Board of Audit Inspection Finds COVID Grants Put Loss-Making Hospitals in the Black

The Yomiuri Shimbun
A hospital bed set aside for COVID-19 patients at a medical institution in eastern Japan.

The Board of Audit reported on Friday that a number of loss-making hospitals have moved into the black, apparently due to hefty government grants to secure beds for COVID-19 patients.

The report, presenting results of the board’s inspection of the government’s grant project, also noted the existence of “phantom hospital beds” that were covered by the grants but went unused due to factors such as a shortage of nurses.

The grants are provided through prefectural governments for beds set aside for accepting COVID patients, as well as for other beds that must be taken out of service due to the effects of dealing with COVID cases on a hospital’s overall capacity.

Initially, the maximum amount of the grant was set at ¥97,000 per bed per day, but this was raised twice, sending it as high as ¥436,000. As of Wednesday, the number of beds that were set aside totaled 48,808 nationwide.

The grants received by a total of 3,477 medical institutions in the country reached ¥3.1 trillion in fiscal 2020-21.

The board inspected the earnings and expenses of 269 hospitals, including state-run general hospitals.

It found that their net balance, on average, was a gain of about ¥700 million in fiscal 2021, in contrast to a deficit of ¥380 million on average in fiscal 2019, which ended on March 31, 2020, as the impact of the COVID-19 pandemic was just beginning.

When considering the hospital’s medical operations alone, their balance was approximately ¥700 million in the red on average, but the subsidies received, including grants for securing hospital beds, averaged approximately ¥1.4 billion.

In response to the board’s inquiries, dozens of hospitals said that in some cases they had refused to admit patients into the beds that were set aside. Sixty hospitals, or 29%, cited a shortage of nurses as a reason. There are thought to have been cases of hospitals having to refuse admission to COVID patients due to an increase in the number of nurses leaving their hospital jobs, or the outbreak of a cluster of infections.

The board stated, “It is not appropriate to provide grants for beds that cannot be provided to patients.” It asked the Health, Labor and Welfare Ministry to review its policy, such as by limiting subsidies only to those beds that can be used.

Shortage of nurses

“Some of our beds did end up as phantom beds. But we hope people will also understand the harsh frontline situation in the medical field,” said an official of a corporation managing a hospital that was inspected by the board.

Hospitals had offered support to “potential nurses” who were no longer working, to bring them back into hospital jobs. But the shortage of nursing staff has not been easy to solve.

When the fifth wave of infections spread across Japan, peaking in the summer of 2021, the shortage of nurses became serious in hospitals in central Tokyo, with some forced to turn down patients seeking admission.

With COVID spreading rapidly at that time, local governments were eager to secure hospital beds. A senior official at the Saitama prefectural government recalled: “First and foremost, we had to secure a sufficient number of hospital beds. We could not afford to think about how many beds could actually be utilized.”

A subcommittee of the government’s Fiscal System Council also reported in October 2021 that there was a case in which a hospital received about ¥1.5 billion in COVID grants during a year when it accepted only 25 COVID patients.

Since 2022, the health ministry has made a 30% cut in grants to medical institutions whose bed utilization rate was less than 70% of the regional average. But the board believes that there are still cases in which grants are being given to hospitals whose beds are effectively out of service.