Impact of COVID-19 on the Service Organizations Participating in the Long-Term Care Insurance System

: Based on Their Exit Patterns

Abstract

This study explored the impact of the COVID-19 pandemic on the exit patterns of service organizations participating in the Long-Term Care Insurance （LTCI） system in Japan. The outcomes indicate that the exit rate did not increase in the current pandemic compared to surveys conducted before the pandemic. The outcomes also suggest the government’s effective interventions to support the service organizations during this time. The service organizations seem to be learning from the experience that, although LTCI functions as part of the governmental system and is designed as such that they are limited to earn only small margins, they can also enjoy stable revenues with governmental support in a volatile period, such as during the COVID-19 pandemic. It is predicted that the experience will promote participations of large-sized organizations from both within and outside Japan, and they will establish chain systems by repeating merger and/or acquisition （M&A） of existing small- to medium-sized service organizations. It will result in a polarization of the service organizations participating in LTCI : large-sized organizations providing services through the chain systems based on a thin-profit-and-high-sales model, and the rest consisting of independent organizations which are likely to suffer from disadvantaged competition with those large-sized organizations.