For Japanese hospitals, expanding into neighborhoods like this one, in Beijing, looks like a growth opportunity. (Photo: Thinkstock)

(Bloomberg) — For more than a century, Aizawa Hospital provided medical care to the people of Japan’s mountainous prefecture of Nagano. Last year, it looked to broaden its patient base, opening a clinic in Beijing in March, and has been approached by hospitals in other cities to open more.

“In the age of globalization, we want to go wherever we are asked to help patients rather than being fixated on Japan,” Takao Aizawa, chairman of the hospital, said in an interview in his office in Matsumoto city. “The money we make will be spent on improving medical services there.”

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Traditionally focused on providing care at home, government incentives have driven Japanese companies to look beyond its borders. Since the government announced a push towards medical commercialization in 2010, Japanese companies and hospitals have opened 19 medical service centers in 13 countries, including China, Russia, Indonesia and Vietnam, often in the form of ventures with local partners. Companies involved include Fujifilm Holdings Corp., Olympus Corp. and JGC Corp.

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Thirteen more Japan-funded clinics are expected to start in coming years, according to Koji Fujimoto, deputy director-general at the office of the Chief Cabinet Secretary, a government department which oversees the international expansion initiative. The business prospects are so bright that companies outside the medical sector have started to join.

Many medical providers — even as they had been bracing for flagging demand with a shrinking population — had been reluctant to expand overseas out of a social contract to provide health care for their own citizens first.

“There is a strong perception that hospitals should not make money, and that it was frowned upon for them to look overseas,” said Fujimoto. “They were instead expected to contribute to the local community.”

The Ministry of Economy, Transport and Industry outlined a plan in 2010 that pushed for commercialization of medical services and started providing financial support for those expanding overseas. Besides seeing a reduction in patient numbers, technological advancements in Japan’s medical industry will be limited if health care providers stayed in Japan, Fujimoto said.

Medical multinationals

Now even non-medical Japanese companies are looking to expand into health care abroad. Major trading houses Itochu Corp. and Mitsui & Co. recently tied up with Japanese hospitals and medical-device makers and opened clinics in emerging economies such as China, Indonesia and Russia.

Mitsui, which invested in two health care providers in the U.S. and Asia this year, said last month it will buy a 22 percent stake in medical equipment maker Panasonic Healthcare Holdings Co. for 54.1 billion yen ($470 million). Mitsui’s Managing Officer Koji Nagatomi told reporters the latest acquisition is aimed at increasing its overseas exposure.

Nihon Trim Co., a maker of water purification systems, tied up with a Chinese partner and is planning to open a medical center that focuses on the prevention of diabetes and other lifestyle diseases in Beijing next year.

“Because the Japan market is so closely tied with the national health insurance scheme, there is no opportunity to enter,” said Takafumi Shimizu, who heads the medical unit at Nihon Trim. “Operating hospitals are considered to be an overseas business.”

The company is using its water purification technology in dialysis machines. Nihon Trim wants to open nine more centers in coastal cities such as Dalian over the next five to seven years. Eventually, it wants the medical business to account for half of a 10 billion yen revenue target.

“It’s important that those with diabetes and other chronic diseases visit the hospital regularly,” Shimizu said. “We want to differentiate ourselves by providing Japanese-style services.”

Aizawa Hospital’s rehabilitation center in Beijing, located on the campus of Beijing Puhua International Hospital, is a small clinic. It’s short on room so beds are lined up in the hallway where some of its treatment is conducted.

But the patients says the clinic’s focus on communication sets it apart from other rehabilitation centers.

“I can easily communicate with the doctor and nurses here. The doctor is very careful and professional and I feel at home,” said Peng Haiyan, a 25-year-old company employee who is learning to walk again after surgery. “I enjoy the rehabilitation and I’m becoming hopeful that I will be better.”

—With assistance from Feifei Shen.

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