International Challenges and Opportunities Facing Senior Care

*Below is a brief summary of our research conducted on this subject. If you would like the full package, please feel free to reach out to us at inquiry@scaaa.com

How can new models of senior care be developed in countries like China with fast-growing aging populations?

In order to explore senior care business opportunities in China, we aimed to understand the trends, patterns, and characteristics of an aging population. We extensively studied the senior care industries in mature markets, such as the US, UK, and Japan. We looked into senior care housing under the Chinese context, examining the specifics of the Chinese family structure and any related challenges, policies, and regulations. We identified potential participants and market segments for the industry, and put forward design considerations for the future Chinese senior care model.

Context

The world’s population is aging at an unprecedented rate. The United Nations predicts that the percentage of the total population who are 65 and older will increase from 5% in 1950 to 21.30% in 2050. The old-age dependency ratio, which measures the number of people age 65 and older per 100 working age (15-64 years) people, is rising around the world; particularly in Japan, China, South Korea, and China. An ageing trend can be perceived as a looming socioeconomic burden or the potential for a huge senior care market in the future.

 

The housing sector is generally composed of five segment types. They are defined by the level of care and amenities provided in conjunction with the living setting. Active Adult Communities offer basic services while Skilled Nursing and CCRCs provide intensive and personalized healthcare services.

 

  • Active Adult Communities and Senior Apartments: Provides transportation and activities for seniors

  • Independent Living Facilities: All provided above plus meal service, housekeeping, and 24-hr monitoring

  • Assisted Living Facilities: All provided above plus laundry and assistance with daily living

  • Skilled Nursing Facilities: All provided above plus 24-hr nursing care

  • Continuing Care Retirement Communities (CCRCs): Varies by care type within the community

 

 

Senior Housing in the United States

  • An industry-driven market with limited government involvement. The senior housing industry model in the US is market-driven. The government’s involvement is not directly involved in the investment or operation of senior care facilities. Though government-provided healthcare benefits provide a degree of support for low-income seniors, its role is primary regulatory. Against this backdrop, investors, developers and operators have clearly differentiated roles.

  • Target market. The senior market is targeted towards the middle/upper class, the majority of who prefer Independent Living. In 2012, 64% of customers in the market were self-paid. Currently, 91% of senior housing facilities are located in urban and suburban areas.

Senior Housing in Europe

  • Heavily tied to the government. In the UK, government involvement is heavily tied to the senior care industry, and has played an essential role in its creation. The government provides tax benefits, subsidies and assistance to a range of actors in the senior care industry. It operates health care centers and provides inexpensive housing and free health care services to low-income seniors.

  • Self-pay and governmental aid. The payment of senior care homes comes in a combination of self-pay and governmental aid. A patient’s payment plan is dependent upon whether the value of their personal assets falls above, between, or below given upper and lower limits. Self-payers play important roles in care homes market because of the inadequate state paid fees.

 

Senior Housing in Japan

  • Government led senior care institutions. Japan’s government pays and leads senior care institutions and service development, provides assistance such as subsidies, low- interest loans, and home medical care related grants. The country has a strong tradition of workers who spend their career at a single company, which provides pensions and benefits that cover senior care. Participants in Japan senior care market include real estate developers, insurance companies, hotels and pharmaceutical companies.

  • Publicly funded spending. Every Japanese citizen, including the unemployed, is required to participate in the National Health Insurance (NHI) program. The Long-term Insurance System covers those over the age of 65. Seniors can avail of in-home care services, community-based services, and facility services.

Chinese Context

  • A growing and underdeveloped market. The Chinese elderly care and assistive devices market is still in its infancy, but its fast-growing ageing population will demand high-growth and development.

  • China has the fastest growing elderly population in the world. By 2050, the number of senior citizens will be approximately 350 million, which is nearly 25% of China’s population.

  • China is home to 83 million disabled people, 80% of which cannot live without assistive devices.

  • There is an increasing demand for rehabilitation and elderly care facilities. Both the public and private health care sectors are experiencing high growth through government support.

  • China lacks know-how and experience in the elderly care and rehabilitation sector. As a result, there is a high demand for foreign equipment and expertise.

  • An evolving family structure. Traditionally, every generation of a Chinese family lived under the same roof. Today, just 38% of people over the age of 60 live with their adult children. Just over half of those living alone receive financial support from their children. In addition, due to China’s one child policy, the “2-4-8 problem” has started to and will continue to be an issue for the foreseeable future: two adult children have four parents and eight grandparents to care for.

 

Challenges, policies, regulations

  • Limited faculties and poor quality. The elderly care industry is still at a very early stage of development. Its housing institutions provide beds for just 2% of the country’s elderly population. There is an estimated demand-supply gap of 8.8 million beds.

  • Land rather than service value. Currently, most senior care facilities emphasize their housing function but neglect health service capabilities. Most of them prioritize land value rather than service value. Many senior facilities are marketed as high-end housing with little health service capability and limited affordability.

  • Poor caregiver education. Of the 220,000 caregivers in China, 9% is certified and qualified, 14% is certified but underqualified, and 77% is not certified. Being a caregiver is a low-paying job and is not respected in Chinese culture.

  • Culture gap. Surveys report findings that 90 percent of the elderly do not want to move to institutions for cultural reasons such as the emphasis on traditional family-centered care. Of the 10 per cent who are willing to try institutional care or housing, two-thirds stressed a desire to be located in the inner city and near their children.