OBJECTIVES: Tinea unguium is a common nail disorder caused by fungal infections. Guidelines issued by Japanese Dermatological Association strongly recommends direct microscopic test for a definite diagnosis of tinea unguium, which requires sophisticated skill by physicians. However, Iwanaga et al. reported that about 40% of patients were diagnosed only based on the clinical presentation, which may lead to misdiagnosis. In 2016, the dermatophyte test kit was approved in Japan. As the kit enables physicians to easily diagnose tinea unguium with high specificity, the reduction of unnecessary treatment cases is expected. The aim of this study is to reveal the impact of implementing the dermatophyte test kit on the budget of the public healthcare system. METHODS: Following the decision tree model of diagnosis/treatment process in patients with suspected tinea unguium, a cost-minimization analysis was conducted from the public healthcare payer’s perspective. The specificity of diagnoses, the numbers of estimated false-positive cases, and the diagnosis/treatment costs were calculated for both diagnosis by clinical presentation and diagnosis with dermatophyte test kit. RESULTS: Approximately 514,000 patients received clinical examination without microscopic test for nail symptoms, and of these patients, 336,000 (65.3%) were diagnosed with tinea unguium. 68,000 false-positive cases were estimated according to the specificity of diagnosis by clinical presentation (Sp=0.61), whereas a significant reduction in false-positive cases to 28,000 was expected if the dermatophyte test kit (Sp=0.88) was introduced. The total reduction in diagnosis/treatment costs was estimated at JPY 700 million (approx. USD 6.7 million). Sensitivity analysis with a tornado diagram supported similar result although the result is sensitive to the prevalence rate and specificity of each diagnostic approach. CONCLUSIONS:  The implementation of the dermatophyte test kit with tinea unguium may lead to a positive budget impact on the public healthcare system in Japan through a decrease in false-positive cases caused by diagnosis without a microscopic test.