Sunday, August 27, 2017

How Private Specialist Clinics in Japan Allow for Medical Services Much More Efficient than Hospitals

One of the greatest advantages of living in Japan is its high-quality affordable medical services.  National insurance cover 70% of all medical costs incurred in any clinic or hospital, while the insurance itself costs a fraction of what the same would cost in the US.  Medical facilities often have the most advanced medical equipments anywhere in the world, while the skill levels of nurses and doctors are top-notch.  Medical accidents are few and far in between, while even the smallest illnesses are dealt with meticulously without any occurrence of careless dismissal.

But perhaps the greatest advantage of all among all the benefits the Japanese medical care system offers is the massive network of private specialist clinics dotted around the country.  In densely populated urban areas like Tokyo, every residential neighborhood would have ENT, dental, maternity clinics along with many general practitioners, alongside community hospitals.  These specialist clinics are basically mom-and-pop shops with one or two doctors, but are high-quality enough to compete directly for customers with large regional hospitals.

While they are slightly more expensive than the same care offered at large hospitals, these clinics more than make up for the higher costs with greater convenience.  Unless hospitals, they are situated directly within residential neighborhoods, providing the surrounding neighborhood with high-quality care without the need to commute long distances to large medical facilities.  The residents of the neighborhood develop long-lasting relationships with the doctors running the clinics, allowing for more personalized service than is possible in a large hospital.  The close client relationships leads to trust that in turn ensure people always come back.

Moreover, since the clinics are manned by no more a couple of doctors, a couple of nurses, and a few admin staff, they can handle patients without the large bureaucracy that burdens large hospitals.  Fewer staff means more productivity, and often also means greater speed since the same patient record and other paperwork do not need to be handled by more than a couple of people in these specialist clinics.  Greater productivity and speed in the small clinics then, often means a patient can get treatment for the same illness much faster in a clinic than a hospital, despite the fact that hospitals have many more doctors on staff.

The competitiveness of specialist neighborhood clinics in Japan illustrates the corresponding backwardness of medical care in many other countries.  The US and UK, for instance, still rely on neighborhood general practitioners that refer patients to specialists for any sort of treatments that require more than issuing a few common medicines.  The whole referral system, while reducing the burden on specialists to see many patients who do not need specialist care, increase the wait time and costs for those who indeed need to see specialists for urgent care and precise feedback on current conditions.

The Japanese system solves the problem by introducing market incentives for specialists to operate outside the hospital-based medical system.  In essence, by creating a market environment where specialists can work productively and make more money running their own neighborhood clinics, the Japanese private healthcare system makes it rather irrelevant whether specialists are willing to see people who do not actually need specialist care.  Specialists who run their own clinics can operate at much faster speed at higher incomes, so they are happy to see more patients, even if they are just in for mundane checkups.

As a positive externality of competitive specialist clinics, hospitals must further specialize in order to stay relevant in the face of dozens of private clinics pulling away customers.  Knowing that they cannot compete on convenience or efficiency, hospitals need to advertise based on their niche services made possible due to presence of a larger staff.  More physicians mean that hospitals can take in "ultra-specialists" capable of treating rare and unusual diseases without having to skim on regular services that can be covered by other doctors on staff.  Private clinics with only one or two doctors cannot devote the same resource for further specialization.

As a result, the presence of specialist clinics in Japan allow for not just competition between clinics and hospitals but also their complementarity to a certain degree.  While private clinics encourage more doctors and customers to become neighborhood specialists, hospitals are pushed to seek the most cutting edge in modern medicine, devoting more of their resources to ensure that, in the face of competitive specialist clinics, they stay relevant because of ever-growing ability to handle previously untreatable and undiagnosable diseases.  The complementarity guarantees both convenient access and innovation.

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