An international caregiver is actively providing assistance at a nursing home in Saitama Prefecture, highlighting the ongoing demand for care services in Japan. However, the industry is grappling with a severe crisis as a record number of nursing care providers declared bankruptcy in the first half of this year, even though the need for their services continues to increase.

According to a detailed survey conducted by Tokyo Shoko Research Ltd., 81 care providers collapsed between January and June, marking a staggering 50 percent rise from the previous year. This figure represents the highest level of bankruptcies since the introduction of the state nursing care insurance system in 2000, surpassing the previous record of 58 bankruptcies observed in 2020, a year heavily affected by the COVID-19 pandemic.

Home-visit care services were particularly hard-hit, accounting for 40 bankruptcies. In addition, day care and short-stay care providers saw 25 closures, while privately operated nursing homes contributed nine to the total. It is notable that all categories experienced a growth in bankruptcies compared to the prior year. The smallest providers faced the greatest challenges, with over 90 percent of the bankrupt businesses employing fewer than 20 individuals.

Despite increased financial support for the nursing care sector, the challenges persist. The government raised overall official fees for nursing care services by 1.59 percent in the fiscal year beginning in April, yet this increase fell short of expectations. Rising costs continued to challenge care providers, making it difficult to attract new applicants desperately needed in this sector. Additionally, home care providers reported a cut in the basic component of official service fees, which the health ministry claimed would be balanced out by adjustments in other areas of the fee structure. However, critiques from home care workers suggest that smaller businesses aren’t experiencing the benefits promised by these adjustments.

The research indicates that the negative fee revisions faced by home-visit care services might have played a significant role in this record number of bankruptcies. Consequently, Tokyo Shoko Research predicts that this adverse trend is likely to persist for the foreseeable future. The current statistics cast a concerning outlook on Japan's health care system, as the demand for care services is expected to rise while the need for a sufficient workforce becomes more pressing.

The health ministry estimates a requirement for 2.4 million care workers by the fiscal year 2026, indicating a shortfall of 250,000 when compared to the 2.15 million workers noted in fiscal 2022. Looking further ahead, by fiscal 2040, the number of care workers needed is projected to reach 2.72 million, resulting in a staggering shortfall of 570,000 as the population aged 65 and over is expected to peak during that time.