Sustainability of university hospitals: a narrative review on governance, finance, workforce, and regional integration

Introduction

Japanese university hospitals serve as a central pillar of Japan’s healthcare delivery system, and provide education, research, and clinical patient care simultaneously (1). University hospitals are unique because of the inseparable integration of these functions: training medical students and residents, advancing cutting-edge research from basic science to clinical applications, and providing highly specialized care for acute and rare diseases (2,3).

Previous studies on Japanese university hospitals have largely focused on individual aspects such as clinical productivity, reimbursement systems, physician workforce issues, or specific reform initiatives (3-5). While valuable, these studies tend to examine isolated domains and often lack an integrated perspective that simultaneously addresses governance structures, financial sustainability, human resource management, and the balance between education, research, and clinical care. In addition, the environment surrounding university hospitals in Japan has undergone significant changes. Population aging, shifts in patient demographics, rising demands for medical services, reimbursement reforms aimed at controlling healthcare expenditures, and the enforcement of work style reforms to regulate physicians’ working hours have collectively affected hospital management and operations (6-8). These factors increasingly constrain the ability of university hospitals to sustainably fulfill their traditional mission (education, research, and clinical patient care). As a result, in 2024, the Ministry of Education, Culture, Sports, Science and Technology (MEXT) formulated and published the “University Hospital Reform Guidelines” and requested each university hospital to develop and submit its own reform plan (9).

This review aims to summarize the key challenges facing Japanese university hospitals, explore barriers to reform through comparisons with European or American University hospitals from an international perspective, and propose future directions for sustainable management from multiple perspectives, including governance, finance, human resources, education and research, and community collaboration. We present this article in accordance with the Narrative Review reporting checklist (available at https://jhmhp.amegroups.com/article/view/10.21037/jhmhp-2025-1-109/rc).

Methods

Relevant articles were identified through searches of PubMed, Web of Science, and Google Scholar, as well as official policy reports from governmental and academic organizations (Table 1). The search covered publications from 2000 to 2025 and was limited to articles published in English and Japanese. Key search terms included “university hospitals”, “academic health centers”, “hospital governance”, “healthcare financing”, “medical education”, and “regional healthcare systems”. The review examines governance, financing, human resources, and regional integration in Japanese university hospitals and compares them with international models, particularly the United States (U.S.) academic health centers (AHCs).

Differences between Japanese university hospitals and European or American university hospitals from an international perspective

In this section, European or American University hospital is discussed primarily as large academic medical centers that combine education, research, and tertiary care, and that play a central role in their respective healthcare systems. In addition, we systematically organize and comparatively examine the major challenges facing Japanese university hospitals.

Japanese university hospitals and American university hospitals

As shown in Table 2, AHCs in the U.S. differ markedly from Japanese University hospitals in several respects, including clearer delineation of responsibilities between universities and hospital management, diversified revenue streams, and well-established mechanisms for external funding (10-14). AHCs in the U.S. consist of medical schools, affiliated hospitals, and research institutes, with clearly defined responsibilities between universities and hospitals. They operate with managerial independence under boards and chief executive officers (CEOs), drawing on professional expertise and external directors. Their finances are diversified, combining clinical revenue with National Institute for Health (NIH) grants, philanthropy, education, and public and private insurance. AHCs recruit globally, offering competitive resources for education and research, and are strongly integrated into regional networks of community hospitals. Importantly, they also participate in the Alliance of Academic Health Centers International (AAHCI) (15) and other global collaborations, enhancing international visibility and knowledge exchange.

In contrast, Japanese university hospitals remain institutionally integrated with their parent universities, which limits the authority of hospital directors and often delays managerial decision-making (9,16). Hospital revenues rely heavily on the Diagnosis Procedure Combination (DPC)-based prospective payment system (17) and fee-for-service reimbursement, while financial contributions from philanthropy and other external funding sources remain relatively limited compared with those of U.S. academic health centers (18,19).

Although national policies emphasize collaboration with community-based healthcare systems, Japanese university hospitals continue to focus primarily on advanced acute and tertiary care, resulting in limited integration into regional and international healthcare networks (4). Overall, U.S. AHCs have achieved greater organizational flexibility and long-term sustainability through diversified revenue streams, professionalized governance structures, and strong engagement in international collaboration, whereas Japanese university hospitals continue to face structural challenges related to institutional dependency on universities, narrow financial bases, and constrained regional and global integration (9,19,20).

Japanese university hospitals and European university hospitals

From an international perspective, the governance of academic hospitals in Europe differs substantially from the experience in Japan (Table 3). In Europe, hospitals are typically defined as public providers—for example, National Health Service (NHS) Trusts in England (21) or public law corporations at the Länder level in Germany (22)—while universities remain institutions of higher education, with clear contractual bridges such as Biomedical Research Centres (BRCs) in the United Kingdom (21) or University Medical Centres (UMCs) coordinated by the Nederlandse Federatie van Universitair Medische Centra (NFU) in The Netherlands (23). In contrast, Japanese university hospitals often show a more ambiguous boundary between university and hospital management (24).

With respect to financing, most European systems employ Diagnosis Related Group (DRG)-based case-mix payments as the principal reimbursement mechanism (22,25), supplemented by separate funding streams to support education and research missions [for example, Missions d’Enseignement, de Recherche, de Référence et d’Innovation (MERRI) in France (25), federal state allocations in Germany (22), and National Institute for Health and Care Research (NIHR) allocations in the United Kingdom (26). Japan relies on the DPC/Per-Diem Payment System (DPC/PDPS) (24), together with competitive research funding such as Grants-in-Aid for Scientific Research (KAKENHI) and the Japan Agency for Medical Research and Development (AMED), but has less institutionalized mission-based compensation.

Regarding external funding, European academic hospitals benefit from diversified sources: European Union-level programs such as Horizon Europe (22), national initiatives like NIHR in England (26), Deutsche Forschungsgemeinschaft (DFG) in Germany (22), MERRI in France (25), or The Netherlands Organisation for Health Research and Development (ZonMw) in The Netherlands (23). By contrast, Japanese university hospitals rely mainly on KAKENHI and AMED, with comparatively weaker systemic mechanisms for direct institutional mission support.

Beyond institutional descriptions, these structural differences have important practical implications for governance and sustainability. In many European systems, the formal separation between universities and hospitals—combined with explicit contractual frameworks—clarifies decision-making authority, financial accountability, and responsibility for education and research missions. Dedicated mission-based funding mechanisms help buffer academic activities from short-term clinical revenue pressures, thereby preserving protected time and institutional capacity for research and education. In contrast, the more ambiguous governance arrangements in Japanese university hospitals tend to blur accountability and concentrate financial risk within hospital operations, often reinforcing dependence on clinical income and competitive project-based funding. While European models cannot be directly transplanted into the Japanese context, their emphasis on role clarity and institutionalized mission support provides useful reference points for rethinking governance design in Japanese university hospitals.

Major challenges facing university hospitals

To contextualize these challenges, a brief comparison with U.S. AHCs is provided.

Governance and organizational management

In Japanese university hospitals, the division of roles between university headquarters (responsible for education and research) and affiliated hospital management (responsible for clinical care and financial performance) remains ambiguous (Figure 1). Universities tend to prioritize education and research, while hospitals must focus on financial sustainability and regional healthcare delivery. This divergence often results in delays in decision-making and difficulties in coordination between educational/research and clinical divisions (6). In Japan, professors hold top positions and simultaneously manage hospital administration. The professors are typically licensed physicians who provide patient care and conduct education and research, while also assuming major administrative responsibilities within the hospital. In contrast, in the U.S., CEOs and chief financial officers (CFOs) oversee management and physicians devote themselves to clinical practice and research (Figure 1). Thus, U.S. AHCs often employ professional executives (CEOs, CFOs) with managerial authority, enabling agile decision-making and strategic financial management (11,12).

Figure 1 Organizational structures in human resource management: Japan vs. U.S. academic health centers. CEOs, chief executive officers; CFOs, chief financial officers.

Financial constraints

Japanese hospitals rely heavily on the national fee-for-service reimbursement system, which limits their ability to diversify revenue. In Japanese university hospitals, in particular, the DPC/PDPS scheme further restricts flexibility in clinical revenue generation (6). In addition, rising costs of medical supplies, energy, and outsourcing have also placed increasing pressure on hospital budgets. Japanese university hospitals are highly vulnerable to fluctuations in the reimbursement system because they rely primarily on clinical revenue as their main financial source (18,27). While additional revenue streams such as government subsidies, education- and research-related funding, and competitive research grants do exist, these funds are often earmarked for specific purposes and provide limited flexibility in supporting day-to-day clinical operations or compensating for rising operational costs. In contrast, large, research-intensive U.S. academic health centers and leading nonprofit university-affiliated hospital systems typically benefit from more diversified revenue streams, including clinical income, research funding, philanthropy, and industry partnerships, which can enhance resilience against systemic changes in healthcare financing and reduce their relative dependence on clinical revenue (13).

Human resource management

Physicians face a triple burden of clinical practice, education, and research, often leading to overwork (6). The recent enforcement of work-hour regulations has intensified the challenge of balancing clinical duties with academic responsibilities (28). Lower salaries compared to those in private hospitals contribute to physician outflow (29). In Japanese university hospitals, physician attrition has been attributed to a combination of heavy clinical workloads, limited protected time for academic activities (28), and relatively lower remuneration compared with private hospitals that do not require substantial education or research commitments (29). While nursing staff recruitment is generally stable due to relatively favorable working conditions, this has led to fiscal strain on hospital budgets. Administrative staff remain tied to university employment systems, limiting flexibility in clinical operations. In contrast, many U.S. AHCs operate with greater institutional autonomy in personnel management within established governance frameworks (11,12), allowing more flexibility in recruitment, compensation, and promotion than is typically possible under uniform university-wide personnel systems in Japan. This means that they are not bound by the uniform personnel rules of the university headquarters, but instead operate with their own systems for recruitment, salaries, and promotions. This allows them to design compensation schemes and manage human resources flexibly, tailored to the achievements and roles of physicians, nurses, and research staff. In many U.S. AHCs, hospital operations are supported by professionally trained administrators with expertise in healthcare management and finance, with Master of Health Administration (MHA) or Master of Business Administration (MBA) backgrounds, often working in collaboration with physician leaders. This shared leadership structure can help reduce the managerial burden on individual physicians and allow greater focus on clinical, educational, and research activities.

Balancing education, research, and clinical care

The predominance of clinical duties often reduces time and resources for education and research (6,29). Education encompasses undergraduate medical education, structured clinical supervision and mentoring of early-career physicians, as well as interprofessional education for nurses, allied health professionals, and other healthcare staff. Complex ethical reviews and internal approval procedures further delay the introduction of innovative medical technologies compared with private or overseas institutions (29). U.S. AHCs, supported by external funding and systematic research infrastructure, can more effectively balance clinical and academic missions (10,13).

Relationship with regional healthcare

Japanese university hospitals, designated as advanced care providers, are mandated by the government to deliver highly specialized acute care and rare disease treatments. However, under the current reimbursement framework, these therapies often involve high fixed costs for specialized personnel and infrastructure, while patient volumes remain limited, resulting in financial pressures that are difficult to offset through clinical revenue alone (6,29). The adoption of new drugs and advanced medical technologies further exacerbates financial strain due to their substantial costs. At the same time, in an effort to stabilize their management, university hospitals increasingly expand into general medical services, which places them in direct competition with community and regional hospitals for patients (29). Because most healthcare services are reimbursed through a single, uniform public insurance system, the expansion of university hospitals into general medical services effectively places them in competition with regional hospitals for similar patient populations within the same funding framework. As a result, university hospitals face a structural dilemma in which they must sustain high-cost advanced care while relying on general medical services for financial balance, a dynamic that may disrupt functional coordination and efficient resource allocation within regional healthcare systems (10,30).

Although the financing structures of U.S. and Japanese healthcare systems differ substantially, U.S. AHCs are often characterized by clearer functional differentiation and structured referral relationships with community providers. This comparison focuses on organizational roles and care coordination rather than on funding methods per se. U.S. AHCs have established systems of clear functional division with community hospitals and regional healthcare providers. Routine care for common chronic diseases and general medical services are primarily delivered by community hospitals and clinics, while AHCs focus on highly specialized acute care, rare disease treatment, the introduction of advanced medical technologies, and clinical research. Through this role differentiation, AHCs can allocate their limited resources to advanced medicine, research, and education, while community hospitals provide accessible and sustainable general care. Moreover, AHCs collaborate with regional hospitals through referral networks, ensuring smooth bidirectional patient transfers so that individuals receive the appropriate level of care when needed. This functional division and collaboration enhance the efficiency and sustainability of the overall healthcare delivery system and ensure equitable access to appropriate medical services for patients (10).

Future directions and solutions

Institutional and organizational reform

The future directions of Japanese university hospitals can be conceptualized around two interrelated pillars. The first pillar focuses on institutional reform and organizational strengthening, while the second emphasizes academic advancement and regional collaboration (Figure 2). The first pillar includes clearly delineating the responsibilities of universities and hospitals, whereby universities retain primary responsibility for education, research, and overall academic strategy, while hospital management is granted authority over clinical operations, financial management, and human resource allocation within a defined governance framework (31,32). Furthermore, it is necessary to enhance organizational sustainability by securing diversified revenue streams beyond reliance on medical service fees (33-35), promoting task-shifting and team-based care, and improving working conditions and improving working conditions, such as reducing excessive overtime, ensuring adequate rest periods, and introducing flexible work arrangements (34,35). Specifically, we now provide examples of diversified revenue streams (including mission-based public funding, competitive research grants, industry collaboration, and specialized clinical services), outline operational approaches to task-shifting and team-based care through expanded roles of allied health professionals, and will perform organizational measures to improve working conditions such as protected time, flexible work arrangements, and workload monitoring under physician work style reform.

Figure 2 Future directions for Japanese university hospitals: two pillars. AI, artificial intelligence.

Collectively, these efforts aim to reinforce both internal academic foundations and external collaborative frameworks, thereby reducing excessive dependence on constrained medical reimbursement structures and enhancing long-term institutional sustainability.

The second pillar is academic advancement and regional collaboration. Ensuring protected research time for young investigators and strategically allocating resources are essential for strengthening research capacity, while the integration of digital health and artificial intelligence (AI) should also be actively pursued, for example through the development of virtual training centers for surgical education, AI-based decision-support tools for imaging diagnostics, and data-driven clinical workflow optimization (36-38). In addition, the establishment of role-sharing with regional core hospitals and active participation in medical networks are required to develop a healthcare delivery system across regions. Collectively, these efforts aim to reinforce both internal academic foundations and external collaborative frameworks, thereby reducing excessive dependence on constrained medical reimbursement structures and enhancing long-term institutional sustainability. These proposals are intended to outline a future-oriented strategic framework, rather than a predictive model, for strengthening institutional foundations and reducing excessive reliance on constrained medical reimbursement systems.

Academic advancement and regional integration

Equally essential is the advancement of education and research in close alignment with clinical practice (34,39), which represents the operational core of the academic advancement and regional integration pillar. This requires concrete measures such as securing protected time for young investigators by reducing their clinical load, providing bridge funding and startup packages, and implementing mentorship programs that connect junior researchers with senior faculty. Strategic allocation of resources should prioritize research infrastructure—including core laboratories, biobanks, and data science units—while also leveraging digital health and AI technologies to integrate real-world clinical data into translational research. Parallel to these academic reforms, university hospitals must also strengthen collaboration with regional hospitals. This can be achieved through formalized role-sharing agreements (e.g., concentrating advanced surgeries and rare disease care at university hospitals while delegating general inpatient care to community hospitals), establishing shared referral and counter-referral pathways, and participating actively in regional care networks and joint morbidity conferences (34,40). Such integration not only enhances the sustainability of healthcare delivery but also ensures that academic centers can concentrate on advanced care, innovation, and global competitiveness (41,42), while regional providers maintain accessible and community-oriented general services. Building on the institutional and organizational reforms outlined above, academic advancement must be pursued through closer integration of education and research with clinical practice.

Study strengths and limitations

This review has several strengths. It provides a policy-oriented synthesis of the challenges facing Japanese university hospitals by integrating perspectives on governance, finance, human resources, education and research, and regional collaboration within an international comparative framework. By aligning recent policy developments, such as the 2024 MEXT University Hospital Reform Guidelines, with international academic health system models, this review offers a timely and structured conceptual analysis relevant to both policymakers and hospital leaders. However, several limitations should be acknowledged. First, as a narrative review, this study does not follow a systematic search protocol and therefore may not capture all relevant empirical studies. Second, international comparisons are based on representative models rather than exhaustive country-by-country analyses, which may limit direct generalizability. Third, some proposed strategies are conceptual in nature and require future empirical validation through institutional case studies and quantitative analyses. These limitations notwithstanding, this review aims to provide a structured analytical framework to inform future research and policy discussions on the sustainable development of Japanese university hospitals.

Conclusions

University hospitals in Japan play a central role in the healthcare system by integrating education, research, and clinical care. Yet they face multifaceted challenges, including governance complexity, financial constraints, human resource difficulties, imbalances between education and research versus clinical demands, and tensions with regional healthcare systems. International comparisons, including experiences from U.S. AHCs, provide useful reference points; however, their primary value lies in informing concrete next steps rather than serving as direct models. Moving forward, Japanese university hospitals should pursue phased governance reform to clarify institutional authority, develop diversified and mission-aligned revenue strategies, implement human resource policies that protect education and research time, and establish regionally coordinated care frameworks with clearly defined functional roles.

These action-oriented reforms are essential for enhancing institutional resilience and ensuring that university hospitals can sustainably fulfill their integrated missions of education, research, and advanced clinical care in the 21st century. In this context, selected elements of international models are discussed as adaptable reference points that require careful modification to align with Japan’s distinct healthcare financing, governance, and educational systems.

Acknowledgments

The authors thank colleagues at Fukuoka University Hospital for their valuable discussions and insights during the preparation of this review.

Footnote

Reporting Checklist: The authors have completed the Narrative Review reporting checklist. Available at https://jhmhp.amegroups.com/article/view/10.21037/jhmhp-2025-1-109/rc

Peer Review File: Available at https://jhmhp.amegroups.com/article/view/10.21037/jhmhp-2025-1-109/prf

Funding: None.

Conflicts of Interest: All authors have completed the ICMJE uniform disclosure form (available at https://jhmhp.amegroups.com/article/view/10.21037/jhmhp-2025-1-109/coif). The authors have no conflicts of interest to declare.

Ethical Statement: The authors are accountable for all aspects of the work in ensuring that questions related to the accuracy or integrity of any part of the work are appropriately investigated and resolved.

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