Entering home medical care, and challenging the separation of practice from management (1994)

A wall of regulation, and a wager on trust

The heart of this entry was not marching into a lucrative market but working out how to build a foothold in a territory protected by regulation. With the Medical Service Act barring corporate entry and a hard line drawn around what non-physicians may do, Secom used detours — home infusion therapy, hospital turnarounds — to force the institutional side into a debate about separating medical practice from business management. As chairman Iida saw it, this was a contest of trust: the logic of entry rested not on near-term returns but on the durable first-mover advantage available to whoever earns that trust first. In a setting where regulation and business judgement are entangled, it was a decision to step deliberately onto the edge of the system.

Yet “first-mover advantage,” turned around, is also a phrase that can justify years of losses. With patient numbers far below target and the business in the red, sustaining a ten- or twenty-year horizon was a posture available only so long as the core security business kept generating ample profit. Medicine and nursing care did eventually grow into one of Secom’s pillars — but that owed as much to the tailwind of an ageing society and to the strength of the business underwriting it. Carrying a loss-making venture while waiting for regulation to move was a choice open to Secom precisely because its core business was strong.