Japan paid a whopping 1.142 trillion yen ($10 billion) to hospitals in fiscal 2020 through a subsidy program introduced amid the pandemic to ensure COVID-19 patients have access to proper care.

The program has been a lifeline to hospitals that helped them turn a profit amid the health crisis, but troubling signs point to the subsidy being inefficiently designed and easy for institutions to abuse.

The central government started the subsidy program in April 2020 to secure hospital beds to treat COVID-19 patients across Japan.

It was meant as income compensation for the hospital beds that could not be used once hospitals shifted priority to treating COVID-19 patients.

For example, because more equipment is often used to treat COVID-19 patients with serious symptoms, rooms that may have had four beds were often converted to single-bed rooms. The subsidy would cover the three beds not in use.

Hospital also closed some wards to move staff to wards handling COVID-19 patients. Those unused beds would be covered by the subsidy as well.

A subsidy was also paid if a bed set aside for COVID-19 patients was not used.

The program was a godsend for many hospitals, with large numbers reporting a profit after years of being in the red.

But because taxpayer money is used for the subsidies, one expert called for a cost-benefit analysis to assess how the program can be improved.

Some hospital officials have even said they felt they received too much in subsidies.

A prefectural hospital in the Kanto region ran an annual deficit of about 700 million yen until fiscal 2019. But in fiscal 2020, the hospital turned a profit of 900 million yen.

Between April and June 2020, almost none of the 260 or so beds at the hospital were made available for regular patients, with the floor space set aside to treat COVID-19 patients.

The hospital treated at most 18 COVID-19 patients at one time.

Even after it resumed treating other patients, the hospital still reserved 34 beds for COVID-19 patients, meaning about 70 hospital beds could not be used.

As a result, the hospital received 3 billion yen from the central government for the beds not in use.

The trend has continued in the current fiscal year. About 3,000 medical institutions received a total of 596.4 billion yen by the end of October.

The central government created various measures to bolster medical institutions handling COVID-19. But a health ministry official in charge of the program said the income compensation subsidy for unused hospital beds took up the largest amount by far.

According to a health ministry report about hospital management released in November, hospitals treating COVID-19 patients in fiscal 2020 received on average 237 million yen in subsidies and had an average yearly profit of 13 million yen.

Because many patients decided not to visit hospitals amid the novel coronavirus pandemic, the report also found that without the subsidies, the average deficit for hospitals would have been 224 million yen.

PROGRAM RIFE WITH ISSUES

Ko Arai, an accounting professor at Hitotsubashi University knowledgeable about hospital finances, said the subsidy program was needed for hospitals to set aside enough beds for COVID-19 patients.

But he added that there was also a need to check on how the financial position of hospitals changed due to the subsidy since it was subsidized by taxpayers.

Some signs of abuse have emerged since its creation.

One private-sector hospital in the greater Tokyo metropolitan area increased the number of beds set aside for COVID-19 patients and continues to receive the subsidy even as the number of such patients has plunged recently.

The government has meanwhile adjusted the subsidy program to deal with the problem of hospital beds officially registered as being open for COVID-19 patients but not actually used to treat them.

That issue came to light during the fifth wave of infections, when some patients died at home waiting for a hospital bed to open.

Some of the unused hospital beds were covered by the subsidy program.

Officials changed the program rules so that medical institutions are required to submit a daily report of the number of available beds for COVID-19 patients along with the actual number being treated.

If a hospital fails to make the report, it will not receive the subsidy.

The subsidy will be scaled back for hospitals with bed usage ratios under 70 percent of the average for their prefecture.

Another change starting in January will cap the number of hospital beds eligible for the subsidy.

Arai said the central government should examine the liabilities held by hospitals to determine if they received an inappropriate subsidy, rather than only focus on whether an institution turned a profit or loss for a specific year.

(This article was compiled from reports by Yuki Edamatsu, Kazuya Goto and Hiroshi Ishizuka.)