【Aging, safety net and fiscal crisis in Japan】No.169: Operating margin of non-profit special nursing homes

Figure 1 shows the historical trend of the number of beds in facilities for the elderly by facility type. Non-profit special nursing homes have the largest number of beds with 578,900 as of 2016. Social welfare corporations, municipalities, and some non-profit hospitals are allowed to operate a non-profit special nursing home; a stock company is not allowed to do so. For-profit nursing homes have the second largest number of beds, and most of them are owned by stock companies. However, social welfare and medical care corporations can also operate them. The income of non-profit special nursing homes depends on public long-term care insurance whereas a for-profit nursing home can obtain additional income by providing living support services to tenants.

Figure 2 shows the average operating margin of social welfare corporations specializing in non-profit special nursing homes. The reason it declined from 3.9% in 2014 to 2.4% in 2015 is that the fee level in the public long-term care insurance was lowered by 2.27% in April 2015. After that, the government raised it by 1.14% in April 2017 and by 0.54% in April 2018. However, as personnel expenses are rising due to the shortage of care staff, it is expected that their management will continue to be harsh in the future.

On the other hand, the average operating margin of social welfare corporations that specialize in non-profit special nursing homes differs greatly among prefectures. As shown in Figure 3, it is −0.8% in Miyazaki prefecture while that in Tokushima prefecture is 7.5%. When revising the fees, the government considers only part of regional disparities in labor costs and prices. Regardless of the disparity of operating margins between social welfare corporations, the government has set public funds uniformly throughout the country. However, to raise the efficiency of the non-profit special nursing home system as a whole, it is necessary to clarify the cause of disparity and rationalize the allocation of public funds.

Figure 1: Bed Capacity of facilities for the elderly

Source: Ministry of Health, Labour and Welfare

Figure 2: Average operating margin of non-profit special nursing homes

Source: Financial statements of social welfare corporations

Figure 3: Disparity among prefectures in average operating margin of non-profit special nursing homes

Source: Ministry of Health, Labour and Welfare