data briefing Japan's healthcare system has come in for hard-hitting criticism. It has some of the UK's problems - but for very different reasons. John Appleby reports

Published: 30/05/2002, Volume II2, No. 5807 Page 30

A recent report from the Organisation for Economic Co-operation and Development notes that an industrialised country's healthcare system faces several challenges.

1Among these are a financing problem arising, in part, from an ageing population. The report goes on to say that '... people are becoming more sensitive to the quality of care provided, particularly with the reporting of medical errors, not to mention the phenomenon of long waiting times... and short consultation time'.

Overall, the system is judged to be 'poorly adapted to a high-income country where the demand for quality care is rising'.

All these criticisms refer not to the tax-funded, universal systems enjoyed by that inscrutable island race - the British - but to the Japanese social insurance healthcare system. The study is interesting not only because it emphasises the ubiquity of the problems in healthcare, but also because it shows that simplistic diagnoses of these problems lead to, well, simplistic (and wrong) prescriptions.

Japan has a regulated, compulsory insurance system.

Consumers cannot choose their insurers and neither can insurers choose providers. Providers (mainly private) compete for patients on the basis of fixed prices set by the government. Apart from sounding similar to our government's move into fixed healthcare-related groups pricing with provider competition, the third-party payer system coupled with fee per-item-of-service has proved inefficient.

The inefficiencies of the reimbursement system have eproduced predictable results. With consultations paid for by insurers on a fee per item-of-service basis, unsurprisingly Japan has the second-highest consultation rates in the OECD. And with no separation between prescribing and dispensing of drugs, the incentive to prescribe is seen in one of the highest levels of per capita drug spending in the world.

The enormously long average length of stay for inpatients - an incredible 41 days - is a reflection, as the OECD study notes, of 'social hospitalisation' - also known as long-term care for the elderly.

As if all these problems were not enough, the financial position of insurers is in near melt-down: low revenue growth and high spending has meant that government-managed insurance for its employees will run out of reserves this year. And around 90 per cent of the insurance funds were in the red last year.

Redesigning payment methods and tightening up on regulation are key reforms being discussed in Japan. However, improving the near non-existent amount of information on medical performance and the quality of services is considered vital.

The report concludes that once there are changes in the system, 'there would be an assurance that an increase in healthcare spending is needed and that corresponding increases in taxes would meet least resistance'. Perhaps it was a study of the NHS after all.


1Imai Y. Healthcare Reform in Japan. Economic Department Working Paper No. 321, 2002. Paris, OECD.

John Appleby is director of the health systems programme at the King's Fund.