Healthcare

M&A and Investment in Hospitals and Clinics in Japan

Acquiring or investing in a hospital or clinic in Japan is not the same as buying an ordinary Japanese company. A Japanese medical corporation has no ordinary shares, cannot distribute profits, and keeps apart roles that a company combines in its shareholders and board.

Whether you can take part, and in what form, depends less on your nationality than on whether the entity involved is a for-profit company and on who, in substance, carries responsibility for opening and running the institution. Four questions that a share purchase would answer at once — ownership, governance of the corporation, the licence to open the institution, and designation under the public health insurance system — have to be answered separately here.

This page sets out what is particular to hospitals and clinics. For the general framework of a Japanese acquisition — transaction structures, foreign investment screening, merger control, due diligence, employees, the transaction documents and closing — please see “M&A in Japan for Foreign Acquirers and Investors”. We advise on Japanese law and work with your in-house team, overseas counsel and other advisers.

Discuss an investment in a Japanese medical institution

Our lawyers' backgrounds include handling domestic and cross-border acquisitions involving hospitals and clinics, as well as judicial experience hearing medical litigation in the division of the Tokyo District Court that specialises in medical cases.

Profiles of our lawyers →

Last updated: September 11, 2026

Before You Contact Us

The following helps us give a useful first answer. Nothing needs to be settled, and an enquiry at an early stage is welcome.

The target — whether it is a hospital, a clinic, a group of clinics, or a business around a medical institution such as a management company, a laboratory or a facility operator.
Who opens and operates it now — whether the institution is opened by a medical corporation (iryo hojin) or by an individual physician, and, for a medical corporation, whether it is a membership or a foundation type.
What you would like to acquire — the operation of the institution itself, a related business, real estate and equipment, or a combination. It does not matter if this is still open.
Your objective — a controlling investment, a minority participation, a commercial relationship with the institution, or entry into the Japanese healthcare market more generally.
Any structure already under discussion — a purchase of a related company, a new Japanese entity, an asset acquisition, or something else. If nothing has been decided, the commercial objective alone is enough.
Regulatory status — designation as an insurance medical institution, the main facility standards notified, the number and type of beds, and any inspection, audit or administrative correspondence you are aware of.
Location and proposed timetable — the prefecture, and the dates you have in mind for signing, closing and the operational transition. Much of the approval practice is administered prefecture by prefecture.
Advisers and documents — your overseas counsel, financial adviser and accountants, and any letter of intent, term sheet or information memorandum that already exists.

Please begin with a short overview rather than sending transaction documents or any patient information with your first enquiry. Once we have confirmed that we are able to act, we will explain how to share detailed material.

How we can helpWhether the investment can be structured／Transaction structure and approvals／Due diligence on the institution／Transaction documents／Health insurance designation and facility standards／Patient records and data／Arrangements after closing

Contact Form

Contents

1. Why Acquiring a Japanese Hospital or Clinic Is Not a Share Acquisition
2. How a Foreign Investor Can, and Cannot, Take Part
3. Choosing a Structure and Mapping the Approvals
4. Due Diligence on a Japanese Medical Institution
5. Operating the Institution After Closing
Frequently Asked Questions

1. Why Acquiring a Japanese Hospital or Clinic Is Not a Share Acquisition

The first thing to establish is what, in law, is capable of being transferred. In most Japanese acquisitions that is the shares of a company. Where a hospital or clinic is opened by a medical corporation or by an individual physician, there are no shares to buy.

A medical corporation is not an ordinary company

A medical corporation (iryo hojin) is established under the Medical Care Act, not the Companies Act. It has no share capital, and it may not distribute surplus to those who fund it. A return on an investment therefore cannot be taken in the form that an investor in a Japanese company would expect, and the usual mechanism for acquiring control — buying a majority of the shares — does not exist.

A membership-type medical corporation has members (shain). The word does not mean an employee: a member is a constituent of the corporation, comparable in function to a member of an association rather than to a shareholder. Each member has one vote, whatever amount that member has contributed.

Membership, contribution interests and office are three separate things

Where a medical corporation was established before the present rules and retains contribution interests (shusshi mochibun) under its articles, those interests are a financial right connected with repayment on withdrawal and with distribution of residual assets on dissolution. They are not, in themselves, membership or a vote.

It follows that acquiring contribution interests does not carry with it the right to decide anything. Membership, contribution interests, and office as a director or chairperson are acquired and changed by different routes, and a transaction has to address each of them deliberately.

The opening entity and the manager are further separate roles

Opening a hospital or clinic is itself a regulated act. The entity that holds the permission or notification to open the institution — the opening entity — is distinct from the corporation's members and officers, and each institution also has a manager, who is a physician or dentist working there.

A transaction can therefore leave the corporation intact and still require attention to the opening entity and the manager, or transfer a business and leave the buyer without the standing to run the institution. These are the questions that decide whether patients can continue to be seen on the day after closing, and they are addressed in section 3.

2. How a Foreign Investor Can, and Cannot, Take Part

The constraints described below are not directed at foreign investors. Japanese commercial companies face the same framework. What matters is whether the entity in question is operated for profit, and whether responsibility for opening and running the institution genuinely rests with the opening entity.

A for-profit company is not accepted as the opening entity

Under the Medical Care Act, permission to open a hospital or clinic may be withheld from a person who proposes to open it for profit. Administrative guidance treats the opening entity as the party that in substance bears responsibility for opening and operating the institution, and as being, in principle, a non-profit corporation or an individual physician. There is a narrow exception where a company opens an institution solely for the welfare of its own employees.

The same guidance directs the authorities, where there is an indication that the applicant is an opening entity in name only and that a third party may in substance direct the opening and operation of the institution, to examine not only the application papers but the actual circumstances. An arrangement that is compliant only on its face is therefore not a safe one.

A for-profit company cannot be a member of a medical corporation

Guidance from the Ministry of Health, Labour and Welfare states that a member of a membership-type medical corporation may be a legal person as well as a natural person, but excludes legal persons operated for profit. An ordinary company — Japanese or foreign — therefore cannot become a member.

Officers of a medical corporation must be natural persons, so a company cannot be a director. In addition, an officer of a for-profit company that has a trading relationship with the medical corporation is in principle not accepted as an officer of that corporation, because of the requirement that the corporation be non-profit in character. The chairperson is, as a general rule, selected from among directors who are physicians or dentists; appointing a director who is not a physician or dentist requires prefectural approval. Foreign nationality neither adds to nor relaxes any of these requirements, and a qualification obtained outside Japan is not the same as being a physician or dentist for this purpose.

Whether a particular foreign entity or individual is accepted in a particular role is a question for the prefecture that supervises the corporation, taking into account its articles and current practice. We confirm this for the specific corporation rather than relying on a general answer.

What can be arranged around the institution

Much of the commercial activity around a Japanese medical institution is carried on by ordinary companies. Premises, equipment, information systems, administrative services, staffing support and supply arrangements are all capable of being owned or provided by a company, including one owned from outside Japan. In the market such a company is often called an “MS company”, which is a commercial term rather than a special form of corporation.

The limit is not the existence of these arrangements but their effect. Where the terms of the contracts, the flow of funds, the composition of officers or the practical conduct of the business would place responsibility for operating the institution with the company rather than with the opening entity, the arrangement raises the very question that the non-profit requirement is directed at. We look at the arrangement as a whole, including how it would be described to the prefecture.

3. Choosing a Structure and Mapping the Approvals

Once it is clear what can be transferred, the structure and the approvals have to be settled together. Approvals here are not a closing formality: for several routes the buyer's ability to see patients at all depends on steps that take their own time, and the transaction timetable is built around them.

The routes available

Where the corporation itself is to continue, the change is made through its members and officers rather than by transferring anything. Where a business is to be acquired, or where the institution is opened by an individual physician, the assets, contracts and employment relationships are identified one by one, and the opening entity changes. Mergers and statutory divisions are available between medical corporations, subject to the type of corporation involved.

Route	What changes	What does not follow automatically	Main approvals to confirm
Change of members and officers	The medical corporation continues. Members are admitted and withdraw, and directors, the chairperson and the manager are changed.	Continuity of the corporation does not remove the need for filings, and it does not decide who may hold each office.	Articles amendment (approval or notification), officer change notification, approval where a chairperson is not a physician or dentist, manager change.
Business transfer	Identified assets, contracts and employment relationships move. The opening entity changes.	The buyer does not inherit the seller's standing to open the institution, and contracts do not move without the steps each of them requires.	Permission or notification to open, use of the premises, beds where relevant, and a fresh designation as an insurance medical institution.
Merger	Rights and obligations of the disappearing corporation pass to the surviving or new corporation by operation of law.	Not every administrative status passes in the same way. Designation under the health insurance system is confirmed separately.	Prefectural approval of the merger, creditor procedures, registration, and post-merger notifications.
Statutory division	Rights and obligations identified in the division plan pass to the recipient corporation.	The route is not open to every medical corporation, so eligibility is confirmed before the timetable is built around it.	Eligibility, prefectural approval, creditor procedures, and the same separate confirmation for health insurance designation.

An outline of the routes commonly considered. The steps that apply to a particular transaction depend on the corporation, the institution and the prefecture.

Approvals under the Medical Care Act

Depending on the route, the matters to confirm include amendment of the articles, notification of changes of officers, approval where a chairperson is not a physician or dentist, change of the manager, and permission or notification to open the institution. Where a hospital or a clinic with beds is involved, the number and type of beds are examined against the prefecture's medical care plan, and beds cannot be treated as an asset that simply passes with the business.

Since April 2026 there has also been a regime under which a person opening a clinic without beds in an area designated as having a concentration of outpatient physicians files a notification before opening. How it applies to the acquisition of an existing clinic depends on the designation of the area and on the form the succession takes, and we confirm both for the location concerned.

Designation as an insurance medical institution

Almost all treatment in Japan is provided under the public health insurance system, and an institution must be designated in order to bill under it. Designation is administered under the Health Insurance Act by the regional bureau of health and welfare, separately from anything done under the Medical Care Act. A change in the opening entity can require a fresh application, and succession to a business or a corporation does not carry the existing designation with it as a matter of course.

Where an institution closes and a new designation is sought, the date of designation can in defined circumstances be backdated. The circumstances in which this is available are limited, prior consultation may be required, and the treatment has been administered under a new notification since September 2026. We confirm the position with the regional bureau for the location while the structure is still being decided, not after signing.

Facility standards are confirmed separately again. Where an institution bills for services on the basis of standards it has notified, continuing to do so after the transaction can require fresh notification, and the standards have to be matched against the staffing and equipment that will actually be in place.

Foreign investment screening and other cross-border requirements

Whether a filing is required under the Foreign Exchange and Foreign Trade Act is not answered by the fact that the target is in healthcare, and it is not excluded by the fact that a medical corporation is involved. It depends on the acquirer, the structure and the business the target and its group actually carry on, which may include medical devices, technology or other regulated activity. An amending Act promulgated in June 2026 also broadens the regime in certain respects, with the principal provisions to come into force on a date to be fixed, so the law in force at the time of the transaction is what we check. The general framework is set out in “M&A in Japan for Foreign Acquirers and Investors”.

4. Due Diligence on a Japanese Medical Institution

The corporate, contractual and employment review is common to any Japanese acquisition and is described in the general page. What follows is the part that is particular to a medical institution, and it tends to be where the findings that affect price and structure come from.

Billing under the health insurance system

Claims under the health insurance system are made against notified facility standards and detailed billing rules. Where standards or requirements were not in fact met, repayment can arise, sometimes for a considerable period, and it may be the subject of guidance, an audit or a voluntary repayment already under way.

We review designation, the standards notified, the billing arrangements and any correspondence with the authorities, and consider what the findings mean for the transaction. A law firm does not recalculate every claim; the extent of the review is settled with accountants and other advisers according to the size of the institution and what the review turns up.

Patient safety, disputes and clinical staff

Incidents and disputes are reviewed beyond those in litigation, including matters where discussions with patients or families are continuing and any handling under the medical accident investigation system. Insurance cover and the institution's internal procedures are reviewed with them.

Physicians, nurses and other staff are reviewed both as an employment matter and as a condition of operation, because facility standards and the institution's licence assume that particular people are in place. Where the transaction may not carry employment relationships across, the staffing that will support the institution after closing is confirmed at the same time.

Patient records, systems and access to information

Medical records contain special care-required personal information. We review how they are kept, what systems hold them, the purposes for which the information is used, security measures, and any incident and its handling. Where records are provided in the course of a transfer of a business, the recipient is not a third party for the purposes of the Act on the Protection of Personal Information, so consent from each patient is not required for that provision; the purposes for which the information may afterwards be used remain constrained.

Access by a prospective buyer during due diligence is a different question, particularly where reviewers are outside Japan, and it is handled with the cross-border rules in mind. The general treatment of data room access in a Japanese acquisition is dealt with in “M&A in Japan for Foreign Acquirers and Investors”.

5. Operating the Institution After Closing

Completion of the transaction does not complete the transition. The institution continues to treat patients, and the arrangements that were designed for the transaction have to work in practice under the same rules that governed their approval.

Governance and the position of the investor

Who decides what, after closing, is the question the authorities are most likely to return to. Management services, funding, premises and supply arrangements with the investor's group are entirely capable of being put in place, but they are assessed against the requirement that responsibility for operating the institution rests with the opening entity. We review the arrangements as they will actually operate, not only as drafted.

Maintaining the position under the health insurance system

Designation, notified facility standards and the staffing they assume have to be kept aligned as the institution changes. Where the transaction alters staffing, equipment or the services provided, the notifications are revisited rather than left as they were.

Records, systems and communication with patients

Responsibility for keeping medical records, access rights to the systems that hold them, maintenance and backup arrangements are settled as part of the transition. Where the name of the institution, its management, its opening hours or its contact details change, what patients are told, and when, is considered alongside any display or notification the rules require.

Name, website and medical advertising

Advertising by a medical institution is regulated, and a website is treated as advertising depending on what it says. Where the name, the departments, information about the physicians or the services described are updated after the transaction, the display has to match what the institution actually does, and announcements about the acquisition itself are reviewed so that they do not suggest a connection or a level of service that does not exist.

Frequently Asked Questions

Can a foreign company buy a Japanese hospital or clinic?

Not in the way it would buy a company. There are no shares in a medical corporation, a company operated for profit cannot be a member of one, and permission to open a hospital or clinic may be withheld from a person proposing to open it for profit. This is not a restriction on foreign ownership as such — a Japanese company is in the same position. What is usually possible is to acquire or establish a business around the institution, and the question is then whether responsibility for operating the institution still rests where the rules require.

Can a foreign individual or company be a member or a director of a medical corporation?

Nationality is not itself a disqualification, and we have not found a provision that makes it one. A legal person may be a member, but not one operated for profit. Officers must be natural persons, so a company cannot be a director, and an officer of a for-profit company that trades with the corporation is in principle not accepted as an officer of it. The chairperson is as a general rule a director who is a physician or dentist, and appointing someone who is not requires prefectural approval. Whether a particular person is accepted is confirmed with the prefecture concerned.

If we acquire the business, does the institution keep its designation under the health insurance system?

Not as a matter of course. A change in the opening entity can require a fresh application, and the designation does not simply follow the business or the corporation. In defined circumstances the date of designation can be backdated, but those circumstances are limited and prior consultation may be needed. Because this decides when the institution can bill, it is confirmed with the regional bureau of health and welfare while the structure is still being decided.

Is a filing required under the Foreign Exchange and Foreign Trade Act?

It depends on the acquirer, the structure and what the target and its group actually do, which may extend beyond the institution itself to devices, technology or other regulated activity. Being in healthcare does not make a filing automatic, and the involvement of a medical corporation does not exclude one. An amending Act promulgated in June 2026 broadens the regime in certain respects, with the principal provisions to come into force on a date to be fixed, so we check the law in force at the time of the transaction.

Can patient records be transferred to us?

Where records are provided as part of a transfer of a business, the recipient is not a third party under the Act on the Protection of Personal Information, so consent from each patient is not required for that provision. That does not make every movement of the information unrestricted: the route the transaction takes, the purposes for which the information will be used afterwards, retention and security measures all have to be confirmed. Access during due diligence, particularly from outside Japan, is a separate question.

How long do the approvals take?

It depends on the route, the prefecture and the institution, and it is not something we can promise in advance. What we can do at an early stage is identify which approvals and notifications a proposed structure would require, and in what order, so that the timetable for signing, closing and the operational transition is built on them rather than fixed first.

Contact

Discuss an Investment in a Japanese Medical Institution

Tell us about the hospital, clinic or related healthcare business, the investment or acquisition you are considering, and the stage the discussions have reached. We advise on Japanese law and can work with your in-house team, overseas counsel and other advisers on the structure, the healthcare regulation and the legal work after closing.