[Summary] FY2025 Survey on the Management of Long-Term Care Businesses—Many Operating at a Thin Margin of 1-3%

Introduction

After a cross-sectional analysis of Tables 1 through 50 (23 service categories × national, regional, and management entity breakdowns) of the Ministry of Health, Labour and Welfare's "FY2025 Survey on the Management of Long-Term Care Businesses," the conclusion is clear.While all service categories remain in the black in the national aggregate, most are operating on thin ice with profit margins in the 1-3% range, and there are multiple categories that are actually in the red when viewed by regional or management entity breakdowns.This article provides an overview of all 50 tables and organizes the reality of "breathing room" in nursing care facility management using numerical data.

In the Black but Thin—The Reality of Profit Margins

The profit margins for the FY2024 financial results (national aggregate) show a significant spread across service types, withthe lowest being 0.4% for community-based long-term care for the elderly in specific facilities,and the highest being 13.4% for periodic patrol and on-demand visiting care and nursing.

As a trend, the profit margins for facility-based and day-care services are thin, while visiting and periodic patrol services are relatively robust, a pattern seen across all tables.

Bankruptcy While Profitable is Not a "Distant Problem"

Even if the national average is in the black, red-ink categories can be confirmed in the breakdowns by region (Tables 24-46) and management entity (Tables 47-50). For example,periodic patrol and on-demand visiting care and nursing show a spread of over 35 points, ranging from +17.0% in Grade 7 areas to -18.3% in Grade 2 areas, behind the national average of 13.4%, meaning that even for the same service, profitability can flip depending on the location. Similar regional disparities in red-ink categories were confirmed for day rehabilitation, geriatric health services facilities, and short-term stay services. The "surface" profit of the national average masks the risk of cash flow collapse at the "point" of individual business offices.In categories with profit margins of less than 1%, even a small decrease in revenue or a small increase in expenses can lead to a deficit, so situations leading to bankruptcy while profitable are not special cases but structural risks that are always present.it can be said.

There Was Zero Mention of "Returns"

As a result of a cross-sectional search of the 50 tables and over 250 deliverables analyzed this time, not a single mention of "returns" (error adjustments/re-billing) of long-term care benefits was found. This survey is a statistical aggregation that deals only with monthly income/expenditure and cost structures; returns, which are cash flow events for individual business offices, are outside the scope. In other words, in addition to the thin profit margins shown here,another cash flow risk—payment delays due to returns—is not reflected in the data of this survey at all.To grasp the actual situation, it is necessary to cross-reference with other statistics such as the Survey on Long-Term Care Benefit Expenditures.

The Path to Sustainable Management

The issue pointed out by the analysis of each table is thestructure where the growth of expenses exceeds the growth of revenue.The personnel cost ratio accounts for the low 60% range in many tables and is the center of the cost structure. The recommendations for improvement that are repeated are

1. Compare your facility's figures using the same definitions as the industry average 2. Break down revenue increases/decreases into care fees, usage fees, and subsidies 3. Evaluate personnel costs alongside indicators per staff member and the status of additional payment acquisition 4. Separate the deduction of subsidies from core business income to confirm the degree of dependency

these four points.

In many tables, the dependency on subsidies remains at a few percent and is evaluated as a "relatively independent income and expenditure structure," but this means thatimproving the profitability of the core business itself is an urgent task.

Summary

Data Source: Ministry of Health, Labour and Welfare "FY2025 Survey on the Management of Long-Term Care Businesses" Tables 1-50 (FY2024 Financial Results)

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