per 1,000 persons), thus increasing the total number of hospital beds by 17 percent.¹⁰

    Since the 1970s, clinic physicians have become concerned about losing their share of primary-care services to hospitals. Although the number of clinics has increased from about 50,000 in 1955 to more than 80,800 in 1990, the number of clinics with beds decreased by almost 20 percent during the 1970s and 1980s.¹¹ Likewise, although the number of physicians has increased by 113 percent since 1960, the proportion of physicians running clinics has dropped from 44.8 percent in 1960 to only 27.5 percent in 1990.¹² This decrease in the number of clinics with beds and the proportion of physicians running clinics is due largely to direct competition with larger hospitals in outpatient services and high land prices that prohibit the establishment of new clinic facilities. Larger hospitals are attracting both young doctors and outpatients with their sophisticated technology and services.¹³

    Despite the competition between clinics and hospitals, two structural aspects of Japan's health care system appear to constrain the trend toward specialization and high-tech care and to promote primary-care services. First, clinic physicians do not have admitting privileges to hospitals. Second, once referred to the hospital, many patients do not return to a clinic but continue to be treated by the hospital's outpatient department. These barriers give clinic physicians an incentive to put off hospitalization.¹⁴

    Beyond the barriers to referring patients to hospitals, two financial incentives also appear to support primary-care services. First, clinic physicians are remunerated under the fee schedule each time they write a prescription for a dispensing pharmacist. Second, they make an average profit of 26 percent of the reimbursement rate every time they prescribe - and sell - a drug to their patients.¹⁵ Because pharmaceutical manufacturers and wholesalers routinely sell drugs to physicians at prices well below the fee schedule's reimbursement rates, drug sales have become an important source of profits for clinics.¹⁶

    The average net monthly income for clinic physicians was $22,900 in 1990, while specialists based in private hospitals earned only $6,300.¹⁷ A 1985 study indicated that revenues and net profits of clinic physicians vary with the quantity of drugs prescribed and sold by physicians, the age of the physicians and the size of the clinic. This finding supports the contention that clinic physicians maximize their income by prescribing and selling more drugs.¹⁸

    Despite clinic physicians' practice of selling the drugs they prescribe, which strikes most Americans as a blatant financial conflict of interest, the doctor-patient relationship presumably is based on trust. Patients are typically told little about their diagnoses, and doctors explain away problems in "soothing terms without necessarily providing precise information about what exactly the problem is."¹⁹ Pills frequently go unlabeled, and patients are not always told when they are part of an experiment. Such practices were recently supported by a court decision that doctors need not share the full details of a diagnosis with a cancer patient.²⁰

    The clinic physician, however, does not provide the kind of primary health care so often extolled by family physicians in the United States. Most clinic physicians operate in solo practices without hospital privileges, thus making it difficult to collaborate with specialists as well as with peers. Standards of practice, professional competence and patient care are neither monitored nor evaluated in any formal way. In addition, as in the United States, Japanese physicians do not typically subscribe to the idea of "comprehensive primary health care and often fail to respect the person as a whole person operating in a complex social and economic environment."²¹

Services for the elderly

    Since the early 1970s, the elderly enjoyed a privileged status in the Japanese welfare state. With the economic growth of the 1960s came demands for the expansion of social benefits that could not be ignored. In 1973, the government responded to social pressures by creating an almost free medical care system for the elderly, the national insurance plan administered by local governments. In 1982, in response to rising health care costs, the Health and Medical Service Law for the Aged established the national pooi to subsidize medical care.²² The government sought to increase equity in financing by taxing all health insurance plans based on a formula related to each plan's number of beneficiaries and past medical expenditures on the elderly.²³

    Despite universal coverage under national health insurance, the range of services designed to meet the needs of the elderly is limited. In general wards, no distinction is made between acute and long-term care facilities.²⁴ A significant fraction of hospital beds are routinely occupied by elderly people requiring long-term care. Seventy-five percent of the institutionalized elderly are in hospitals and clinics, for example, and survey data indicate that 45 percent of elderly inpatients are hospitalized for more than six months.²⁵ Due to the shortage of rehabilitation services, roughly 4.6 percent of the elderly population is bedridden.²⁶ In 1987, 34 percent of patients in Japan's long-term care facilities were bedridden, a striking contrast to America's 6.5 percent.²⁷

    There are now a growing number of hospitals specializing in treating and caring for the elderly. There are also three other types of facilities that serve the elderly in Japan: a small number of nursing homes (10 beds per 1,000 elderly persons in 1988, in contrast to 46.2 in the United States in 1985), welfare institutions for those who need constant care, and facilities providing rehabilitation services.²⁸ But the relatively limited number of home health aides leads to an absence of reliable support services.²⁹ Compared to the United States, Japan has a far more severe shortage of long-term care services. There are long waiting lists for admission to nursing homes-applicants commonly wait for more than a year.³⁰

   In addition to the lack of appropriate institutions and support services, at least three other factors contribute to Japan's high rate of "social admissions" to hospitals. First, medical practice generally tends to emphasize passive care and bed rest. Second, a lack of space at home to accommodate elderly relatives pushes more of the frail elderly into hospitals and clinics. Finally, women, the traditional care givers for the elderly, are entering the work force in increasing numbers. Thus, although some 62 percent of the elderly live with their children or other relatives, in contrast to less than 33 percent in the United States, Japan's institutionalization rate (6.2 percent) is comparable to America's.³¹ Where Japan diverges from the United States and other OECD countries is in its rapidly graying population. In 2020, 26 percent of Japanese will be over 65, compared to 17.3 percent of Americans.³² Because there are already about 700,000 Japanese aged 65 and over (4.6 percent of the elderly population) who are so severely disabled that they are bedridden or require constant supervision, these projections impelled government policy-makers to publish the "Golden Plan" and make a commitment to solve this anticipated crisis.

    The Golden Plan is a 10-year national health care and welfare plan for the elderly agreed upon by the Ministries of Health and Welfare, Finance and Home Affairs in 1989.³³ At the Japan Society conference, Ministry of Health and Welfare Director-General Nobuharu Okamitsu described it as an attempt to integrate welfare services, medical care and insurance in a comprehensive manner. The plan outlines an ambitious set of goals at a projected cost of $40 billion during the 1990s. This is in contrast to the $11.3 billion spent in the 1980s.

    The plan relies on four principal strategies to build the infrastructure necessary to accommodate the growing needs of the elderly:

1. Expansion of existing services by increasing the number of home helpers from 40,900 in 1991 to 100,000 in 1999 and the number of nursing home beds from just over 144,600 to 240,000;³⁴
2. Creation of a more diverse range of services by defining the respective roles of corporations and of the national, prefectural and municipal governments;
3. Decentralization through an increased role for municipalities in the design of programs;
4. Reduction of fragmentation by developing government entities to provide services, support research, disseminate information and coordinate the regional administration of model projects.

    In addition to expanding infrastructure for the elderly, the Golden Plan seeks to rationalize services. It aims to reduce the geriatric population of hospitals and to increase capacity in skilled nursing homes and particularly in new institutions known as geriatric rehabilitation centers. In addition, it calls for a three-fold increase in government-employed visiting homemakers, a 10-fold growth in adult day centers, and a 12-fold increase in respite care centers. If the plan is implemented, the bedridden elderly will be shifted over the next decade away from hospitals toward home care support services, informal support services and nursing homes.

    The government has recently adjusted the fee schedule's reimbursement rates to encourage those general hospitals that provide mostly long-term care for the elderly to become approved geriatric hospitals. The fee schedule's per diem rates for long-term care in general hospitals have been reduced to provide an incentive for many private, medium-sized hospitals to become chronic and geriatric care facilities that would be reimbursed on the basis of a more favorable geriatric fee schedule.³⁵

Another major change in the reimbursement of medical care for the elderly was the reinstatement of copayments. When the elderly were first covered under national health insurance in 1961, their copayments were set at 50 percent of the allowed fees. Free medical care for the elderly was established in 1973 and lasted until 1983. When reinstated, the copayment was kept at a low level, far lower than the pre-1970 levels of patient contribution.³⁶ But cost-sharing for care of the elderly has continued to rise. Moreover, the government is now emphasizing programs that draw on family resources. In contrast to inpatient services, local governments now ask the children of residents in nursing homes and geriatric hospitals to contribute toward the cost of care