China’s Growing Business of Growing Old

written by Michael Simon Waser, Embassy of Switzerland in Beijing

Virtually every country in the world is confronted with an ageing population and surely China is no exemption to this phenomenon. But to understand the scope and speed China’s population is ageing, we need to have a look into the country’s recent history.

 

Until the 1960s, China’s fertility rate increased continuously until the government effectively introduced counter measures which infamously peaked in the announcement of the “one-child policy” in 1980. Since then, fertility rates have dropped to 1.5 (from 6.4 in 1965), considerably below the reproduction rate of 2.1 children per women. In the meantime, average life expectancy has increased to 76 years (from 43 in 1960), and people in cities like Beijing can today expect to live as long as someone born in the United States or Germany. In a nutshell, China is facing an ever increasing share of elderly people who rely on a shrinking share of labor force. In China, this unbalance is commonly known as 4:2:1 problem: Four dependent grandparents and two parents rely on one working-age Chinese. Considering the fact that elderly care has traditionally been carried out within families makes this problem even more difficult. On the one hand, there is still a social aversion against the use of professional senior care services such as elderly homes. On the other hand, the imbalanced dependency ratio will, for better or for worse, lead to an increased demand of professional elderly care services. At the same time, China has neither enough professional care givers, nor the necessary facilities to provide appropriate care for its senior population. Beijing, for example, counts 3.5 million seniors aged 60 or above but the city has only 120’000 beds in nursing homes. In other words, only 1 in every 30 senior citizens has the privilege to get a bed in one of Beijing´s nursing homes. Some of these institutions claim to have waiting lists of more than 100 years.

The Chinese government has recognized this challenging development and issued a series of policies such as an improved pension plan and the recently adopted two-child policy. However, in the uphill battle of finding a satisfactory way to care for China’s growing number of seniors, most challenges remain and a final solution has yet to be found. Therefore, this article is going to introduce two disruptive innovations, both private initiatives from local social-entrepreneurs who found innovative solutions to China´s ageing problem.

 

  1. YYK’s Community Health Service Stations:

 

Beijing based YYK Ltd. is running a series of so called community health service stations. Each station offers four kinds of services: First, a state-of-the-art offline-to-online health monitoring and management solution which is free of charge. Second, simple rehab- and physical therapies, including acupuncture, which is covered by the residences’ health insurance. Third, social activities and healthy elderly friendly meals which have to be paid out of pocket. Fourth: To-your-door medical services (health check, rehab, etc.) which have to be self-financed.

Core of each station is the offline-to-online monitoring system which measures basic health indicators such as blood pressure, height, weight and heart rate. Different from a clinic or a hospital, the monitoring stations provide a comfortable and relaxing atmosphere so the elderly volunteer to come on a regular basis. Paired with the stations’ social activities and meal plan options, they have the character of social meeting points, rather than one of a medical institution. The data collected by these monitoring stations is summarized in an individual digital health record which serves as a basis for doctors to track patient conditions. Furthermore, a software automatically generates health, nutrition and rehab advices. Depending on the resident’s physical condition, simple treatments can be offered on spot such as acupuncture and physiotherapy. For more complicated cases, the station can consult a network of local community doctors and/or transfer the resident into a hospital nearby. Each of these steps and all health data can be monitored by the resident and his/her family via smart terminals. Once established, the YYK model, including its e-healthcare solution can be easily replicated across the city at much lower cost.

As a solution provider, YYK works closely with district governments in Beijing. The space of their service stations is provided free of charge by the government, and their services are purchased by the government and then provided to the public for free. After successfully launching their pilot stations in Ganjiakou community, YYK is currently seeking to expand their model into more communities. While the stations offer convenient services and a social platform to the local community, they have even greater benefits for the local government. The social and preventive character of the stations improves the residents’ overall health and hence their ability to live independent. This in turn reduces hospitalization and dependency rates and eventually saves personnel and public expenditures. At last, the government can use the collected health data to recognize and forecast public health risks and to take appropriate countermeasures correspondingly.

 

  1. Pinetree: China’s Spitex 2.0 or the Uber of senior care services

 

Similar to Spitex in Switzerland, Pinetree is China’s largest home care service provider. The idea of providing home-based care is not new, but in its original form, it is often associated to be financially strenuous on families compared with institutionalized care. However, Pinetree has managed to keep its services affordable to the general public by keeping its overhead costs low. Using the concept of sharing economy, health care professionals can be allocated more efficiently. Similar to the car service app Uber, Pinetree uses a mobile-internet based platform to include existing healthcare professionals in their services and help them optimize service routes for maximum efficiency. Many of these “contractor caregivers” simultaneously work in traditional hospital and elderly homes. Pinetree also introduced tele-care, a companion robot that helps to connect patients, their family members, medical experts, as well as Pinetree’s own health staff over video-conference. Tele-care not only provides fast and efficient support to its users, it also acts as a triage pyramid to ensure that only the most relevant and demanding cases are presented to the top experts. However, Pinetree´s strongest asset is probably its focus on restorative care, as opposed to replacement care. While traditional replacement care workers assume tasks on behalf of their patients, restorative care workers let the individual carry out these tasks to his or her best capabilities. For example, a domestic aide may clean the apartment so that the patient does not have to perform this duty. Pinetree´s care workers understand how they can support the patient while still letting them clean the apartment themselves. In other words, restorative care refers to care that helps an individual restore his or her capabilities.

fig4

Pintree´s advantages are clear: they offer a tailored professional home care solution to senior citizens by focusing on the enhancement of their physical and mental health which improves their ability to live independently while being cost efficient and hence affordable to the general public. As their customers enjoy greater independence and better health, Pinetree´s system eases the pressure on China´s public health system.

 

Growing Business Opportunities

 Whether Pinetree or YYK, there are countless other businesses in China that are tapping into the opportunities related to the ageing population. In contrast to the traditional mentality of increasing number of beds at elderly care homes, most Chinese companies are looking for innovative business models and creative solutions to keep elders at home as much as possible, which is also in line with the Chinese family value. The potential is huge; healthcare, pharmaceutical, financial services, manufacturing and the retail services industries stand to benefit from the growing number of old people. The challenges of these innovative business models, however, are also mounting. For most solution providers – including YYK—their sustainability relies heavily on government relations as they need to work hard to coordinate and integrate inter-ministerial government resources into their healthcare service stations, to attract government procurement contracts in order to scale and to lobby strongly to include their services in healthcare insurance package. For service providers like Pinetree, responding to the increasing cost of human capital, especially skilled labor while keeping their service price attractive and affordable will continue to be a main challenge in the years to come. On top of all challenges, shortage of qualified elderly care talents remain a key barrier for the entire industry. After all, no matter how advanced technologies such as companion robots can be, elderly care still needs a lot of human touch.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s