The Japanese medical system is facing difficult challenges. Although it is at a critical turning point, most physicians have limited awareness of the issues and challenges facing the medical system. Yet, physicians must play a major role in addressing these issues and moving the medical system in a better direction for patients, physicians, and the payors of medical care.

The challenges include ensuring the efficient use of money, while achieving a patient-oriented medical system; creating a patient-oriented medical system and raising it to international standards; faster, more efficient translation of research to medical practice; clinical practice based on Japanese data; establishment of clinical trials in Japan; and establishing a better training course for physicians.

Japan has enjoyed a high-level medical system for the past 30 years. Japan has the highest life expectancy in the world. Infant mortality is decreasing. Disability-free lifespan is the highest in Japan. The WHO ranked the Japanese medical insurance system number one in the world in the year 2000. Japan’s national health insurance coverage, which established free access to ensure equitable access to the medical system, may be responsible for some of these good results. Payment-per-service (PPS) also plays a role.

Yet, problems inherent to the medical system exist, including uneven distribution of services across Japan, with some services completely unavailable and excessive supply of others. Inefficiencies exist in providing service and the associated medical costs. Strong governmental regulation of the medical system exists because of the national health insurance system. National financial problems have resulted in government regulations to curtail medical expenditures, without giving priority to the quality of medical service.

In 1998, about 8% of Japan’s GDP was spent on health care, of which 30% was for medical care for the elderly—a percentage increasing annually, and will result in greatly increased total medical expenditures over the next 10-20 years. Japan ranks number 20 for total medical cost as a percentage of GDP of the OECD member countries. Japan ranks number 2 for total medical expenditure and number 7 for per capita medical expenditure. Although personal medical expenditure and consumer prices have increased over the past 20 years in Japan, this has not been offset by an increase in medical expenditure by the national government.

Critical deficits are a challenge for 3 of the public national health insurance systems, which will result in a decrease in the medical expenditure for the public system. This will perhaps lead to an increasing number of people not covered by the public national system to reduce the total medical expenditure. The 5 leading reasons for the worsening financial situation are: increased medical expenditure for the elderly, increasing number of elderly people, decreased income from the insurance system because of the long-term national economic problems, regulation of the PPS system, and inefficiencies and irrational aspects in the current medical system.

Despite the financial problems the Japanese medical system faces, a patient-oriented medical system must be established, plus quality of medical services improved.

A patient-oriented medical system involves the patient in personal medical decision-making, but this is an area in which Japan is lacking. Despite the current popularity of the concept of informed consent, the actual practice and quality of informed consent is limited. Although medical records should be disclosed to the patient, currently this is very limited in Japan. One study showed that 80% of patients want to see their medical records. Information related to physician and hospital performance should be disclosed, but also is very limited. When a patient goes to the hospital in Japan, either to the outpatient clinic or for hospitalization, the patient knows little about the physician who is providing the treatment. Yet, when a person selects to purchase an automobile, any information desired about the automobile is obtainable. A system to promote obtaining a second opinion should be developed and supported by physicians. Although patients are asking for second opinions, it is unclear that physicians are responding to this need.

Areas in which Japan is lacking or not meeting patient expectations includes pediatric medicine, the outpatient- based system, and hospital services. The hospital environment in Japan lags far behind that in the United States and Europe. Hospital stays must be shortened. Preventive medicine needs to be strengthened.

The outpatient clinic in Japanese hospitals is famous for making patients wait for 3 hours to see the physician for only 3 minutes! The physician is frustrated by the inability to spend more time with patients. Centralizing certain functions and networking are needed to improve this situation. Further, risk-management for Japanese hospitals does not exist.

To improve the quality of medical service, which includes providing this service safely and securely to patients, requires consideration of several issues. Standardization of clinical procedures must be addressed. Currently there is much variance within and between university hospitals regarding results, performance, length of hospital stay, and other matters. Other issues to be addressed in order to improve quality include: centralization of medical functions, networking, public disclosure of hospital and physician performance, disclosure to the patient of his/her medical information, improving the hospital environment, medical malpractice, and nosocomial infection, among others.

Incentives, including financial incentives, for physicians and hospitals are needed to improve quality. Reduced reimbursement could be an effective sanction and hence an effective incentive to improve quality and outcomes.

A review of the results of the outcomes for stomach cancer showed that the survival rate ranged from 40% to 70% across institutions nationally. This is a major issue for patients. Data from the national government shows that medical reimbursement for certain diseases varies greatly between prefectures across Japan, without significant differences in patient demographics or disease severity to account for the difference.

The public disclosure of hospital performance for coronary artery bypass grafting surgery is done in the state of New York in the United States. Any patient can obtain the severity-adjusted mortality by hospital in New York State. This public disclosure has led to an improvement in the performance at each institution over time. Further, the reimbursement to the hospital may be reduced if results are sub-standard. With this information, the patient can select the hospital to go to, which will also provide an incentive for hospitals to improve quality.

A change to the health insurance is one possibility to create the needed changes in the medical system. In addition to the national public health insurance system, a private, non-government funded health insurance system may be beneficial. A private system would address the needs of the people who are not insured by the national public health insurance system. Further, it would help to reduce the public, government-paid medical expenditures. An advantage for the patient would be the ability to select from a variety of riders to tailor the insurance to their specific needs. But the inability to pay for private insurance would be a disadvantage and hence limit their access to good medical service.

Over the past 20 years, there has been a limited combination of the public health insurance system and private insurance. By expanding the private insurance system, the medical marketplace can be expanded with the hope of an earlier introduction of a new medical system. Additional advantages for an expanding a combined public and private health insurance system may be improved quality of medical service and competition between hospitals, which will reduce costs and improve quality. More public discussion and disclosure is needed in Japan about a possible combined system of public and private health insurance, so there is a clear understanding of what the systems would offer and what the patient must pay for.

The excesses within the current system must be identified to improve efficiency. A comparison of OECD member nations shows that the number of hospital beds per 1000 people was much higher in Japan compared to the international average. The global average in 1980 was 9.1 beds/1000 people, while in Japan it was 13.8 beds/1000 people. In 1995, the global average had decreased to 7.5 beds/1000, while in Japan it had increased to 16.2 beds/1000 people. Further, Japan has a much longer length of hospital stay. In 1980, the global average was 18.4 days, while in Japan it was 55.9 days; in 1995, the global average had decreased to 12.5 days and in Japan to 44.2 days. The OECD data shows a clear correlation between the number of hospital beds and the length of hospital stay. In this international comparison, Japan is a clear aberration from the other countries, with a much higher number of beds and longer hospital stays.

Compared to the US and Germany, Japan has about 20% and 33% fewer physicians per 100 hospital beds, respectively, and 20% and 50% fewer nurses than in the US and Germany respectively. This is a basic issue related to the quality of medical care provided to patients. Yet, the number of examinations per hospitalized patient is much higher in Japan at 16.8 per patient, compared to 5.8 in the US and 6.5 in Germany.

Acute care centers would result in a better staff to hospital bed ratio and hence higher quality medical care. These centers would also reduce the overall number of hospital beds, which would result in shorter hospital stays.

Other excesses also exist in Japan. For example, the number of facilities for PCI/PTCA is higher in Japan at 8.1 per 1000 patients, compared to 4.2 in the US, 1.3 in Canada, and 1.6 in Italy. Japan has a higher ratio of scanning devices compared to the US and Germany; 22.1 MRI machines compared to 7.5 and 6.2 per 1000 patients respectively, and 84.6 CT machines compared to 13.2 and 17.1, respectively. In the US, over the past 20 years the number of hospital beds have decreased and the number of surgeries done outpatient has increased, while this has not occurred in Japan.

In Japan, the medical expenditure for the elderly is 5-fold that for the young. Specifically, the ratio of medical expenditure for the elderly to the young was 4.90 in Japan in 1997; 3.50 in 1996 in the US; 2.66 in Germany in 1994; 3.00 in France in 1993; and 3.35 in England in 1997. Longer hospital stays and cardiovascular disease drive the higher costs for the elderly.

Reimbursement must cover the actual cost of providing medical care. In addition, it needs to provide an incentive to provide optimal medical care. Payment-per-service or payment-per-procedure may be associated with insufficient evaluation of efficiency and quality of care. Monitoring of these systems and the new DRG system will be needed to ensure they provide the improvements intended. The currently low reimbursement of technical fees needs to be reviewed.

The procurement price for balloon catheters in Japan is 4- to 5-fold that in the US. Further, in the US the procurement cost is about 50% of the reimbursement, while the differential in Japan is slight. In the US, the procurement cost is about $225-$230 and the reimbursement is about $560-$750, while in Japan the cost is about $2000 and the reimbursement about $1833. Group purchasing organizations (GPO) in the United States allow hospitals to purchase items as a group and negotiate better prices. Information from the Health Care Solution Company further helps the GPOs. In contrast, in Japan the devices are imported at a price 2.25-fold the manufacturer’s list price and hospitals purchase devices individually with little negotiating power. Yet the reimbursement is set at 3-times the manufacturer’s list price. The irrational system in Japan must be addressed.

Clinical trials in Japan are facing problems and this is directly related to EBM based on Japanese data. The number of clinical trials being conducted in Japan is decreasing. In 1993, there were 160 trials registered, 71 trials in 1997 and only 43 trials in 2001. In Japan, clinical trials are much slower than in the US, from 10- to 20-fold slower, and more expensive. An infrastructure to allow speedy, affordable clinical trials in Japan is needed.