SYSTEM NOTICE

Auto translation by AI. Be sure, accuracy, nuances and authorial intent may not be fully reflected.

Complete Guide to Medical Fee Revisions for Hospital Executives: Reading the Future of Hospital Management, Part 25

2026年7月4日 10:52

Part 25: The Power of 'Management Accounting' That Hospital Directors Don't Know—Hospital Management Changes with Departmental Profitability

"Where is the deficit in this hospital coming from?"

When I provide support for hospital management improvement, this is a question I always ask hospital directors and board chairpersons.

"Which departments do you think are generating profit for this hospital, and which are losing it?"

The answers I receive vary widely.

"It must be the outpatient department."
"Isn't it the wards?"
"Everything is struggling."

However, when I show them the balance sheets by department afterward, many are surprised.

"Was this the result?"

Even if the hospital as a whole is in the black, there are departments that continue to generate deficits. Conversely, a department thought to be unprofitable is actually supporting the hospital's management.
I have seen this many times.

That is why I can state this definitively.

Therefore, I can assert this.

Hospital management cannot be improved through financial accounting alone. What truly changes management is 'management accounting'.

Financial statements are merely a report card for the entire hospital

In the previous article, I discussed the importance of reading financial statements.

However, financial statements have one major weakness.

They only show the results for the hospital as a whole.

For example,

Annual revenue of 5 billion yen
Medical profit of 50 million yen

At a glance, you can grasp the management situation.

However,

which clinical departments are generating profit,
which wards are losing profit,
and which departments are supporting the entire hospital,

these things are not visible.

Management improvement is not about "making the entire hospital better."

It is about identifying the areas that need improvement and concentrating management resources there.

What is necessary for that is management accounting.

When I enter a hospital, the first thing I create is a "departmental profitability statement."

When I begin supporting a hospital, there is a document I ask for first.

That is the departmental profitability statement.

By clinical department
By ward
Outpatient department
Operating room
Rehabilitation department
Laboratory department
Pharmacy department

The way of dividing them differs depending on the hospital, but the goal is one.

Visualize 'where profits are generated and where losses are occurring.'

In many cases, this reveals figures that differ from what the management had imagined.

For example,

You might think a department is profitable because it has many patients, but the profit margin is low due to material and labor costs.
There might be a department that has few patients but generates stable revenue through many referrals.

Such facts can never be seen from the hospital's overall financial statements alone.

'Profitable departments' and 'departments necessary for the hospital' are different.

There is something I do not want you to misunderstand here.

Management accounting is not for the purpose of'eliminating deficit-making departments.'

Hospitals have departments that cannot be evaluated by profit alone.

Emergency medical care
Infection control
Nutritional management
Community collaboration

These are essential for community healthcare. If judged solely by profitability, they might become unsustainable.

That is precisely why management accounting is necessary.

However, when calculating departmental profitability, what hospital directors struggle with most is creating rules for
'how to allocate common expenses such as administrative departments and utility costs.'and
establishing those rules.

'Clarifying the rules for allocation is the key to gaining consensus.'

Looking at the entire hospital through numbers. This is the essence of management accounting.

'This department is in the red, but how much does it contribute to the hospital as a whole?'
'What kind of patients are flowing to other departments because this department exists?'
'Which department supports the operation of the operating room?'
'Where is the contribution to testing revenue coming from?'

'Hospitals that try to do everything' cannot improve their management.

Hospitals that fail to improve their management have common characteristics.

Trying to grow all clinical departments equally
Investing in all wards equally
Allocating personnel to all departments equally

However, management resources are limited.

Doctors. Nurses. Investment capital, too.

They are all limited.

That is why "selection and concentration" is important.

Management accounting provides the basis for those decisions.

The FY2026 revision evaluates "functions" rather than the "hospital as a whole"

Looking at the FY2026 medical fee revision, that direction is clear.

What is being evaluated is not the box called a hospital.

Emergency care for the elderly
Community-based integrated medical care
DPC
Convalescent rehabilitation
Home care support

In other words, the era of thinking about hospital management as a "whole hospital" is changing to an era of thinking in "functional units."

That is precisely why management accounting, which looks at figures by department, becomes important.

The direction of the system and the direction of management are aligned.

Management accounting is not about "finding the culprit"

When management accounting is introduced, voices of concern sometimes arise from the front lines.

"Is this to blame departments that are in the red?"

No, it is not.

I always tell the staff this.

Management accounting is not for assigning blame. It is for making improvements.

Numbers are not there to evaluate people, but to improve management.

Once this mindset is shared, the front lines begin to view numbers in a positive light.

Hospital management: From "intuition" to "evidence"

Previously, the intuition of experienced hospital directors supported management. There was a time when that was sufficient.

However, today,

labor shortages,
rising prices,
medical fee revisions,
medical DX,
and the 2040 problem

have made the management environment so complex that it can no longer be navigated by intuition alone.

Of course, experience is important. However, it is necessary to back that experience up with numbers.

Management accounting does not negate experience.

It is a mechanism to transform experience into management power.

Finally—when the numbers change, the hospital changes.

In hospital management, when people hear "look at the numbers," many think only of profit.

However, the numbers you really need to look at are much more present in the field.

Profit by medical department
Profit by ward
Value added per person
Bed turnover rate
Productivity per staff member
Profitability by department

Once you start looking at these numbers, hospital management changes significantly.

I have been involved in the revitalization of many hospitals to date.

What I realized there is that hospitals that improved their management without exception made "numbers a common language in the field." that is.

The FY2026 revision requires hospitals to clarify their functions.

What is needed in that era is not just financial accounting that looks at the hospital as a whole.

It is management accounting that visualizes the roles and values of each department.

What changes the future of hospital management is not a new addition.

Whether you can turn your own hospital's numbers into your own hospital's weapons.

I believe that this difference will greatly influence the competitiveness of hospitals from now on.

I share information on medical and nursing care management support and M&A support. If you follow me, you will receive new articles.

FY2026 Medical Fee Revision for Hospital Executives

Hospital Selection Series

Part 1: The 'Selection of Hospitals' Begun by the FY2026 Revision—The Difference Between Hospitals That Survive and Those That Struggle
Part 2: Initial Consultation Fees Have Risen. The Real Reason Hospital Management Is Still Getting Tougher
Part 3: Price Adjustment Fees Are Not Enough—The Quiet Limit Reached by Hospital Management
Part 4: People Are Disappearing from Hospitals That Cannot Raise Wages—The Reality Posed by the FY2026 Revision
Part 5: Hospital Disparities Widen with Regional Comprehensive Medical Wards—Hospitals That Grow and Hospitals That Struggle
Part 6: What Hospitals Fixated on the Medical DX Addition Are Overlooking
Part 7: How Will Hospitals Survive in an Era Where Nurses Cannot Be Recruited?
Part 8: Hospitals That Use AI vs. Hospitals That Do Not—The Management Gap That Will Open in 5 Years
Part 9: Paper Culture Is Hurting Hospitals—Hospital Operations Demanded by the FY2026 Revision
Part 10: Toward an Era Where 'Hospitals That Can Perform Surgery' Survive—Surgical Capability Becomes the Turning Point
Part 11: Hospitals That Cannot Accept Elderly Emergency Patients Will Be Left Behind
Part 12: The Reason Why Management of Regional Comprehensive Care Wards Suddenly Becomes Difficult
Part 13: Hospitals That Will Remain Until 2040 and Those That Will Disappear—'I Especially Want Hospital Directors of Small and Medium-Sized Hospitals to Read This': This Revision Was a Preview
Part 14: The Day When Remaining an Acute Care Hospital Becomes the Greatest Risk
Part 15: The Wards Are Full, Yet There Is No Profit—The Culprit Was 'Exit Congestion'
Part 16: Toward an Era Where Convalescent Rehabilitation Wards Are Chosen Based on 'Results'
Part 17: What Has Changed in DPC Standard Hospital Groups 1 and 2—Coefficient Differences Create Revenue Disparities
Part 18: Hospitals That Cannot Coordinate with Nursing Care Will Not Be Chosen—The Strength of Hospitals with Discharge Destinations
Part 19: The End of Hospital-Complete Medical Care—The Reason the FY2026 Revision Steered Toward Home Care