Regional Healthcare Management Series: Nursing Care Facilities Part 1

Part 1: It might be nursing care facilities that truly disappear due to the 2040 problem—The future as seen by the Fiscal System Council

When I talk to hospital administrators and office managers, there are phrases I hear often lately.
"We can't hire nurses," "The emergency department isn't functioning," "High prices are tough."
These are certainly all serious problems.

On the other hand, when I talk to the nursing care providers I support, I hear even more desperate voices.
"We can't gather staff," "Home care isn't profitable," "Nursing care benefits alone are no longer enough," "Will we be able to continue this business in the future?"

Being involved in the management of both hospitals and nursing care, I have a certain sense of crisis.

That is, it might not be hospitals, but nursing care businesses that are truly hit hardest by the 2040 problem,.

Of course, hospital management is not easy either. However, hospitals have strong institutional support in the form of medical service fees.

On the other hand, nursing care is facing both a labor shortage and the suppression of benefit expenditures. And the Fiscal System Council is the entity most acutely aware of these changes.

I believe that nursing care managers, more than anyone, should be watching the discussions of the Fiscal System Council. This is because the direction of future nursing care fee revisions is clearly indicated there.

What the Fiscal System Council consistently advocates

Nursing care fee revisions are not decided by the Ministry of Health, Labour and Welfare alone. In recent years, the Fiscal System Council has consistently indicated the following direction.

Of benefit expenditures:

• Optimization

• Efficiency

• Prioritization

• Consolidation

In other words, "creating a system to maintain nursing care with limited financial resources.".

This is an extremely important message for nursing care managers.
Because we cannot assume that nursing care fees will continue to rise significantly in the future. I have written this many times in articles about hospital management.
Management that waits for the system is dangerous. The same applies to nursing care management.

What is truly scary is not a shortage of users

When talking to nursing care facility managers, I sometimes hear concerns about "a decrease in users."
However, looking ahead to 2040, I do not believe that is the biggest problem.

The elderly population will remain at a high level. The number of people requiring nursing care will also increase. The number of elderly people with dementia will also increase.
In other words, nursing care needs will not disappear. They will actually increase.

The problem lies elsewhere. It is that there will be a shortage of people to support nursing care.

The labor shortage will become more serious than imagined.

According to Ministry of Health, Labour and Welfare estimates, a shortage of hundreds of thousands of nursing care personnel is expected by 2040.
There are nursing care facilities. There are users. But there is no staff.

This is also happening in hospitals, but it is even more serious in the nursing care sector.

This is because hospitals have a strong social role called medical care. On the other hand, the nursing care business is not necessarily advantageous in the competition for securing human resources.

Salary. Working environment. Career development. All of these are being questioned.
That is why I believe that the essence of the 2040 problem is not aging, but a shortage of human resources.

Hospitals and nursing care have become a community of destiny.

It is often thought that hospitals and nursing care are separate industries. However, when looking at the actual site, that boundary has already disappeared.
For example, an elderly person is hospitalized with pneumonia. Treatment ends. Looking for a place to be discharged. But there is no facility to accept them. Home nursing care is also short-handed. As a result, they cannot be discharged.

Such cases are not rare. From the hospital's perspective, hospital beds do not become vacant. Emergency patients cannot be accepted. The bed turnover rate drops. This affects management.

In other words, the nursing care problem is a hospital problem.
Conversely, if hospitals do not function, nursing care will also be in trouble.

From now on, I believe that management that considers hospitals and nursing care separately will no longer be viable.

Commonalities of surviving nursing care providers

Strong nursing care corporations have commonalities.

• Collaborating with local hospitals

• Deep relationships with care managers

• Connected with visiting nursing

• Sharing information with community comprehensive support centers

In other words, their role within the region is clear. For example, staff job satisfaction and the resolution of feelings of isolation lead to staff retention.
On the other hand, those that will struggle are

providers that do not know what their strengths are.

Is it a special nursing home? Is it a health service facility for the elderly? Is it a paid nursing home? Is it home nursing care?
Being large-scale does not necessarily mean being safe.
Being small-scale is not a reason to be pessimistic.

If functions remain ambiguous, it will become increasingly difficult in the future.

The numbers I look at first in nursing care management

When I am consulted about nursing care businesses, I do not look at the nursing care remuneration unit price first.

What I check first is,

• utilization rate

• labor cost ratio

• staff retention rate

• referral source composition

• cash flow

.

This is because the problem often lies not in the system, but in the management structure.
There are facilities that are full but not profitable.
There are corporations that are in the black but struggle with cash flow.
There are also operators where staff do not stay, leading to ever-increasing recruitment costs.

These cannot be solved by nursing care remuneration revisions alone.
You need to review your management structure.

What will be questioned in 2040 is the "reason for existence"

I believe that what will be most required of nursing care operators in the future is not scale, but
reason for existence
.

What role will you play in the community?
How will you collaborate with hospitals?
How will you support home care?
How will you support elderly people with dementia?

Corporations that are clear on these points are strong.
Conversely, management that only adapts to the system will struggle.

Finally—the true enemy of nursing care management is not 2040

When you hear the term "2040 problem," it might feel like a future issue.
However, in reality, the labor shortage has already begun. The number of home nursing care office closures is increasing. Recruitment difficulties for nursing care facilities are also continuing.

The 2040 problem is not the future.It is a reality that has already begun.

That is why I want to ask nursing care managers:
Will you wait for the next nursing care remuneration revision? Or will you review your own organization's role?

The corporations that survive will not be those that adapted to system changes.
They will be the corporations that have become necessary within their communities.

For both hospitals and nursing care, the essence is the same.

What is truly important in management is not chasing nursing care reward points.
It is thinking about what the community needs.
From that perspective, what the Fiscal System Council's discussions indicate is not merely the suppression of benefit costs.

It is the beginning of an era where only providers that have a role within the community will remain.
That is how I feel.

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Part 2: Is Home-Visit Nursing Care Really Unprofitable? — What Is Happening Behind the Rise in Bankruptcies

Bankruptcies and closures of home-visit nursing care offices are increasing. However, on the other hand, there are also providers that continue to grow.
Next time, while deciphering the management of home-visit nursing care through numbers, I would like to think about the difference between 'businesses that will disappear' and 'businesses that will remain'.