VZCZCXRO4544
RR RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #1817/01 1140506
ZNR UUUUU ZZH
R 240506Z APR 07
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 3004
INFO RUEHBJ/AMEMBASSY BEIJING 6768
RUEHUL/AMEMBASSY SEOUL 2836
RUEHFK/AMCONSUL FUKUOKA 0845
RUEHNAG/AMCONSUL NAGOYA 0132
RUEHNH/AMCONSUL NAHA 3292
RUEHOK/AMCONSUL OSAKA KOBE 4381
RUEHKSO/AMCONSUL SAPPORO 1757
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHIN/AIT TAIPEI 6400
RUEAUSA/DEPT OF HHS WASHINGTON DC

UNCLAS SECTION 01 OF 03 TOKYO 001817 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT. PLEASE PASS TO USTR/MICHAEL BEEMAN. HHS FOR OGHA 
STEIGER AND BHAT. 
 
E.O. 12958: N/A 
TAGS: ECON EINV ETRD SOCI TBIO JA
SUBJECT: TOKYO MEDICAL CENTER BREAKS NEW GROUND IN HEALTH 
SERVICES 
 
 
¶1. (SBU) Summary.  The Tokyo Midtown Medical Center (TMMC), 
located in the newly opened Tokyo Midtown complex in the 
Roppongi area of central Tokyo, boasts Japan's first hospital 
with a foreign affiliation.  TMMC has contracted with Johns 
Hopkins International (JHI), part of the Johns Hopkins 
medical center in Baltimore, Maryland.  Besides providing 
TMMC with an internationally-known brand, JHI will be 
responsible for training TMMC staff and also will provide 
TMMC patients with second opinion consultations.  TMMC will 
offer general medical treatment covered by Japan's national 
health insurance as well as dental care, dermatology, a 
pharmacy, a supplement center, and a women's clinic staffed 
entirely by women. 
 
¶2. (SBU) The TMMC corporate structure represents a 
breakthrough in Japan's medical system.  Under current 
regulations, most Japanese medical corporations must be run 
under the direction and/or ownership of a licensed Japanese 
physician and on a not-for-profit basis -- precluding any 
foreign direct investment (FDI).  While TMMC has no FDI,  its 
structure allowing foreign training and consultation could 
become a model for similarly structured deals in the future. 
End summary. 
 
--------------------------- 
The Break-through Structure 
--------------------------- 
 
¶3. (SBU) At an American Chamber of Commerce Japan (ACCJ) 
Healthcare Services sub-committee meeting on April 9, Tokyo 
Midtown Medicine Co. Board member Tetsuya Furukawa introduced 
the newly opened Tokyo Midtown Medical Center (TMMC) and 
explained its complicated business structure, necessitated by 
strict Japanese legal requirements.  Furukawa described how 
Tokyo Midtown's primary developer, Mitsui Fudosan, wanted an 
on-site medical center to service the complex's Ritz Carlton 
Hotel guests and the approx. 20,000 employees and residents 
in the development.  Mitsui Fudosan combined forces with 
Resort Trust Inc., a Japanese company whose principal 
activities include operating membership resort clubs, hotels 
and restaurants but whose interests also include medical 
facilities.  Resort Trust has a wholly owned subsidiary, High 
Technology Medical Complex (HIMEDIC), created in 1992 to 
branch out into medical operations.  HIMEDIC took a 66.5 
percent interest in TMMC while Mitsui Fudosan holds the other 
33.5 percent.  The company then sought an internationally 
recognized medical affiliation, choosing Johns Hopkins of 
Baltimore, US News & World Report's top-rated US hospital for 
the last 16 straight years.  Finally, the company sought 
doctors to create TMMC, the medical service providers and the 
final piece of the puzzle. 
 
----------------------------- 
The Johns Hopkins Affiliation 
----------------------------- 
 
¶4. (SBU) Johns Hopkins International (JHI) is an organization 
within Johns Hopkins Medicine charged with advancing the 
Johns Hopkins mission of teaching, research and patient care 
internationally, according to its website.  In addition to 
coordinating care for international patients, JHI provides 
services in healthcare consulting, clinical service 
development, laboratory management, and education programs 
for the international medical community.  Besides TMMC, JHI 
has projects in India, China, Turkey, Ireland, Eastern 
Europe, the United Kingdom, Lebanon, UAE, Panama, Mexico and 
Trinidad and Tobago. 
 
¶5. (SBU) Because JHI is not approved by the Japanese 
government, it can have no ownership or investment in any 
Japanese medical facility; an affiliation is legal, however, 
although relationship with JHI does not extend to TMMC's 
dental care.  JHI has trained TMMC's staff, all of whom speak 
English, and will travel to Japan four times a year to train 
them in the latest technology.  JHI  also will receive fixed 
royalties allowing the affiliation to be advertised. 
Furukawa noted that TMMC has benefited from the recent change 
in the law allowing medical facilities to post photos of 
 
TOKYO 00001817  002 OF 003 
 
 
doctors and advertise the facility.  Furukawa stressed that 
JHI's interests lie in accruing capital gains, not in 
attracting new patients to the hospital's Baltimore location. 
 He also noted that the company's relationship with the 
Ministry of Health, Labor and Welfare (MHLW) is good, 
although MHLW is watching the company very closely to ensure 
that no laws are broken. 
 
--------------------------- 
New Doctor-Patient Protocol 
--------------------------- 
 
¶6.  (SBU) Furukawa divulged that JHI had learned a lot about 
patient treatment from the Ritz Carlton and Disney, -- two 
companies well known for exceptional service -- much of which 
has been put into practice in Baltimore and now TMMC.  He 
said, for example, that, contrary to current Japanese 
patient-doctor protocols, patients and doctors at TMMC are 
regarded as equals.   Patients will be referred to as 
"o-kyaku-san" or "honored guest" rather than as "patient." 
Doctors will stand and greet patients at the doors of their 
offices rather than waiting for a knock and then granting 
patients leave to enter.  Furukawa admitted that TMMC staff 
had required a fair amount of training and had not yet fully 
adjusted to this new way of handling patients. 
 
------------------ 
American Advantage 
------------------ 
 
¶7. (SBU) Commenting on how much easier it is for a private 
company to reduce costs, Furukawa outlined four areas where 
TMMC benefits from the JHI affiliation.  First, TMMC profits 
from US-style hospital management and organization 
efficiencies, which he maintains exceed Japan's (Note: as do 
all other analysts of Japan's healthcare system).  Second, 
TMMC offers service excellence, something else American 
hospitals do better than Japanese hospitals, he said.  Third 
is the opportunity for US-Japan medical exchanges, and last 
is the center's ability to offer specialty services not yet 
available in Japan or not as advanced as in the United 
States, such as cancer treatments. 
 
------------- 
TMMC Services 
------------- 
 
¶8. (SBU) Located on the sixth floor of the complex's tallest 
building, the Center occupies 25,000 square feet, the largest 
in Japan, according to Furukawa.  TMMC has six facilities: 
the Outpatient Division (cardiology, internal medicine, 
gastroenterology, dermatology, sports orthopedics and 
orthopedic surgery, ophthalmology, travel clinic); Health 
Screening Center including a women's clinic; Special Services 
including a comprehensive back pain clinic and an 
international and executive division; Aesthetic Dermatology; 
a Dental Clinic including orthodontistry; and a Supplement 
Center including nutritional counseling.  A seventh area, the 
Pharmacy, is operated by an outside company that has 
contracted directly with TMMC.  Future plans include a 
possible inpatient facility and day surgery that might 
require an overnight stay.  Part of the agreement the Midtown 
Center has with TMMC is that doctors are on call 24 hours a 
day for residents, including guests at the Ritz Carlton 
Hotel. 
 
--------------- 
Risk and Reward 
--------------- 
 
¶9. (SBU)  Asked who carried the risk in the structure, 
Furukawa said it lay with TMMC and the banks that had 
extended it loans.  Tokyo Midtown Medicine Company, not TMMC, 
owns the facility's physical property and has hired its 
management; it also receives payment for its consulting and 
administration services but will not receive any increase 
unless it renegotiates existing contracts.  TMMC, on the 
other hand, hires and pays the doctors.  If TMMC makes a 
 
TOKYO 00001817  003 OF 003 
 
 
profit one year, TMMC doctors will receive an increase in 
their wages the following year.  Furukawa agreed that 
starting a medical corporation in Japan is not difficult but 
it has to be done by doctors.  The difficulty lies in 
securing a location and then securing and managing it. 
 
----------------------------------- 
National Health Insurance Covers It 
----------------------------------- 
 
¶10. (SBU) Furukawa observed that some of the press coverage 
of TMMC had been incorrect or had overstated certain aspects. 
 For example, nearly sixty percent of the business will be 
covered by Japanese national health insurance.  He agreed, 
however, that losses incurred from this business would be 
covered by its more elite services such as its Executive 
Health program, which offers participants a series of more 
than 250 tests over several days. 
 
--------------------- 
Net-working Necessity 
--------------------- 
 
¶11. (SBU) Furukawa admitted that his company had learned a 
lesson from the Roppongi Hills complex's medical center, 
which failed to reach out to and network with area doctors in 
advance of opening.  As a result, the area doctors had caused 
some unspecified trouble for the medical center, which TMMC 
was able to avoid. 
 
------- 
Comment 
------- 
 
¶12. (SBU) The opening of TMMC has generated plenty of buzz in 
the press and amongst medical professionals.  The ACCJ 
already has hosted a lunch for TMMC staff as well as the 
briefing described above.  Most of the press reports have 
left the impression that TMMC is aimed at the elite, 
something its management is attempting to dispel.  Certainly, 
elite services are on offer but so are national health 
insurance-covered general services.  Nevertheless, the 
overall opulence of the new Tokyo Midtown development may 
dissuade the general population from seeking out TMMC's 
services. 
 
¶13. (SBU) TMMC's corporate structure is very complex and may 
be difficult to imitate but it offers hope for US businesses 
trying to break into Japan's medical services sector.  As 
long as Japan regulates hospitals to be owned and managed 
solely by individual doctors, however, a thoroughgoing reform 
of healthcare services and entry of foreign providers will 
remain very difficult. 
DONOVAN