The company provides an online platform in the medical field, connecting doctors, medical institutions, university hospital medical offices (ikyoku*1), peripheral companies, and patients through the internet.
Professional ServicesHealth Care Providers & Services
Executive summary
Business overview
MRT Inc. provides an online platform in the medical field, connecting doctors, medical institutions, university hospital medical offices (ikyoku*1), peripheral companies, and patients through the internet. In the mainstay Medical Personnel Services, MRT posted revenue of JPY2.3bn (88.6% of total) in FY12/20, of which the Gaikin part-time doctor referral service (matching part-time doctors with medical institutions) accounted for over 50%. The term “gaikin” refers to the practice where doctors who work full-time, mostly at university hospitals, take on additional part-time jobs at other medical institutions. The remainder of revenue in Medical Personnel Services comes from the full-time doctor referral business and employment services (part-time job referral, career change referral, and temporary staffing) for other medical professionals*2.
As of end-February 2021, Medical Personnel Services had approximately 260,000 registered members. Of this figure, doctors (mainly young doctors to doctors in their 30s to 40s) accounted for 70,000, representing roughly 20% of Japan’s 330,000 doctors as of end-December 2018. The company has a working relationship with over a third of the university hospitals across Japan.
It is a common practice for doctors in Japan (especially those aged 40 or younger) to take on part-time assignments in addition to their full-time work. Medical institutions hire doctors part-time to resolve issues such as resource shortage and maldistribution in terms of geography and areas of practice. MRT has its origin in the University of Tokyo Hospital as a mutual support organization where doctors introduced locum assignments (temporary substitution) to each other. The company was founded in January 2000 by two doctors from the University of Tokyo’s Faculty of Medicine, one of whom is the current chairman and director, Hyoe Tomita. Currently, five of the company’s seven directors are doctors.
Unlike the placement of doctors to full-time positions, referral to part-time assignments is a niche service that MRT pioneers in. In this business, the company’s management team first cultivates relationships with the university hospital medical offices; it then widely recruits doctors such as those belonging to these offices by word of mouth to make them registered members of the service. Competitors in the medical personnel space tend to focus on full-time placement and often have a conflict of interest with medical offices since it could appear as though they were poaching doctors for full-time positions elsewhere.
MRT, however, is less likely to be in a conflict as it is these medical offices that introduce the doctors for referral, mainly to their affiliated hospitals. In terms of fees, since its founding, the company has maintained a commission rate of 10% of the doctor’s pay per each match made (paid by the medical institutions; over 10% in some cases) versus the going rate of 20%. The company can afford to charge a lower commission because it can save member acquisition costs through word-of-mouth marketing and its online systems platform enables processing of large volumes of repeated matches. Further, given that doctors account for the majority of MRT’s management team, the company has an in-depth understanding of the needs of doctors and medical institutions, and is at an advantage in gathering recruitment information from medical institutions (employer and source of commission revenue). MRT has a working relationship with some 10,000 medical institutions.
Revenue from the Gaikin part-time doctor referral service is calculated as the hourly pay of part-time doctors (around JPY10,000) x number of hours worked (on average 4–14 hours per assignment) x MRT’s commission rate (10%, higher for some assignments) x number of matches made. The company’s average commission income per match is JPY4,000–14,000. Membership stands at approximately 70,000 doctors on a consolidated basis and 30,000 doctors on a parent-only basis, with over 15% of the latter being active members. The number of matches in 2019 totaled 130,000–140,000. Based on these figures, we can estimate that active members used the Gaikin service 20 times per year on average. We estimate OPM at over 10%. The company targets a CAGR of 10–15% in Gaikin revenue growth for the medium term.
Personnel accounts for around 50% of Gaikin’s costs. The company employs operational staff (around 60 employees) to make manual adjustments to the online matching based on specific requirements of the hiring medical institutions. Other costs are sales promotion, system operation and maintenance, and communications. MRT mainly recruits doctor members through word of mouth. Its main service area is the Kanto region. The company focused on expanding into the Tokai area in FY12/19 and is working on expanding into Kansai, Kyushu, and Hokkaido as well. It spends on advertising (e.g., campaigns to attract members) and marketing in regions where the brand is not well known, but aims to keep such promotional costs down to 8–10% of revenue.
In addition to the Medical Personnel Services, the company provides other platform services including a groupware (Net Ikyoku) to support medical office operations, as well as online medical and telehealth consultation services. The company aims to increase revenue for other platform services as these, and turn them profitable at the operating level, with a view to making them a second growth driver that generates high levels of synergies with the physician network created through the Medical Personnel Services.
Earnings trends
FY12/20 results: Revenue was JPY2.6bn (no YoY comparison, because FY12/19 was a nine-month irregular period), operating profit JPY264mn, pre-tax profit JPY240mn, and profit attributable to owners of the parent JPY132mn. Compared with the sum of the results in Q4 FY03/19 and cumulative Q3 FY12/19 (hereafter “the January—December period a year earlier”), FY12/20 revenue was up 3.4%, operating profit was up 205.2%, pre-tax profit increased by 233.5%, and profit attributable to owners of the parent increased by 418.4%. Revenue at the mainstay Medical Personnel Services slumped due to the impact of the COVID-19 pandemic, but revenue and profits increased overall thanks to the top-line growth and cost reduction in Other Services.
MRT’s consolidated FY12/21 earnings forecast (IFRS basis; upwardly revised on August 13, 2021) calls for revenue of JPY3.0–3.1bn (+17.1% to 21.0% YoY), operating profit of JPY410–480mn (+55.1% to 81.6% YoY), pre-tax profit of JPY400–470mn (+66.9% to 96.2% YoY), and profit attributable to owners of the parent of JPY250–300mn (+89.7% to +127.6% YoY). . The company provided its forecast in a range format, explaining that it was difficult to precisely project revenue in Medical Personnel Services. Being a pioneer in a niche market of part-time doctor referral with a network of active members who use the service repeatedly and continuously.
The company expects full-year FY12/21 results to come in above initial forecast as it projects COVID-19 vaccination-related demand for securing medical personnel to continue. In terms of expenses and investments, it anticipates lower recruiting costs, but higher expenses related to the development and operation of new services, including the Door. app aimed at resolving challenges faced by the industry surrounding the group.
MRT has not announced a medium-term business plan. The company will aim for revenue growth by attracting more registered members as it expands regional coverage in the mainstay Medical Personnel Services. It also plans to increase revenue of other medical platform services and turn a profit at the operating level by building a common platform for all services.
Strengths and weaknesses
Strengths:
1) Being a pioneer in a niche market of part-time doctor referral with a network of active members who use the service repeatedly and continuously.
2) Competitive commissions for part-time doctor referral and an advantage in gathering medical institutions’ recruitment information due to extensive knowledge of doctors and frontline needs.
3) Having the ability to harness knowledge of female doctors’ work style reforms in online medical service and telehealth consultation, which are potential growth markets for the company.
Weaknesses:
1) Tracking behind rivals in scale as a medical platform operator.
2) Brand recognition of full-time doctor referral service is diminished by the strong brand power of part-time doctor referral.
3) Managing PMI and collaboration with alliance partners tend to become lax due to frequent acquisitions and alliances aimed at business expansion.
Key financial data
Note: YoY comparisons of FY12/20 company forecasts are based on the total for Q4 FY03/19 (January–March 2019) and FY12/19 (April–December 2019).
Recent updates
Q3 FY12/21 flash update, upgraded full-year earnings forecast
MRT Inc. announced earnings results for Q3 FY12/21 and an upgraded full-year earnings forecast; see the results section for details.
Concluded a basic agreement with Japan Post to conduct pilot studies
MRT Inc. announced that it concluded a basic agreement with Japan Post Co., Ltd. to conduct pilot studies.
The company and Japan Post concluded a basic agreement on September 29, 2021 to conduct pilot studies toward building a platform that can provide comprehensive services from online medical consultations to online guidance on taking medications and prescription drug delivery.
Against the backdrop of increased adoption of online medical consultations and online guidance on taking medications, the company aims to develop and provide highly convenient services for patients, medical institutions, and pharmacies. To this end, while making a full use of the company's strong networks with medical institutions and physicians as well as its member base, the company is considering building a new platform that incorporates schemes for same-day delivery in the shortest delivery time possible for prescription drugs using Japan Post's nationwide delivery network.
Trends and outlook
Quarterly trends and results
Notes: Figures may differ from company materials due to differences in rounding methods. Starting FY12/19, the company changed its accounting period from fiscal year ending March 31 to fiscal year ending December 31. The quarterly YoY figures in FY12/20 are comparisons with the corresponding three-month period of the previous calendar year including the January-March quarter that falls under FY03/19.
Seasonality
Q1 (from FY12/20 onward; January–March quarter) is an off-peak season and revenue is also affected by fewer business days compared to other quarters. The company tends to ramp up SG&A expenses in Q1 as well, since it invests for growth during the quarter based on profit performance of the previous fiscal year.
Demand is brisk year-round for the Gaikin part-time doctor referral service, but is especially strong during the spring and fall health check seasons. The peak season for the “career” full-time doctor referral service is April, which is the usual timing for doctors to change jobs.
1H FY12/21 results (out August 13, 2021)
Summary
1H FY12/21 results
The company reported revenue of JPY1.6bn (+27.2% YoY), operating profit of JPY342mn (+118.6% YoY), a pre-tax profit of JPY337mn (+124.1% YoY), and profit attributable to owners of the parent of JPY206mn (+152.4% YoY). Revenue and operating profit were record highs for 1H. The company revised up full-year FY12/21 forecast as 1H results exceeded its 1H forecast (not disclosed).
Achievement rates versus full-year forecast
In comparison with the company’s FY12/21 full-year forecast (upwardly revised on August 13, 2021*), 1H revenue achieved 53.1–54.8% (versus an achievement rate of 50.5% in 1H FY12/20 versus full-year FY12/20 results), operating profit 71.2—83.3% (59.1%), pre-tax profit 71.8—84.4% (62.9%), and profit attributable to owners of the parent 68.8—82.5% (62.0%).
Revenue
1H FY12/21 revenue rose 27.2%, JPY352mn, YoY to JPY1.6bn, breaking down as JPY1.5bn for Medical Personnel Services (+27.3% YoY), and JPY160mn for Other Services (+26.2% YoY).
Positive factors: Growth in the number of part-time doctor referrals and revenue per referral added JPY256mn (+27.4% YoY) to revenue; other medical professionals JPY61mn (+26.9%) as growth in part-time nurse referrals offset the drag from lower temporary staffing volume in Kanto and fewer pharmacist referrals; and doctor lifestyle support and book publishing services JPY33mn.
Negative factors: Fewer pharmacist referrals and temporary staffing volume in Kanto in other medical professionals.
Growth in the number of registered doctors and nurses increased (+0.7pp YoY) along with growth in the number of referrals for those involved in COVID-19 vaccinations.
The company revised up full-year FY12/21 revenue and profit forecasts as 1H revenue exceeded its forecast (not disclosed). Amid a flood of inquiries at the start of the year, it realized that it might not be able to handle all requests for medical personnel internally (resulting in some being passed on to other companies), but in the end it was able to handle all physician referrals and 1H results exceeded its expectations. However, the company said it subcontracted some nursing referrals to others in the industry.
In Q1 (January–March 2021), revenue was JPY532mn (-8.3% YoY ), growing to JPY1.1bn (+55.9% YoY) in Q2 (April–June). From end-FY12/20, COVID-19 vaccination inquiries started increasing, and revenue declined YoY in Q1 as the company worked to grow headcount, but in Q2, revenue increased as the company fulfilled vaccination-related demand. In Q2, the number of part-time doctor referrals rose significantly for coronavirus vaccine injection and PCR testing-related business.
Doctors
Amid the spread of COVID-19, the MRT group responded to requests from local municipalities and companies for medical personnel to aid in vaccination rollout. Revenue was steady owing to an increase in medical personnel referrals associated with COVID-19 vaccinations. The number of part-time doctor referrals and revenue per referral rose YoY. Salaries for doctors who administer COVID-19 vaccines are comparatively high, boosting the company’s referral fees. In Q2, the cumulative number of part-time doctor referrals for the company since inception passed the 1.5mn mark.
Nurses (Other medical professionals)
Referrals for part-time nurses to staff mass vaccination centers and companies’ workplace vaccination sites increased. There were more referrals for nurses than doctors, as doctors conduct medical interviews and nurses administer the vaccines. The company said the government’s initiatives to set up tax breaks and improve working environments for medical personnel to meet demand for licensed nurses who are not employed were positive for earnings.
Pharmacists (Other medical professionals)
Other
Revenue up 26.2% YoY on contributions from doctor lifestyle support and book publishing services.
Operating profit
MRT reported operating profit of JPY342mn (+118.6%, +JPY186mn YoY), as higher revenue and streamlined operations offset the impact of higher personnel and systems development expenses.
Positive factors: Growth in revenue, JPY351mn.
Negative factors: Higher personnel expenses (increased career consultant headcount) JPY110mn, higher advertising JPY0.5mn, higher depreciation (increased systems investment) JPY12mn, and other JPY42mn.
The company responded to the increased workload by strengthening its staffing structure and streamlining its operations, including organizing and adjusting to the rapidly growing referral volume, strengthening its BPO system, and further recruiting medical personnel.
Company forecast for FY12/21
As noted earlier, on August 13, 2021, the company made an upward revision to its initial FY12/21 forecast announced on February 12, 2021.
Operating environment
COVID-19
The spread of COVID-19 began back in early 2020, but the virus continues to wield an enormous impact; as of June 2021 it had infected more than 180mn people worldwide. In Japan, the number of infections has reached 800,000. The healthcare system is starting to buckle, with medical personnel shouldering an ever-increasing burden. Hospital beds are filling, and when ambulances are called for COVID-19 patients at home who have a taken a turn for the worse, there is often difficulty finding a hospital to take the patient due to a lack of available beds.
Securing medical personnel to aid in COVID-19 vaccine rollout
Japan began vaccinating healthcare workers for COVID-19 in early March 2021, and has been working since May to prepare for rollout among the general population. Requirements include procuring sufficient vaccine, locking in vaccination venues, and large-scale recruitment and organization of the personnel necessary to administer vaccines. As of end-June 2021, the vaccination rate remains low, with 26% of the population having received at least one dose of the vaccine and 14% of the population fully vaccinated, due to various issues surrounding vaccine supply, management, appointment systems, and the availability of medical personnel.
At the start of FY12/21, the company assumed that the COVID-19 vaccination rollout would take till the end of the year, and in mid Q2, it brought forward the timing to autumn 2021 as workplace vaccinations started. As of end-August 2021, it pushed back its estimate to early 2022 due to delays in vaccine supply. As the possibility of a third injection emerged, it thinks the rollout may continue until spring 2022.
Vaccine related medical personnel referrals will decline at some point, but even without these, the company said it usually accounted for over 50% of placements to medical institutions. The company’s registered members are growing nationwide due to the pandemic, suggesting it may be able to increase its share of placements once vaccine rollout referrals run their course. The company also thinks that stronger relations of trust with medical institutions should be a tailwind to growth in referrals.
Initiatives
In response to the rise in COVID-19 patients under home-care or waiting for hospitalization, the company was contracted by Saitama Prefecture to provide health consultation services for home-care patients. In May 2021, the company was contracted by the Osaka prefectural government to operate the Emergency Consultation Center for Home Care Patients, and has built a variety of medical systems to support home care patients, including for online health consultations, online medical treatments, and home visits. In addition, the company provided client companies with a wide range of other services such as health consultation services accompanying antigen and antibody tests, and consultation services for post-vaccination side effects.
MRT also continued to make moves to boost enterprise value, including development of core systems for medical personnel matching, and further development of the Door. app linked to the company’s physician network, and the Door. into Health and Medical Consultation service, an end-to-end service providing health consultations, recommendations for hospital visits, and medical services online.
Online healthcare services
With its Door. app launched in FY12/20, the company is able to provide end-to-end health consultation and medical services in-person and online. It acquires patients at the entrance (health consultation), and the exit, following online medical services, is real (face-to-face) medical services. The company said the addition of home visits completed its end-to-end Door. offering.
In 1H (January–June 2021), roughly 120,000 consultation codes were issued (aggregate of paid and free). This includes health checks for local government patients recovering at home in Saitama and post-vaccine health consultations via the app. Under paid services, members of corporate health unions use dedicated codes for consultation (purchased for JPY100–200 each). Paid services accounted for roughly 30% of the total in 1H. The company books revenue when codes are used (from a cash flow perspective, cash inflows are generated when a code is issued).
Areas covered by consultations include positive antibody test results, antigen test kit results, support for Saitama residents recuperating at home, vaccination side effects, and health for employees under corporate benefit plans. Member doctors provide health consultations using the chat function or video call. If there is a possible COVID-19 infection discovered during the consultation, online or face-to-face medical services (home visits) can be immediately provided. The company has built a system where home visits are promptly arranged when emergency transport or hospital beds are unavailable. The number of people using online medical services is growing due to the provision of online health and medical consultation services to numerous local government residents and company employees. The company aims to link guidance on the use of medications in the future.
The company is collaborating with a local government to develop services to link home visits for COVID-19 patients being treated at home to its Door. app. Just as with online medical services, medical institutions provide home visits, but many do not have the capability. The company steps in to arrange a vehicle necessary for home visit, medicine, and equipment on behalf of the medical institution, from which it receives a fee (in addition to the Door. app fee, it receives one for providing the home visit function).
Online medical services in Japan
On August 16, 2021, Prime Minister Yoshihide Suga told reporters that building the medical system was extremely important, and that the government would raise the compensation for telemedicine for patients in the home. The company expects that guidelines will call for fees for initial phone consultations to double and quadruple for follow-up consultations. It sees plenty of scope for online medical care to grow going forward.
RPO/BPO services
The company aims to integrate workflows related to the employment of part-time medical personnel (recruitment process outsourcing: RPO) that it provides to medical institutions and local governments with business process outsourcing (BPO) services such as calculating salaries and handling bank deposits for such personnel it provides through subsidiary anew, Co., Ltd. The company rolled out RPO/BPO services covering 3,000 part-time medical personnel in 1H, in collaboration with local governments and medical institutions in Kanto and regional areas. From 2H onward, it plans to step up cooperation with local governments and test centers and will continue developing the business once the pandemic settles down.
Sharing information
The company is developing a common platform using the Door. app to share group information and services, but has been focusing on pandemic related projects and online health consultation and medical services, so progress is slightly behind schedule. However, it is now possible to use the Door. app for online health consultations. The company is working on integrating Value Medical’s media and installing BPO capabilities on the common platform. In BPO services, the company is calculating salaries for some 3,000–4,000 personnel due to an increased number of COVID-19 vaccination projects, so said it aimed to incorporate BPO functions on the Door. platform and boost productivity in 2H.
For details on previous quarterly and annual results, please refer to the Historical financial statements section.
Company forecast for FY12/21
YoY comparisons of FY12/20 company forecasts are based on the total for Q4 FY03/19 (January–March 2019) and FY12/19 (April–December 2019).
Overview
MRT’s consolidated FY12/21 earnings forecast (IFRS basis; upwardly revised on August 13, 2021) calls for revenue of JPY3.0–3.1bn (+17.1% to 21.0% YoY), operating profit of JPY410–480mn (+55.1% to 81.6% YoY), pre-tax profit of JPY400–470mn (+66.9% to 96.2% YoY), and profit attributable to owners of the parent of JPY250–300mn (+89.7% to +127.6% YoY). The company provided its forecast in a range format, explaining that it was difficult to precisely project revenue in Medical Personnel Services.
Full-year FY12/21 forecasts (revised August 13, 2021)
Reason for revision
MRT reported steady revenue in 1H FY12/21 owing to an increase in medical personnel referrals associated with COVID-19 vaccinations. In addition, the company managed to reduce recruiting costs by fully utilizing the group's medical information platform.
The company expects full-year FY12/21 results to come in above initial forecast as it projects COVID-19 vaccination-related demand for securing medical personnel to continue from 1H FY12/21. In terms of expenses and investments, it anticipates lower recruiting costs, but higher expenses related to the development and operation of new services, including the Door. app aimed at resolving challenges faced by the industry surrounding the group.
Revenue outlook
The company’s outlook for full-year consolidated revenue of between JPY3.0bn and JPY3.1bn represents projected YoY growth of between 17.1% and 21.0%. The company’s general expectations by business line are as follows:
At its Medical Personnel Services business, the company sees revenues growing on the back of rising demand for medical personnel in connection with PCR testing and coronavirus vaccination programs.
Revenues from pharmacist referrals is seen declining as new hiring of pharmacists slows in the wake of the pandemic.
The company is also counting on growth stemming from its new-found connections with local governments. Prior to its contacts formed in response to the government-led efforts to roll out PCR testing and vaccination programs, MCR had no contacts in government. But with this door now open, the company is looking to capitalize on these connections and work together with local governments in other areas as well, thereby turning the public sector market into another growth driver going forward.
Operating profit outlook
The outlook for full-year operating profit of between JPY410mn and JPY480mn represents projected YoY growth of between 55.1% and 81.6%. The company’s key assumptions that directly affect operating profit are as follows:
Based on planned increases in staffing (personnel consultants), the company has budgeted an additional JPY100mn in spending over last year for depreciation and maintenance of related equipment.
Based on planned investments in its Door. app and systems supporting its personnel referral business, the company is budgeting an additional JPY80mn in systems-related spending over last year (with roughly 80% of this additional spending going towards its Door. app).
Company assumptions regarding its external operating environment
The company assumes there will be a need to further improve the hiring environment of healthcare workers as the job market of these workers expands and the demand to hire doctors grows progressively amid persistent physician shortage and maldistribution (in terms of geography and areas of practice).
While the Japanese government has actively considered online medical services as a growth strategy, the rate of actual service use has not increased due to various constraints. However, the pandemic spurred an urgent need in the medical sphere to address the infection risks during face-to-face medical consultations and provide support to those COVID-19 patients undergoing home care. The government consequently eased the regulations on online medical services as a temporary and time-limited measure. This move helped boost the public awareness of such services, but there still remains an urgent need to improve the service environment.
Measures to boost enterprise value
The company will continue investments made in FY12/20 into in systems to provide better and more efficient matching of doctors and other medical professionals with medical institutions, and upgrade to high-versatility systems.
It will continue the group information sharing measures it implemented in FY12/20 to put its management resources to maximum use.
It will lay the foundation for expansion into international business and promote partnerships with community medical care providers.
Individual services
Medical Personnel Services
MRT plans to pursue the measures below to improve the brand recognition/awareness of its services and offer new value-added to healthcare workers and medical institutions.
Strengthen the service integration among group companies
Add functions to improve usability once the core system for medical personnel referral services undergoes a revamp; expand functions in line with the expansion of medical personnel referral services
Develop new services associated with personnel referral: MRT forecasts revenue from its doctor referral services by multiplying the projected number of matches by a billing rate that is estimated based on past transactions. According to the company, it has become difficult to make a precise revenue projection due to the complexity of hiring requirements under the COVID-19 crisis (i.e., constraints in providing medical care as a backdrop; need for improved testing structure and care for those infected, ability to handle vaccination).
Other Services
MRT intends to leverage the network of physicians and medical institutions it has built thus far to achieve organic growth in the services operated by its group companies. Initiatives include:
Rollout of the Door. app* and Door. into Health and Medical Consultation service
Expansion of services for healthcare workers (media, lifestyle support)
Expansion of services for medical institutions (operational support)
Collaboration with government agencies
Previously, collaboration between the company’s services and government agencies has not exactly been close. However, in FY12/20 the company started working with Osaka and Saitama prefectures, and there have been many inquiries from other government agencies as well, and in FY12/21 the company says it will focus on engaging with government agencies as well. It will enhance support for government agencies over the longer term, not just contracts related to COVID-19 such as PCR testing and vaccinations.
Online medical care
In October 2020, MRT began charging fees for Pocket Doctor, the telemedicine and telehealth consultation service developed jointly with OPTiM Corporation (TSE1: 3694). The company says it will continue to offer Pocket Doctor even after achieving full-scale operations with its Door. app.
The Pocket Doctor system utilizes OPTiM’s remote technologies. Going forward, hospitals and clinics will choose either Door. app or Pocket Doctor. The two are conceptually different. Pocket Doctor mainly provides high-quality medical systems, while Door. is a comprehensive tool that utilizes the company’s network, and online medical care is part of the overall network-based support for entire medical institutions.
The company had planned to conduct continuous business from health consultation to online medical care, but Pocket Doctor was mainly just an online medical care business. For that reason, the company says it aims to use Door. to attract users with health consultations and then offer them online medical care as well, and by doing so provide support for hospitals and clinics. In other words, it will market Pocket Doctor to users seeking online medical care only, and Door. for providing comprehensive services.
Expenses
MRT assumes expenditure in efforts to grow membership (increase member doctors to expand its physician network), build a common platform for the group (to achieve efficient/effective marketing, improve service quality, diversity services), and develop new services including Door. (to resolve the challenges faced by the industry surrounding the group). The company will continue to invest in systems, and has budgeted about the same amount as in FY12/20 (roughly JPY80mn). In addition, it projects higher personnel expenses as it hires more support staff to grow sales in the “career” full-time doctor referral service.
Based on the above, the company provided its earnings forecast in a range format.
Medium-term outlook
Medium-term business plan undisclosed
The company has not disclosed a medium-term business plan.
Company’s view of external environment
The company expects significant growth in the surrounding medical care and healthcare markets as the population continues to age.
Employment of healthcare workers will continue to expand in this context. MRT expects further growth in demand for doctors amid chronic shortage of physicians and their maldistribution in terms of geography and clinical departments.
The company also assumes that telemedicine services will become accepted and recognized across Japan as the government pursues the growth strategy of remapping the clinical departments whose online medical care is eligible for public health insurance coverage and allowing more online services such as guidance on the use of medications.
Medium-term operating environment
Doctors’ work style reforms
The number of overtime hours that doctors are permitted to work will be capped beginning April 2024 (see section below on doctors’ work style reforms).
Progressive aging of the population and increased social security spending
According to Cabinet Office’s FY2020 Annual Report on the Ageing Society white paper, Japan’s population is declining, but the percentage of senior citizens continues to rise due to the increase in the number of people aged over 65. The percentage is forecast to reach 32.8% (one in three) in 2035.
Japan’s social security spending is forecast to grow from JPY121tn in FY2018 to JPY190tn in FY2040, while GDP is projected to increase from JPY564.3tn to JPY790.6tn over the same period (source: “Outlook of social security toward 2040: A reference for discussion by the Cabinet Secretariat and other agencies,” May 21, 2018, Cabinet Secretariat, Cabinet Office, Ministry of Finance, and MHLW; see “Market and value chain” section).
Shortage and maldistribution of physicians
The physician shortage in Japan is forecast to continue until around 2028 based on MHLW projections (see “Market and value chain” section for details).
The government aims to resolve the maldistribution of physicians by FY2036 (as above).
Online medical service and telehealth consultation
FY2018 NHI medical fee revision lifted the ban on online medical service. The Japanese public health insurance coverage was applied to online medical service from FY2018, but only for chronic conditions for which patients have had face-to-face medical consultations for at least three months. From April 13, 2020, however, initial medical consultations conducted online also became covered by public health insurance as a temporary and time-limited measure to prevent the spread of COVID-19 (see “Market and value chain” section for details).
Company’s strategic direction
Overview
The MRT group’s corporate philosophy is to “contribute to society with medical care at heart.” The company believes that strengthening connections among physicians who play a leading role in the frontlines of healthcare, and enhancing their QOL* will help to create a rich healthcare system. Its objective is to resolve issues in the front line of healthcare through the services it provides.
MRT’s management team has the following two priorities in its management strategy.
Form an extensive medical network: Form an extensive network of doctors and other healthcare workers as well as university hospital medical offices and medical institutions
Pioneer new services: While maintaining focus on existing services, collaborate with medical-related companies to offer new services for medical institutions and doctors, and pioneer new ancillary services
While growing the mainstay Medical Personnel Services at a rate of 10–15% per year, aim to boost the revenue share of other platform services such as telemedicine/telehealth consultation service (Pocket Doctor) to develop them into a second growth driver. Other platform services are still at the investment stage and are not profitable at the operating level. However, the company plans to turn an operating profit in these services through revenue growth. It hopes to maintain a group-wide OPM of 10% plus.
Since its inception as a mutual support organization of doctors in 2000, MRT has built a medical personnel network based on accumulated experiences and know-hows. Leveraging this network, the company runs a medical information platform business centered on the referral of part-time and full-time doctors. In the mainstay Medical Personnel Services, it plans to expand the service coverage nationwide, while investing in systems development to improve matching efficiency and controlling fixed costs such as personnel expenses.
In FY12/20, the company invested in IT systems to improve the matching rate between physicians/other medical professionals and medical institutions, and share information across the group to maximize the utilization of management resources.
For more details on other platform services, see section below on pioneering new services.
Responding to changes in external environment; expanding into healthcare and overseas business
MRT sees both threats and opportunities in changes in the external environment, including government policy and medical system reforms, as evident in the FY2018 medical fee revision opening the door to online medical service.
Regarding online medical service, follow-up medical consultations conducted online became eligible for public health insurance coverage in FY2018. From April 13, 2020, online initial consultations also became eligible as a temporary and time-limited measure to prevent the spread of COVID-19.
The number of overtime hours that doctors are permitted to work will be capped beginning April 2024 (doctors’ work style reforms). In principle, doctors will only be permitted to work up to 960 overtime hours per year. However, MLHW also laid out an exception allowing overtime of up to 1,860 hours per year for cases that are viewed as necessary for the maintenance of community healthcare or for the purpose of intensive technical training to improve clinical skills (source: MHLW interim report published on March 28, 2019). Considering the shortage of doctors, many in the profession think that an overhaul of the healthcare system is required to comply with the rule limiting doctors’ overtime to 960 hours per year. In a survey by MedPeer Inc. (TSE Mothers: 6095), 55% of the 3,000 doctors who participated answered that they believed it would be difficult to comply with the limits on overtime hours. MRT thinks the recruiting market for physicians will reach a major turning point as a result of the 2024 work style reforms, and that it will become crucial to carefully determine the course of its businesses.
MRT plans to move into the healthcare business going forward. It believes it can harness the ability to get things done and solid reputation as medical professionals in expanding into the healthcare industry.
The company is also laying the groundwork for doing business overseas. It is expanding its overseas network (mainly in Asia) in the medium term to run a medical personnel referral business outside Japan.
The company plans to build networks over the next year or two with countries with projected population growth, which offer markets for medical services. The medical office system varies between countries in Asia. Doctors with a medical license in Japan can work after some training in Malaysia, Dubai, and in some areas in Cambodia. Singapore has tight restrictions on overseas doctors working there, and provides no opportunities for Japanese doctors. The company is considering a range of options, such as dispatching Japanese doctors to Asian countries, increasing job mobility for doctors within Asia, or providing its systems only. The company plans to run services in Asia after gaining a full understanding of each country’s medical insurance system and job mobility in the healthcare field.
Forging an extensive medical network
The company plans to expand its service area as follows.
Since prefectures with multiple university hospitals have many doctors, the company has targeted these areas and established sales bases in Tokyo, Osaka, Nagoya, Fukuoka, and Hokkaido. Areas with multiple university hospitals offer more job mobility to doctors. Large populations attract many medical institutions and call for greater medical needs. Thus, the company will concentrate its efforts to first build networks in these areas.
MRT’s management team intends to build relationships with medical offices of university hospitals and other medical institutions and broadly recruit members, including young doctors working at these facilities, through word of mouth. At the same time, it will attract assignments by gaining an understanding of the needs of each medical institution that is part of its network to establish a system of two-way information exchange between doctors and medical institutions.
The characteristics of medical services and the needs of medical institutions vary between regions. Therefore, the company believes a flexible approach to fit in with the way each region operates is essential. Despite these regional variations, the company says it can harness in its business the know-how and problem-solving capabilities it has acquired over the years.
As a small company with limited name recognition, MRT understands that raising its profile in the regional areas is crucial when approaching medical institutions to do business.
Cultivating new services
The company is cultivating the following new services.
As doctors who engage in part-time work become older, they often approach the company for advice on changing jobs and going into private practice. There are multiple solutions to the challenges that doctors encounter in different life stages. The company will seek to provide these solutions as a service.
The number of female doctors continues to rise. Among female doctors unable to work in a clinical setting due to childbirth and parenting, there is an increasing demand to work from home. This trend has widened the scope of MRT’s services to include, for example, online health consultations. The company aims for revenue growth by expanding services for female doctors.
For medical institutions, employing multiple part-time doctors complicates administrative tasks such as managing attendance and calculating salaries. The company plans to provide a solution to this problem, focusing on expanding services that reduce medical institutions’ administrative workload. For example, provided the doctors on part-time assignments at a medical institution are mostly MRT member doctors, the company can offer administrative services, including preparing pay statements and making payments.
The company is promoting a common platform for all group companies to share information and expand its core personnel referral services, while also utilizing the common platform to make use of its own media and expand ancillary services. It is improving user interfaces (UIs) for this purpose.
Business
Business description
Overview of company and services
Medical Personnel Services centered on the Gaikin part-time doctor referral service
MRT provides an online medical platform that connects doctors, medical institutions, medical offices (ikyoku*1), medical-related companies, and patients. The company was founded in 2000 by practicing doctors who aspired to resolve issues that medical institutions faced, such as the nationwide shortage of physicians.
MRT’s mainstay business is Medical Personnel Services provided online. In FY12/20, its revenue from the Medical Personnel Services business stood at JPY2.3bn (88.6% of total). Although the company does not disclose a revenue breakdown by services, it says that over 50% of its revenue comes from Gaikin, an online service that matches part-time doctors with medical institutions seeking to fill vacancies.
The remainder of revenue in the Medical Personnel Services business comes from the referral of doctors to full-time positions, and personnel services for other medical professionals*2 (part-time job referral, career change referral, and worker dispatch).
As of end-February 2021, there were approximately 260,000 registered members in the Medical Personnel Services business. Of this total, physicians—mainly young doctors and those in their 30s and 40s—accounted for 70,000 or roughly 20% of Japan’s 330,000 doctors (as of end-December 2018). The company has a working relationship with over a third of the university hospitals across Japan.
Other Services
In addition to its core Medical Personnel Services business, the company provides other platform services, including a groupware that supports medical office operations (Net Ikyoku) and online medical care and telehealth consultation services (Door. into Health and Medical Consultation).
Revenue from other platform services grew from accounting for 1.6% of total revenue in FY03/16 to 11.4% in FY12/20. This is an indication that while the revenue of the Medical Personnel Services (over 90% of total) marked double-digit annual growth over the same period, other platform services have also gained traction for business growth (note: these services are still in the investment phase and yet to post an operating profit).
The company’s inception (how the core Gaikin service came about)
Referral of part-time (gaikin) doctors via the internet
Medical Research and Technology (now MRT) was founded in January 2000 by two doctors who graduated from the University of Tokyo’s Faculty of Medicine, one of whom is current Chairman and Director Hyoe Tomita. It started out as a mutual support organization*3 of doctors employed at the University of Tokyo Hospital.
It is common for doctors in Japan (especially those aged 40 or younger) with full-time jobs in university hospitals to take on additional part-time work at other medical institutions. This practice is known as “gaikin.” Medical institutions hire these part-time doctors to resolve issues such as physician shortages and maldistribution of physicians in terms of geography and areas of practice. Around the time the company was founded, university hospital medical offices (ikyoku) were typically in charge of sending/referring doctors to gaikin work*4.
MRT devised a mutual support system where doctors belonging to the same medical office were able to refer each other to gaikin assignments*5. By harnessing IT (going online), the company further developed and expanded this system to achieve the business growth to date.
Change in the clinical training system in 2004: Reduced authority of medical offices, greater labor mobility for doctors
In April 2004, the Japanese government made changes to its clinical training system for medical practitioners*6.The new system effectively reduced the authority of medical offices and accelerated doctors’ labor mobility.
Under the new system, doctors requiring clinical training have flocked to popular hospitals, aggravating the physician shortage in some regions. The new system also weakened medical offices’ control over personnel management*7. The doctors’ mobility also increased at an accelerated pace as they themselves became more motivated to choose where they worked. MRT commented that this change was a turning point that fueled its revenue growth.
Other companies providing medical personnel services (MRT’s competitors) have a conflict of interest with medical offices, because their main line of business is to present career change opportunities to doctors, and they could appear to be poaching resources from the medical offices. In contrast, MRT focuses on introducing part-time positions, and is not involved in a doctor’s career change from his/her medical office to an unaffiliated medical institution. The company’s management team has established and maintained positive working relationships*8 with medical offices, mainly of university hospitals. Building on these relationships, MRT has successfully promoted its services through word of mouth and expanded its membership of doctors.
Why is gaikin necessary?
Current status of gaikin
According to a survey report released on July 8, 2015 by the Japan Medical Association (JMA) on the number of doctors required in hospitals as of May 1, 2015, 81.6% of the doctors (n = 117,345) worked full-time (including 1.3% in permanent employment with reduced hours) and 18.4% worked part-time. Given a five-day work week, a part-time doctor worked one day a week on average.
A September 2012 survey by the Japan Institute for Labour Policy and Training* on doctors’ working conditions and awareness found that 52.1% of hospital doctors worked at two or more institutions (i.e., did some part-time work). Doctors worked on average 46.6 hours per week at their main place of work (in their full-time positions; n = 3,457) and a total of 53.2 hours per week (n = 3,429) as a total of full-time and part-time work, which meant they spent an average of 6.6 hours per week in part-time positions.
Reasons why doctors do gaikin
According to the same survey on doctors’ working conditions and awareness, the top three reasons why hospital doctors took on gaikin (part-time) work were: 1) to earn more income (48.1%); 2) upon instruction of their employers (36.5%); and 3) because they could not earn enough to make a living from one job (34.4%). It typically takes around 10 years for doctors who graduate from medical school and pass the National Examination for Medical Practitioners to be recognized as fully qualified medical doctors who can utilize their clinical experience. During this period, doctors engage in gaikin to build up their experience as well as supplement their income. Thus, there is strong demand among younger doctors for gaikin assignments, including locum work.
Reasons why medical institutions require gaikin
The general unpredictability of medical practice and the physician shortage stemming from geographic maldistribution of doctors, as evident in rural communities that do not have doctors, are among the main reasons why medical institutions have the need for gaikin (part-time) doctors. There are also physician shortages in some clinical departments.
General unpredictability of medical practice:
In hospitals, patients may suddenly take a turn for the worse or a need for an emergency surgery may arise, so much of their day-to-day operations are unpredictable. Hospitals that employ multiple specialist doctors as full-time staff can cope with emergencies without outside assistance by adjusting shifts or bringing in additional doctors. However, given Japan’s chronic doctor shortage, few medical institutions have sufficient doctors within their work force. Thus, there is a mismatch between the number of patients requiring medical treatment (demand) and the absolute number of doctors able to provide the treatment (supply). In these situations, medical institutions must call for reinforcements among doctors who work elsewhere. There is a need for services such as MRT’s that provide extensive information and timely doctor referral to hospitals needing help.
Doctor shortages due to uneven regional distribution and shortages in some clinical departments:
Under the new clinical training system for medical practitioners, more doctors have chosen to work at urban hospitals where they have exposure to many patients and can gain plenty of clinical experience. Conversely, the number of doctors employed at medical institutions and university hospitals in rural areas has declined and the doctor shortage has become severe in some regions. Clinical departments with long work hours and tough working conditions are also unpopular and face chronic doctor shortages. These clinical departments and regional medical institutions cannot maintain the quality of care with just their full-time doctors. Thus, part-time help is essential and many medical institutions are constantly advertising for them.
Current status of the doctor shortage
According to MHLW, there were 327,210 registered medical doctors in Japan as of December 31, 2018, a 60% increase in 30 years compared to 201,658 at end-1988. However, OECD Health Statistics 2019 show that the number of doctors per 1,000 population in Japan is only 2.4, the fifth lowest figure among the 36 OECD countries (the OECD average is 3.5). The number of medical school graduates per 100,000 population is the lowest in the OECD at 6.8 (average 13.1). Total capacity of medical schools at national, other public, and private universities was 9,330 in FY2020.
The MHLW subcommittee dealing with the supply-demand imbalance of doctors estimates that even if medical schools were to reduce their student intake from 2022, reduced workload from the proliferation of AI and other technologies would lead to a supply-demand balance around 2028–2033, and a supply surplus thereafter.
MRT’s corporate philosophy
The MRT group’s corporate philosophy is to “contribute to society with medical care at heart.” The company believes that strengthening connections among physicians who play a leading role in the frontlines of healthcare, and enhancing their QOL* will help to create a rich healthcare system.
Business model
Single business segment: online medical information platform provider
Service categories
The MRT group mainly provides a medical information platform using the internet (single reportable segment). Its services broadly break down into Medical Personnel Services (medical personnel information platform services) and Other Services.
In FY12/20, revenue was JPY2.3bn (88.6% of total) in Medical Personnel Services and JPY291mn (11.4%) in Other Services.
Revenue from Other Services has grown year by year, from accounting for 4.0% of total revenue in FY03/17 to 5.6% in FY03/18, 6.3% in FY03/19, 7.3% in FY12/19 (nine-month irregular fiscal year), and 11.4% in FY12/20.
Regional coverage
MRT had sales offices in the following locations as of end-December 2020. The company seeks to increase group revenue by opening sales bases in Tokyo and other locations with a large doctor population, thus expanding the areas where it can collaborate with medical institutions. It also plans to simultaneously pursue acquisitions.
Tokyo (two locations in total, Shibuya headquarters +1): Since its founding in 2000, the company’s most successful service area remains the Kanto region.
Nagoya: Sales office opened in March 2015. Revenue in the Tokai region in FY12/20 was 2.4x the revenue in January–December 2014. The company began strengthening it sales base in the Tokai area in FY12/19.
Osaka: Sales office opened in September 2015. Revenue in the Kansai region in FY12/20 was 27.7x the revenue in January–December 2014. The Osaka branch office turned profitable on a monthly basis in FY12/19 (nine-month irregular fiscal year) after the company stepped up sales in Kansai from FY03/18. Consolidated subsidiary NOSWEAT Co., Ltd. is based in Kyoto and Nihon medical career Co., Ltd. (also a consolidated subsidiary) has a branch office in Osaka.
Fukuoka: Sales office opened in June 2017. Revenue in the Kyushu and Okinawa regions in FY12/20 was 36.6x the revenue in January–December 2014. The company began strengthening its business in Kyushu and Okinawa from FY03/19. Consolidated subsidiary Nihon medical career Co. has a branch office in Fukuoka.
Sapporo: Consolidated subsidiary Nihon medical career Co. has a sales office in Sapporo. Revenue in the Hokkaido and Tohoku regions in FY12/20 was 7.8x the revenue in January–December 2014.
Membership
The registered members of MRT group’s services are healthcare workers such as doctors, nurses, pharmacists, clinical technologists, and clinical radiologists. Members (all group companies combined) totaled around 260,000 as of end-February 2021, of whom 70,000 were doctors (approximately 30% of total). There were also around 90,000 nurses and 40,000 pharmacists. The remaining 50,000 were clinical technologists, radiologists, and others.
More than 90% of the 70,000 doctor members signed up by word of mouth. They represent around 20% of the 330,000 doctors in Japan (as of end-2018). The company cultivates relationships with university hospital medical offices through sales activities spearheaded by its senior management. It then broadly recruits members including doctors from these medical offices by word of mouth. Members aged 40–49 make up the largest group, and doctors in their 30s and 40s are the most active. MRT notes that a typical snapshot of gaikin has not changed over time. It involves young doctors working part-time at other hospitals to supplement low salaries from their full-time jobs. These doctors do clinical outpatient work at their main hospitals, conduct research as graduate students, and provide medical education to medical school students. They not only perform triple roles of clinical work, research, and education, but also work part-time in their free time. A typical active member of MRT’s part-time doctor referral service (core service) continues to take on gaikin assignments in their 40s.
Number of referrals made
In the Medical Personnel Services, the company handles 500–600 referrals per day (as of 2020). MRT has a working relationship with some 10,000 medical offices.
MRT can keep its member acquisition costs low since its main source of publicity is word-of-mouth. As such, since the company’s inception, it has managed to keep the commission rate for part-time doctor referral to 10% of the doctor’s pay (charged to the hiring medical institution; over 10% in some cases), which is half the going rate of 20%.
As the members of MRT’s management team are largely doctors (five of the seven directors are doctors), the company has an in-depth understanding of the needs of doctors and medical institutions, and is at an advantage in gathering recruiting information from the medical institutions, which pay the commissions.
Medical Personnel Services (medical personnel information platform services)
Overview
Revenue
Revenue from Medical Personnel Services was JPY2.3bn in FY12/20 (88.6% of total). The company does not disclose an operating profit breakdown, but says that currently all of its operating profit comes from Medical Personnel Services (i.e. Other Services is making an operating loss).
Breakdown of Medical Personnel Services
The Medical Personnel Services (medical personnel information platform services) is broadly divided into two categories: 1) doctor referral services for part-time and full-time positions; and 2) personnel services for other medical professionals (part-time job referral, career change referral, and temp-to-perm staffing [temporary staffing with the possibility of moving to full-time employment]). Both categories make use of job listing websites.
Services for doctors
The doctor referral services for part-time and full-time positions are operated by the parent company (service names: Gaikin for part-time and “career” for full-time positions) and two consolidated subsidiaries, Ishi no Tomo and Nihon medical career Co. (previously CB Career). MRT provides safe and secure services to medical institutions and related parties through strict management of member doctor data.
In the past, even doctors belonging to a university hospital medical office could only obtain information on hospitals that had ties with his/her medical office in one way or another. Meanwhile, there are many medical institutions across the country that do not have connections with medical offices but could still benefit from these doctors’ specialist knowledge and skills.
Previously there was no place medical institutions could visit to gather the information they were seeking. Therefore, at their request, MRT began collecting information on medical institutions with doctor shortages, while gathering information on doctors’ skills and specializations via its platform in an effort to ensure accurate and optimal matching.
Services for other medical professionals*
MRT and consolidated subsidiaries NOSWEAT and Nihon medical career Co. (previously CB Career) provide personnel services for other medical professionals (part-time job referral, career change referral, and temp-to-perm staffing [temporary staffing with the possibility of moving to full-time employment]).
Strict management of member doctor data and the MRT award point system
Strict management of member doctor data: Doctors who wish to use the company’s referral services for part-time and full-time positions must first register as a member. All registering doctors must provide official qualification documents (such as medical license) and resume to prevent fraudulent registrations by unqualified persons. In addition to verifying the licenses, the company checks the hospitals and clinical departments where the doctors previously worked to prevent a mismatch between the doctors and medical institutions. It collects extensive feedback from previous employers regarding social skills, punctuality, attitude to work, any issues with nurses and other staff, and professional skill levels for quality assurance purposes and will only refer doctors whom it finds trustworthy. Doctors also update their information such as specialist knowledge and skills so that the information is up to date on both sides.
MRT Points: MRT Points are awarded to the doctors who use its part-time and full-time doctor referral services, apply to campaigns, or respond to questionnaires. The company says the redemption rate of MRT Points is higher than rates for credit card loyalty schemes (0.5–1%). Once the points reach a certain number, they can be redeemed for cash (10,000 points = JPY10,000; paid by bank transfer). MRT Points can also be donated to the Japanese Red Cross Society emergency relief fund for the Great East Japan Earthquake and other social causes.
Gaikin (part-time doctor referral)
Overview
Gaikin is an automated online matching service for doctors seeking part-time work and medical institutions seeking to hire (some tasks are adjusted manually). Assignments come in two work styles (regular and spot). The company commented that referral services to part-time doctor positions represent a niche market, which is also its area of strength.
The company commercialized the business model for Gaikin ahead of its competitors, and has developed the service to the level of generating more than 140,000 matches annually (as of 2020). Gaikin is available year-round, 24 hours a day. The company does not scout part-time doctors to have them switch careers. Rather, it matches the needs of hospital doctors wishing to work part-time in their free time including nights and weekends (supply) with those of medical institutions that face a staff shortage (demand).
Matching process
The matching process is as follows:
Medical institutions (such as hospitals and clinics) seeking part-time doctors register on MRT’s job referral website for doctors, and list their requirements (i.e., clinical department, period, and pay).
Doctors seeking part-time work register on the same site (become members), check the details posted by medical institutions, and apply via the site.
Medical institutions access the site to check the information provided by applicants. An employment contract is concluded if the parties agree on the terms.
The hiring medical institution pays MRT a commission of around 10% of the doctor’s pay once the part-time doctor begins work. MRT does not collect any commission from doctors.
Doctor membership
As of end-FY12/20, the doctor members registered with the MRT group stood at 70,000. On a parent-only basis, the membership came to 30,000 doctors, with over 15% being active members. The company noted that doctors handling medical care at multiple institutions are generally young, highly skilled, and energetic. In this vein, MRT’s main membership targets are doctors aged 30–40, who are employed at or recently left university hospitals. Part-time doctor referrals through Gaikin amounted to more than 140,000 cases in 2020. Doctors’ use of the Gaikin service varies from once a year to multiple times, but by simple average, active members use it around 20 times per year.
Operations
As a general rule, the matching system automatically matches doctors and medical institutions on a repetitive and continuous basis. However, the referral of part-time doctors also calls for a speedy response while considering factors that are unique to the medical setting (i.e., emergency surgeries and cases to be handled promptly; the idiosyncrasies of medical institution HR; requirements for specialist skills and experience). As such, some manual adjustments are made by a group of dedicated staff (around 60 employees) to meet the specific needs of medical institutions.
Number of referrals made
The company disclosed the number of referrals made during each fiscal year through FY03/18, but has stopped doing so since FY03/19, mainly due to a mix-up among spot and regular assignments.
Number of referrals: 60,158 in FY03/10 ⇒ 68,266 (+13.5% YoY) in FY03/11 ⇒ 78,923 (+15.6%) in FY03/12 ⇒ 83,522 (+5.8%) in FY03/13 ⇒ 90,657 (+8.5%) in FY03/14 ⇒ 101,159 (+11.6%) in FY03/15 ⇒ 105,684 (+4.5%) in FY03/16 ⇒110,000 (+4.1%) in FY03/17 ⇒ 100,000 in FY03/18 (-9.1%).
Revenue
Revenue from Gaikin is calculated as the hourly pay of part-time doctors (around JPY10,000) x number of hours worked (4–14 hours per assignment) x MRT’s commission rate (10%, more in some cases) x number of matches made. The average commission income per match is JPY4,000–14,000. Shared Research estimates OPM at over 10% in FY12/20.
Once part-time doctors begin their work after a successful match, they receive an hourly wage of around JPY10,000 from the hiring medical institution (hourly pay can be higher for more specialized and urgent assignments, and may vary among clinical departments).
MRT receives a commission of 10% (more in some cases) of doctors’ pay from the medical institutions (employers). Doctors do not pay commissions to the company. The company’s commission rate is half the going rate of 20% (payable in cases where medical offices refer doctors to medical institutions; also, the rate normally charged by MRT’s competitors). As discussed below, the company can keep its prices competitive, because its primary member acquisition method is word of mouth (pull marketing). It also has an advantage in being able to gather recruitment information from medical institutions.
Earnings are recognized on the date the doctors begin their part-time assignments. The lag between the matching date and the date earnings are recognized varies. One doctor may be matched for a job starting the following day in urgent cases, whereas another can be matched for a job that begins in two months’ time. The company says the average lag time is one month (i.e., the part-time assignment starts one month after the matching date).
Costs
Main costs are personnel, system maintenance, and communications-related expenses. Personnel expenses account for around 50% of the total. The company attracts the majority (90%) of doctor members by word of mouth, mainly through networks of doctors working at medical institutions. This is a form of low-cost pull marketing. Pull marketing is mainly used in the Kanto region where the company was first established and other regions where its brand is well known.
Meanwhile, the company invests up to 8–10% of revenue in advertising and promotions to attract doctors who voluntarily seek part-time (gaikin) assignments, a group that has emerged after the 2004 revision of the clinical training system for medical practitioners, which brought about career mobility at an accelerated pace. Spending on advertising and promotions is essential for attracting members among doctors working in regions where MRT’s brand recognition is low and word of mouth is not enough to expand membership. The company says it attracts such members by running booths at medical society general meetings and other academic meetings and collaborating with other information service sites targeting doctors and other medical workers. The company noted that marketing expenses as a share of revenue was lower for Gaikin than for “career” (its full-time doctor referral service).
Regular assignments
Regular assignments follow a fixed work schedule every week. They are either based on 1) a regular employment contract with reduced hours (less than five days a week, but with the same conditions as full-time regular employment contract with no fixed term), or 2) a part-time employment contract with a term of two months or longer. Working once or twice a week on a part-time but continuous basis would be a regular assignment (for example, a duty doctor shift on a particular day of the week for x number of months).
Once a doctor is matched online, a dedicated MRT staff coordinates the start date and other details. The staff also works to maintain the employment contract between the doctor working a regular assignment and the medical institution. At the same time, the staff communicates with the doctor and medical institution as necessary, so that a replacement can be introduced should the employment contract expire.
Spot assignments
Spot assignments are one-off jobs; namely part-time employment that are not regular assignments. Working on a specific day for a specific number of hours would be a spot assignment, for example.
The company commented that in part-time doctor referral, spot assignments far outnumber regular assignments in both numbers and revenue (weightings are not disclosed).
“career” (full-time doctor referral)
Overview
The “career” service matches the doctors seeking full-time employment with the hiring medical institutions, using the internet and dedicated in-house staff. Both parties (medical institutions with vacancies and doctors seeking to change jobs) first register on MRT’s job referral site for doctors. MRT staff specializing in full-time doctor referral then interview the registered doctors face-to-face to gain an understanding of their preferences, and match them with potential employers.
The service fulfills the needs of MRT’s member doctors who have done part-time assignments over a number of years, and whose needs have changed according to their life stage as they got older. It introduces new career opportunities (new full-time positions) to member doctors.
Matching process
The matching process is as follows:
Medical institutions (such as hospitals and clinics) seeking full-time doctors register on MRT’s job referral website for doctors, and list their requirements (i.e., clinical department, period, and pay).
MRT staff specializing in full-time doctor referral conducts face-to-face interviews with the hiring medical institutions to find out about employment conditions and other requirements. The staff then initiate a search for the doctors who are the best fit, and introduce them to the medical institutions.
Doctors seeking permanent employment register on the same site (become members), and apply for a permanent position.
MRT staff specializing in full-time doctor referral interview the doctors face-to-face to find out their preferences such as working conditions, initiate a search for medical institutions that are the best fit, and introduce them.
An employment contract is concluded between the medical institution and the doctor if they reach an agreement.
MRT receives a commission of around 20–30% of the doctor’s annual salary from the hiring medical institution. It does not charge any commission to doctors.
Number of referrals made
The company no longer discloses this data.
Number of referrals (through FY03/14): 35 in FY03/10 ⇒ 31 in FY03/11 ⇒ 26 in FY03/12 ⇒ 47 in FY03/13 ⇒ 45 in FY03/14.
The company has two options: seeking applicants from among members of its doctor referral website or seeking non-member applicants. The company noted that it mainly seeks applications from its 70,000 member doctors. There is plenty of competition in referral services for full-time doctors.
Revenue
Revenue from “career” is calculated as approximately 20–30% of the annual salary of the full-time doctor placed x number of successful referrals. The average commission per placement is over JPY3mn (reverse calculations from disclosed data suggest that the average has increased in the past six years from JPY2.87mn in FY03/14).
MRT receives a commission from the medical institutions where it has placed a doctor. It does not collect any commission from the doctors.
Costs
Main costs are personnel expenses (approximately 30 staff members specializing in full-time doctor referral) and cost of attracting job applicants (sales promotion expenses). Other costs are system maintenance and communications-related expenses.
The company has a separate dedicated team for the “career” (full-time doctor) and Gaikin (part-time doctor) referral services because each service calls for different skillsets. Staff for the “career” service require more advanced, in-person sales skills as they must visit medical institutions to find out their needs.
Like MRT’s other services, sales promotion expenses account for 8–10% of the revenue, but the company notes that the ratio tends to be higher for “career” than Gaikin. In cases where the company seeks applicants among non-members, it will need to step up publicity efforts beyond just listing job ads and recruitment information on its own website. Such efforts lead to a cost hike.
Other medical workers
Overview
The company provides part-time job referral, career change referral, and temp-to-perm* staffing services for other medical professionals (nurses, pharmacists, clinical technologists, clinical engineers, and clinical radiologists).
The matching process for part-time job and career change referrals is the same as for doctor placement. The company commented that the number of referrals is the highest for nurses and pharmacists. Revenue is split more or less evenly between part-time job and career change referrals, although revenue from career change referral varies considerably from year to year.
Temp-to-perm* staffing service is outlined below (note that the company does not provide this service for doctors).
* Temp-to-perm: temporary staffing with the possibility of moving to full-time employment.
Part-time job and career change referrals for other medical professionals
Revenue: The company receives a commission (around 20% commission rate) from the medical institution when a health professional is matched with a part-time or permanent job vacancy. (The company does not charge a commission to the health professional).
Costs: Personnel, sales promotion, system maintenance, and communications-related expenses
Temp-to-perm staffing
The MRT group provides temp-to-perm staffing services for medical workers in some regions and within the scope permitted by law. Temp-to-perm staffing is a temporary staffing agreement that is based on the assumption that a direct employment contract will be concluded between the dispatch worker and the employer (medical institution). The medical institution decides whether to hire the dispatch worker on a permanent basis after assessing his or her performance during the temporary staffing period.
After acquiring NOSWEAT Co., Ltd. in January 2017, the MRT group began temp-to-perm staffing of nurses and pharmacists. In addition to the sales regions covered by NOSWEAT, MRT also launched a temp-to-perm staffing service in the Kanto region in December 2019, following a trial run beginning June 2018. However, in the Kanto region, it was unable to differentiate its brand from competitors’ and also faced shrinking demand amid changing operating conditions in the temporary staffing business (equal pay for equal work*). Thus, the company scaled back its temp-to-perm staffing service in spring 2020. The company plans to offer the service as a work style option for nurses and other medical professionals, but will not invest aggressively in it.
Process of temp-to-perm staffing
The process of temp-to-perm staffing is as follows.
Applicants seeking temporary staffing assignments (dispatch work) register on the company website.
MRT group’s dedicated staff interview the applicants face-to-face to find out their preferences and match them with medical institutions with vacancies.
If an applicant and medical institution reach an agreement, an employment contract is concluded between the MRT group and the applicant (dispatch worker). Meanwhile, the group and the medical institution enters into a worker dispatch contract.
Under the terms of the contract, the group receives a fee from the medical institution and pays a salary to the dispatch worker.
Revenue
For the duration of the temporary staffing period, the group receives from the medical institution an amount equal to the dispatch workers’ salary plus commissions.
Costs
The largest cost is the salary (labor costs in cost of revenue) paid to the dispatch workers (medical professionals). SG&A expenses include personnel expenses for operational staff and sales promotion, system maintenance, and communications-related expenses.
Other Services
Other Services posted revenue of JPY291mn (11.4% of total revenue) in FY12/20. The company does not disclose operating profit/loss, but commented that the business is still recording an operating loss due to investments for future growth.
Other Services include Net Ikyoku, online medical care (Door. into Health and Medical Consultation, Pocket Doctor), Good Doctors, Joi Plus, Ishi Plus, operational support services for medical institutions, book publishing, and worker and patient satisfaction surveys (outlined below).
Net Ikyoku
Overview
Net Ikyoku, developed by the MRT group, is a groupware that supports administrative operations of medical offices (ikyoku).
An estimated 350–400 medical offices (18–20% of the roughly 2,000 university hospital medical offices in Japan) used Net Ikyoku as of end-FY12/20.
Net Ikyoku is offered free of charge other than the FASTCALL emergency safety confirmation service, since the company positions it as a tool to boost the number of members at its Medical Personnel Services. At the apex of doctor networks is the faculty of medicine at universities. The company believes it can build comprehensive networks by strengthening its relationship with the medical offices of university hospitals that are directly tied to their faculties of medicine.
Once medical offices using Net Ikyoku exceed a certain number, the company may be able to monetize the service (e.g., by including pharmaceutical company ads), but it thinks this will take some time to achieve.
Functions
Net Ikyoku offers the following functions.
Schedule management: Centralizes schedule management including doctor duty schedules and attendance; publicizes events (e.g., study groups and lectures) and manages participation.
Information sharing: Bulletin board feature enables sharing of information (e.g., presentations and conferences).
Appointment management: Makes and manages appointments efficiently to enable effective utilization of free time.
FASTCALL emergency safety confirmation: Allows risk management for disasters and other emergencies by supporting the safety management systems of medical institutions; equipped with functions required for medical institutions’ crisis management protocols, such as safety confirmation, emergency bulletin board, and disaster information updates. It is critical after a disaster to know how much medical treatment a medical institution can offer. FASTCALL complements medical institutions’ business continuity plan (BCP) by confirming which medical workers are available within an hour after a disaster. Medical workers register as members. Medical institutions pay a fee to use FASTCALL.
Revenue
Net Ikyoku is provided free to medical offices except FASTCALL, which is an optional pay service. Revenue from FASTCALL is estimated at several tens of thousands of yen per medical institution; the service is yet to generate enough revenue to cover costs.
Costs
Mainly personnel, system maintenance, and operational costs
Online medical care and telehealth consultation services
MRT operates online medical care and telehealth consultation services through “Door.” and Pocket Doctor (telemedicine and telehealth consultation services), with its main focus being the Door. app that links to its network of medical personnel and institutions.
Door. app linking to MRT’s network of medical personnel and institutions
Overview
The MRT group plans to build a common platform with access to a nationwide network of medical personnel and institutions, and share information across its group. By doing so, it aims to optimize marketing, improve and diversify the quality of its services, and maximize the effects of alliances and acquisitions. The Door. app provides the platform for those objectives, and with the launch of the app, the company will work to further integrate and strengthen its physician network and roll out various services.
As the first step, it began providing a limited-function version of the Door. into Health and Medical Consultation service in November 2020 to help prevent the spread of COVID-19. The service is designed to connect those seeking advice (including patients) with physicians, medical institutions, and other healthcare workers (e.g. pharmacists) and offer online health consultation and medical service.
Door. into Health and Medical Consultation
Online medical care is becoming better known, but only 15% of all medical institutions in Japan have adopted it. Those that have adopted online medical care only use it roughly eight times a month on average (source: 11th Study Commission on Revision of Policies regarding Appropriate Implementation of Online Medicine, November 2, 2020). Hence, with its Door. into Health and Medical Consultation service, the company has done its best to eliminate the three types of barriers to the acceptance of online medical care (barriers to adoption, barriers to administration, barriers to use).
Barriers to adoption (cost, convenience, time required for adoption): Simple and easy operation of necessary functions; zero installation costs and zero fixed costs, JPY300 charged per use; can be used as quickly as three business days from contract signing
Barriers to administration (misgivings about complicated process flow changes): Patient-individualized management by patient-registration card (registration key); per-visit information available at a glance, such as appointment date and time, doctor in charge, medical treatment status, and status of payment
Barriers to use (patient awareness, appetite for use): Features include chat, appointment changes, videophoning, payment, and transmission of images such as prescriptions or photos of affected parts of the body; compatibility with company-provided health consultations
The Door. into Health and Medical Consultation service offers health checkups using chat function, hospital visit consultation via videophoning, and free consultation using registration key (electronic patient-registration card).
Pocket Doctor (telemedicine and telehealth consultation service)
Overview
The MRT group provides Pocket Doctor, a telemedicine and telehealth consultation service using smartphones and tablets developed jointly with OPTiM Corporation (TSE1: 3694).
By using OPTiM’s remote management technology in combination with MRT’s accumulated medical information and networks with doctors and medical institutions, Pocket Doctor connects people in remote areas who need medical care with medical professionals.
Revenue from Pocket Doctor is shared between MRT and OPTiM according to the division of roles (roughly equal share at present).
Main feature
Pocket Doctor provides a visual image (e.g., the facial complexion and injured/diseased areas of the patient or consultee) through the use of smartphone and tablet cameras. It allows doctors to provide more specific advice and medical treatment than the conventional phone consultations.
Services
Pocket Doctor divides into two service categories—telemedicine (online medical service*), whose fees are paid by medical institutions, and telehealth consultations, whose fees are paid by users (patients and other consultees).
Three services are offered: family doctor service (telemedicine), appointment-based consultation service, and urgent consultation service.
Family doctor service (telemedicine):
A telemedicine service whereby a family doctor (i.e., a doctor based at a medical institution regularly visited by the patient) examines the patient face-to-face for the first time, but subsequent visits can be done online from anywhere and with public health insurance coverage*1. The service makes follow-up consultations easier for patients who have difficulty making hospital visits due to busy work schedules, whose homes are a long way from their regular hospital, or are elderly with mobility issues. The company receives a monthly fee from medical institutions for use of the telemedicine system. The company cultivates user medical institutions through referrals and distributors as well as advertising and general promotional activities.
Appointment-based consultation service:
A service whereby consultees can make an appointment with a specialist doctor anywhere in Japan using Pocket Doctor. This service can be used by clients who do not have specialist doctors in their area or are seeking a second opinion. The company needs to attract end users (consultees) at a reasonable cost, because fees are paid by them.
Urgent consultation service:
A telehealth consultation service available 24 hours a day, 365 days a year. Service users can receive appropriate advice from a doctor when they are, for instance, sick but unable to take time off work, unsure whether or not to go to a hospital, or are traveling.
Functions
Patients and consultees can share with doctors their vital statistics,*2 which are gathered through the use of wearable devices*3.
A red marker function and a pointer function allow doctors to mark up or pinpoint on the live images fed via smartphones and tablets during the consultations. By using these functions, doctors can ask what they want displayed on screen or provide an accurate description of symptoms using images.
Launch of MRT’s telehealth consultation service and the government allowing online medical service
Providing workplaces where women doctors can thrive is one of the new challenges of doctors’ work style reforms. Against this background, and the idea of reassuring members of the public by providing access to a doctor from home, the company launched its telehealth consultation service in April 2016. Although the service currently uses the video chat feature of the LINE communication app, the company is working to develop a platform incorporating a B2B2C model that can be expanded to support corporate benefit programs. Around five of MRT employees are in charge of Pocket Doctor.
Online medical service and telehealth consultation have not spread in Japan due to medical regulations that made it mandatory for initial consultations to be done face-to-face. Although online medical service has been covered by public health insurance since FY2018, as a general rule, it was limited to patients with chronic conditions who had had face-to-face consultations with their doctors for at least three months. It was also offered by a relatively small percentage of hospitals and clinics*4. On April 13, 2020, the ban on conducting initial consultations online*5 was lifted (albeit a time-limited measure) in response to the COVID-19 outbreak (see “Market and value chain” section).
Good Doctors
Overview
The MRT group uses its owned medium*1, Good Doctors, to publish a range of articles written by doctors and other medical institution personnel, covering topics from health-related lifestyle information to specialized information on hospitals and diseases. It provides a service aimed at connecting doctors with consumers through a medical care and healthcare medium that features doctors as the information providers.
Business model
Ad revenue model whereby ad revenue is earned by an increase in page view (PV) when doctors and patients access the medium. Costs include fees paid to writers and personnel expenses for employees who supervise and check the content for publication.
The concept at the time of service launch was to have doctors post content freely. However, after the WELQ incident*2 involving DeNA Co., Ltd. (TSE1: 2432) in 2016, the cost of checking articles went up. As a result, the company is no longer investing resources in the service.
Joi Plus, Ishi Plus
Overview
Run by consolidated subsidiary Ishi no Tomo, Joi Plus and Ishi Plus allow doctors to engage in promotional activities or disseminate information related to medical care and healthcare, leveraging their professional knowledge as well as individual characteristics.
Services
Main services are as follows:
Sampling survey: Support collection of doctor feedback by having doctors act as monitors for products/services and answer questionnaires.
Certification mark: Help communicate to users the quality, safety, etc. of a product/service by awarding a certification mark based on the results of a survey answered by doctors.
Product development and supervision: At the development phase, provide doctors’ advice based on their medical knowledge to help improve the quality of products and services.
Article supervision and interviews: Help deliver accurate medical information by having doctors check articles for medically dubious content based on specialist knowledge, or conduct interviews from a medical perspective.
Media appearances and lectures: Help deliver accurate medical care and healthcare-related information by featuring doctors in TV programs and magazines, organizing seminars and training courses, etc.
Business model
The MRT group seeks to earn revenue in this business by charging a fee to companies that wish to utilize doctors in advertising and product PR.
Joi Plus has seen steady increase in exposure of female doctors in magazines and other media, which has contributed to revenue growth.
This business has also been affected by the WELQ incident and the company says its value has not increased as expected. Despite active inquiries for the above services from companies, many of these do not lead to revenue due to the need to comply with guidelines and voluntary regulations. Finding ways to earn revenue in this context remains a challenge for the company. The main cost is payment to doctors supervising the articles (MRT member doctors).
Operational support services for medical institutions
Overview
A comprehensive outsourcing service to handle back-office operations for medical institutions and free up their time for medical consultations.
Operated by the company and consolidated subsidiary anew Co., Ltd., the service is positioned to create a point of contact with medical institutions to expand MRT’s mainstay part-time doctor referral service Gaikin. In other words, it is one of the sales promotion tools for Gaikin.
Services
Main services are as follows.
Medical fee factoring*1 service: Purchase medical fee receivables from medical institutions so that their cash needs can be met promptly. Since MRT’s consolidated subsidiary can also manage funds for salary payment to part-time doctors matched by the company, medical institutions can devote themselves to medical treatment without worrying about cash flow.
RPO*2 and BPO*3 services: Provide end-to-end support from recruiting and hiring part-time doctors to remitting their salaries. In coordination with the factoring service, pay part-time doctor salaries on medical institutions’ behalf using funds collected on the purchased medical fee receivables.
Book publication and satisfaction surveys for hospital employees and patients
Wholly owned subsidiary Value Medical Inc. publishes books on diseases and treatment and conducts satisfaction surveys targeting the employees and patients at medical institutions.
Publication of books on diseases and treatment: Value Medical mainly publishes books in partnership with large hospitals (those with 400 or more beds) across the country, and has had dealings with about a third of Japanese hospitals affiliated with national and public universities. The publications are mostly guidebooks on diseases and treatment written by doctors of prestigious regional hospitals, and are designed to be easily understood as they target patients and local residents. The company says the quality of the publications is ensured, since the medical institutions verify the content. The latest publication was a book by the Toyama University Hospital, designated as a special function hospital providing highly advanced medical care. A sequel to an earlier publication featuring the cutting-edge medical care at the same university hospital (released in 2017 and reprinted), the book includes the hospital’s new initiatives such as those addressing the COVID-19 pandemic and cancer genomics.
Satisfaction survey targeting employees and patients: Value Medical offers a survey based on the service-profit chain model*, applying the theory that improvement in employee satisfaction will lead to patient satisfaction. The results of the employee survey allow MRT to understand the state of individual medical institutions, and gain information on their human resources and work environment. The company plans to utilize these survey data in the group’s Medical Personnel Services business.
* In the service industry where production and consumption occur simultaneously, it is important to improve the satisfaction of those employees positioned at the customer touchpoints. Improved employee satisfaction elevates the service level, which leads to better customer satisfaction, and in turn, higher profitability at the company. The redistribution of the profit to employees will lift their satisfaction level even higher, thus creating a virtuous cycle. This framework is referred to as the service-profit chain model.
M&A, business and capital alliances
MRT acquired NOSWEAT Co., Ltd., Ishi no Tomo Inc., and Nihon medical career Co., Ltd. (previous name: CB Career), and made them its consolidated subsidiaries.
The company has also engaged in multiple business and capital alliances (see table below). The two main alliances are outlined below.
Micro Blood Science Inc. (previously MBS Co., Ltd.):
In August 2015, MRT formed a business and capital alliance with Micro Blood Science (acquired a 19.5% stake) to fill a need for ancillary services for Pocket Doctor and generate business synergies. However, it removed Micro Blood Science from its scope of equity-method affiliates in FY03/19 as MRT saw a need to reassess the pace of business at Micro Blood Science in relation to the impact it has on MRT’s earnings. It also wanted to accelerate the pace of business at both companies. MRT has kept the business alliance, however, and says that its initial objective is being sustained.
Hikari Tsushin Group:
An alliance for the online medical service business. MRT formed a business and capital alliance with Hikari Tsushin, Inc. (TSE1: 9435) and its consolidated subsidiary iFLAG Co., Ltd. in December 2015. The Hikari Tsushin Group excels in the appointment booking business, which is a necessary part of online medical service. Hikari Tsushin runs a dental appointment booking business, so the company’s objective for the alliance was to explore future collaboration in the appointment booking business for medical care. The capital alliance took the form of joint venture MRT NEO (now Icashica.com Co., Ltd.), which started out in the dental appointment booking business. Appointment booking is essentially a media business, but substantial funds were required to resolve media operation issues highlighted by the aforementioned WELQ incident (see “Business” section). Lacking funds to increase the scale of its media, MRT transferred the joint venture to the Hikari Tsushin Group. The capital alliance has also effectively ended, because Hikari Tsushin sold off shares on the market. However, MRT commented that the two companies continue to collaborate in medical appointment booking and online medical service businesses.
Note: Gray shaded companies are consolidated subsidiaries of MRT
MRT remains positive on M&A and business and capital alliances, but will maintain a disciplined approach such as limiting deals to EV/EBITDA of up to 10x.
Market and value chain
Supply-demand balance of doctors in Japan
Number of doctors
According to Ministry of Health, Labour and Welfare (MHLW), there were 327,210 registered medical doctors in Japan as of December 31, 2018, of whom 311,963 worked at medical institutions (see table below). Men accounted for 78.1% and women 21.9% of all doctors and doctors working at medical institutions. Of the doctors at medical institutions (hospitals and clinics), 208,127 worked in hospitals, of which 42.8% were young doctors aged under 40 (under 30: 14.0% and 30–39: 28.8%) who are more likely to take on gaikin assignments (additional part-time work).
The number of doctors at medical institutions increased 40% from 220,853 in 1994 to 311,963 in 2018 (at a CAGR of 1.4%). However, compared with other OECD countries, Japan has a shortage of doctors. The average number of doctors per 1,000 population is 2.4 in Japan, 3.4 in the US, and 2.6 in the OECD as a whole (see table below). A breakdown of doctor numbers by clinical department shows that numbers have not increased in areas with long working hours and a high risk of being sued for malpractice, such as surgery and gynecology & obstetrics, whereas numbers are increasing faster than the overall growth rate in anesthesiology and radiology (see table below). Thus, there is a maldistribution of doctors in terms of clinical departments.
There is also a geographic maldistribution of doctors. The average number of doctors per 100,000 population in Japan is 238, ranging from 329 (1.38x national average) in Tokyo, which has the most doctors, to 169 in Iwate Prefecture (0.71x; see figure below).
Target date for rectifying maldistribution of doctors: FY2036
An MHLW discussion group estimates that the doctor shortage in Japan will continue until around 2028, provided a work style reform (limiting doctors’ annual overtime to 960 hours in principle) will be implemented in April 2024 as planned.
The fourth interim summary report (draft) released on March 29, 2019 by the MHLW subcommittee on supply and demand of physicians (under the study group on supply and demand of healthcare workers) state that FY2036 is the appropriate target date for rectifying the maldistribution of doctors.
Progressively aging population and ballooning social security costs
Progressively aging population
Japan’s total population was 125.71mn as of December 1, 2020, of whom 36.22mn (28.8% of the total population) were over 65. While over-65s accounted for less than 5% of the total population in 1950, the rate surpassed 7% in1970 and has continued to increase thereafter (source: Ministry of Internal Affairs and Communications).
The National Institute of Population and Social Security Research published forecasts of Japan’s future population in April 2017. According to the report, Japan’s total population is on a long-term decline, projected to drop below 120mn in 2029 and continue on a downward trend to below 100mn in 2053 and below 90mn (80.08mn) in 2065.
The number of over-65s totaled 33.87mn in 2015 when baby boomers turned 65 plus, and is forecast to reach 36.77mn in 2042 when baby boomers turn 75 plus. This number is expected to track upward, peaking at 39.35mn in 2042 before turning down.
An increase in over-65s amid an overall population decline means the percentage of senior citizens will continue to increase, reaching 33.3% (one in three) in 2036. Even after 2042, when the number of over-65s begins to fall, the percentage of senior citizens is forecast to continue rising to 38.4% (one in 2.6) in 2065. The percentage of over-75s is estimated at 25.5% (one in 3.9) in 2065.