Privatization strategy: evolving roles of private sector in Japanese long-term care

The rapidly increasing financial burden of an aging population and scarce public financial resources require a pragmatic response to reorganize and develop long-term care delivery systems in Japan. Privatization can be one of the most effective and influential countermeasures. Privatization of health providing systems, however, should be implemented in order to increase cost effectiveness and improve productivity. That is, the process of privatization should be designed to better induce the increased reliance on market incentives and management systems without impinging upon equity as a social objective. In an environment of fiscal constraints, market incentives and management systems are the two concepts that can facilitate effective privatization in the provision of quality long-term care. By examining demographic and financial impacts on long-term care, this work analyzes the lack of policy consistency that breaks down national health policy in pursuit of efficiency in macro domain into management systems of individual providers in micro domain. In order to synchronize the consistency of privatization policy with both micro and macro domains, it is necessary for Japanese health providers to change the out-dated management practices to more efficiency-oriented management systems. It is also imperative for policy makers to facilitate the management renewal among providers. Consequently, this paper provides a policy framework for integration of long-term care and the effective involvement of the private sector in the provision of privatization.