In 2000, the longterm care insurance system was established to separate geriatric nursing care from medical insurance and to support social care for the elderly. In 2001, the Medical Care Law clearly stated and formally categorised longterm care beds as beds for long LOS/chronic care (not geriatric care), and since then, ordinary beds have been legally separated into general beds (short LOS/acute care) and long-term care beds (long LOS/chronic care). In
2003, a prospective payment system (Diagnosis Procedure Combination: DPC) was introduced to “acute-care hospitals” such as teaching hospitals or large hospitals, replacing the “fee for service” payment system. This is a diagnosis related groups (DRG) like payment system designed to give financial incentives to hospitals to reduce their LOS [34]. It is generally believed that the DPC has also moved these hospitals toward reducing LOS [35]. In 2006, the government started to encourage the conversion of hospitals with beds for longterm care into long-term care institutions such as nursing homes.