Oversupply of Hospital Beds and Regional Healthcare Expenditures in Japan: A Structural Analysis of Supply-Driven Costs

Japan’s healthcare system is renowned for its universal coverage, low infant mortality, and high life expectancy, achievements built through decades of dedicated effort. However, demographic shifts such as rapid aging and workforce decline, along with regional disparities, present new challenges. Notably, Japan exhibits an unusually high hospital bed density (12.62 beds per 1,000 people) compared to other developed countries, despite a relatively low physician density. This paradox raises important questions regarding the relationship between healthcare infrastructure, medical needs, utilization, and costs.The country’s free-entry system for hospital establishment, designed to expand access post-World War II, allows licensed physicians to open hospitals with minimal regional planning or supply control. Combined with a fee-for-service reimbursement model, these factors create incentives for hospitals to maintain high bed occupancy and may lead to supply-induced demand beyond actual medical necessity.Regional data reveal significant variation: several rural western prefectures have the highest bed densities and inpatient costs, despite not consistently worse health outcomes or older populations. Economic factors such as lower land and labor costs, underdeveloped outpatient and community care, and historical legacies of medical school networks contribute to this pattern. Evidence indicates that higher bed density does not necessarily correlate with better health outcomes; some low-density regions achieve superior public health through strong preventive and community care. Excess inpatient capacity may increase avoidable admissions and exposure to hospital-acquired conditions.To promote sustainability and equity, policy approaches should include evidence-based regional bed planning, incentivizing hospital consolidation and service diversification, strengthening community-based care, reforming payment systems toward value-based models, and fostering collaborative stakeholder engagement.By aligning infrastructure with actual needs and encouraging efficient, quality care, Japan can maintain its healthcare excellence while addressing emerging challenges.