The Shock of 83% in the Red: Can Public Hospitals Survive Through 'Data-Driven Management'?

Public hospitals, which have supported regional healthcare, are now at a major crossroads.
"There is a hospital nearby."
"They will accept me in an emergency."
"I can receive medical care in my community even if I need hospitalization or surgery."
The peace of mind regarding medical care that we take for granted is actually supported by the efforts of many hospitals.
However, that foundation is beginning to shake.
According to reports, 83.3% of public hospitals fell into the red in the 2024 fiscal year. Furthermore, a survey by the Japan Hospital Association of Local Governments shows a severe situation where 86% of responding member hospitals had ordinary losses and 95% had medical operating losses.
This is not just a problem for a few hospitals.
It means that regional healthcare itself is now quietly facing a crisis.

Why are public hospitals struggling?

Public hospitals are not simply 'hospitals for making a profit'.
To protect the medical care necessary for the region, they also take on fields that are difficult to make profitable.
For example:
・Emergency medical care
・Remote area medical care
・Disaster medical care
・Infectious disease response
・Pediatrics, perinatal care, and community-based integrated care
・Maintaining medical departments necessary for the region even if they are unprofitable
These roles are indispensable to the region.
However, they are a heavy burden in terms of management.
Furthermore, in recent years, challenges such as the following have piled up:
・Rising utility costs
・Soaring medical material costs
・Rising personnel costs
・Shortages of doctors, nurses, and medical staff
・Changes in patient numbers due to population decline
・Continuous response to medical fee revisions
・Investment burden for medical DX
In other words, the deficit of public hospitals is not a simple matter of 'insufficient management efforts'.
The role of protecting regional healthcare and the reality of rising costs are colliding.

An unusual situation where 'excellent hospitals' are not recommended

The Japan Hospital Association of Local Governments has previously recognized hospitals with sound management that contribute to regional healthcare as 'Excellent Public Hospitals'.
However, it has been reported that there were no recommendations from branches for the 2026 fiscal year, and no awards will be given as there were no eligible candidates.
This is a very symbolic event.
There used to be hospitals considered 'models of sound management'.
But now, the situation is so severe nationwide that it is difficult to find hospitals that can be recommended as excellent.
The front lines of regional healthcare may already be approaching their limits.

The focus on 'data-driven management'

To overcome this crisis, hospital management utilizing data is now attracting attention.
The Japan Hospital Association of Local Governments has launched theAll-Japan Hospital Association Data Cloud Service.
This is a cloud-based service for visualizing the management status and clinical data of public hospitals to lead to improvements in hospital management.
Data used includes, for example, the following:
・DPC data
・Electronic receipt data
・Financial data
・Regional cooperation data
・Clinical performance data
・Management indicators
By combining these, it becomes possible to grasp the situation of one's own hospital more objectively.
In hospital management until now, there were many parts that had to rely on the experience and intuition of the staff.
Of course, experience is very important.
However, in an era where environmental changes are so drastic, it is becoming difficult to make judgments based on experience alone.
What is needed from now on is
management decisions that combine 'experience' and 'data'.

What changes when you use data?

By utilizing data, hospital management changes significantly.
For example, if you can quickly grasp the monthly management status, you can consider countermeasures before the deficit expands.
If you can check bed occupancy rates, average length of stay, medical unit prices, referral rates, and the status of additional fee calculations, it becomes easier to see where there is room for improvement.
Also, if you can compare with hospitals of similar bed size or regional conditions, you can understand your own hospital's position.
In other words, data utilization is not just about looking at numbers.
It is about having a map to find management issues.
Without a map, you don't know where to go.
However, if the current situation becomes visible through data, the direction for improvement also becomes visible.

The noteworthy 'real-name benchmarking'

Among the All-Japan Hospital Association Data Cloud Services, what is particularly noteworthy is the 'real hospital name benchmarking'.
Usually, comparison data between hospitals is handled anonymously.
However, in this service, hospital comparison by real name is possible under certain conditions.
This has a very significant meaning.
With anonymous data, you can only know that
"some hospital is doing well."
But with real names, it leads to concrete learning such as
"why is that hospital of that size in that region achieving results with this indicator?"
This is not just a mechanism for competition.
It is a mechanism to learn from successful hospitals and raise the level of healthcare for the entire region.
Of course, real-name data is very important information.
Therefore, strict rules are set for its use and external disclosure.
Data transparency and strict information management.
How to balance both will be important in future medical DX.

The essence of medical DX is 'making data usable'

When people talk about medical DX, it tends to become a discussion about systems, such as electronic medical records, online qualification verification, electronic prescriptions, cloud migration, and AI utilization.
Of course, those are also important.
However, the essence is not just installing systems.
What is truly important is
making the data generated in daily clinical practice and operations usable for management decisions.
For example:
・Want to improve bed occupancy rates
・Want to increase medical unit prices
・Want to reduce omissions in additional fee calculations
・Want to ensure management of facility standards
・Want to review personnel allocation
・Want to prepare for performance reports for subsidies and support projects
・Want to prevent omissions in in-hospital postings or web publications
To respond to these issues, data and evidence must be organized.
In other words, what medical institutions need from now on is
**not 'data being entered' but 'usable data'.**

The same trend will come to small and medium-sized hospitals and clinics

This data cloud migration for public hospitals might look like a story only for large hospitals.
However, in reality, it is thought that the same trend will spread to small and medium-sized hospitals, clinics, dental clinics, pharmacies, and nursing care facilities.
This is because medical institutions will increasingly be required to handle tasks such as:
・System compliance
・Facility standard management
・Medical DX response
・Medical fee revision response
・Subsidy and grant response
・Work-style reform
・BCP
・In-hospital postings, web publications
・Training records, evidence management
Moreover, it is not enough to just say "we are doing it."
Being able to produce records when necessary.
Being able to explain.
Being able to present as evidence.
This system will become increasingly important in future medical institution management.

How 365 Medical thinks about future medical institution support

At 365 Medical, we do not think of medical DX as merely introducing systems.
What is important is to enable medical institutions to comply with systems while reducing the burden on the front lines and organizing the information necessary for management decisions.
In particular, we believe that the following support will become important from now on:
・Visualization of facility standards and notification status
・Organization of medical DX response status
・Management of response history to medical fee revisions
・Management of application documents and evidence for subsidies and grants
・Preparation of in-hospital postings, web publications, and consent documents
・Records of staff training, BCP, and safety management systems
・Organization of data necessary for management improvement
The operation of medical institutions is becoming more complex year by year.
There is a limit to how much a hospital director or administrative director can handle everything, including clinical practice, personnel, accounting, system compliance, DX, subsidies, and administrative response.
That is precisely why it is necessary to establish an operational foundation while utilizing external experts and support services.

Summary: The key to protecting regional healthcare lies in 'data visualization'

The widening deficit of public hospitals is a major wake-up call for regional healthcare in Japan.
However, at the same time, new movements in hospital management utilizing data are beginning.
What medical institutions need from now on is not just simple cost-cutting.
It is to correctly grasp the situation of one's own hospital.
It is to compare with other hospitals and past performance.
It is to clarify the points that need improvement.
And it is to connect these to management decisions.
To achieve this, it is necessary to organize the data, vouchers, notifications, records, and financial information generated in daily operations into a form that can be used for management, rather than managing them separately.
Hospital management has already entered an era where it cannot be overcome by 'intuition and experience' alone.
From now on, it is an era where
medical institutions that organize their data will protect regional healthcare.
365 Medical supports medical institutions with regulatory compliance, medical DX, voucher management, and management improvement, helping to build the operational foundation for hospitals and clinics that support regional healthcare.

References/Citations

・Japan Hospital Association of Local Governments 'All-Japan Hospital Association Data Cloud Service'
・Japan Hospital Association of Local Governments 'All-Japan Hospital Association Data Cloud Service FAQ'
・Japan Hospital Association of Local Governments 'Results of the FY2024 Financial Results Survey of Member Hospitals'
・GemMed 'In FY2024, 86% of public hospitals had ordinary deficits, and 95% had medical service deficits'
・m3.com 'FY2025 Financial Results for Public Hospitals: Many Hospitals Continue to Run Deficits'
・PR TIMES '250 Hospitals Registered Within One Month of the Launch of the All-Japan Hospital Association Data Cloud Service'

Disclaimer

This article has been independently organized and edited by 365 Medical based on publicly available information. System details, service conditions, fees, usage restrictions, etc., are subject to change. Please be sure to check with relevant organizations, experts, and official documents when making actual applications, implementations, regulatory compliance, or management decisions.