PUBLISHED : Sunday, 18 April, 1999, 12:00am
UPDATED : Sunday, 18 April, 1999, 12:00am

THE workers have just finished erecting a massive, six-storey illuminated sign over the busiest road in Kwai Chung. The dozens of container trucks passing along Castle Peak Road every minute can literally see it a mile away.

It is not for a restaurant, supermarket or mobile phone company. In a testament to Hong Kong's newest growth industry, it is for the Wah Fung Elderly Home.

Previously associated with tiny converted flats in Shamshuipo, elderly homes are now a growth business - and the industrial area of Kwai Chung is Ground Zero.

Warehouses, restaurants and snooker halls among the industrial buildings lining some of the most crowded streets in Hong Kong are being converted into vast dormitories. Some sleep 200 elderly people to a room.

Wah Fung, previously a shopping centre, has 553 beds and, when full, should have a turnover of about $4 million a month.

Nearby, one home has rather cheekily appropriated the characters paak gai, the Chinese name for ParknShop, for its name and proudly displays a large Visa Cash sign in its entrance hall.

Government figures show that despite the recession, the number of beds in private homes has risen 35 per cent to 29,800 in two years, creating an estimated $2 billion-a-year business.

Dr Alfred Chan Cheung-ming, associate professor in City University's Department of Applied Social Studies, says: 'Everyone knows there's a lot of money in this business.' The boom marks the beginning, entrepreneurs hope, of a new business. And far from decrying the commercialisation of the elderly, the Government is trying to encourage it. The health reforms recommended in the Harvard Report issued last week could give it another push and create a major 'grey dollar' economy fuelled by the ageing population. The problem is that so far, the big profits have not been matched by high standards. There are now 466 private elderly homes and Ho Wing-him, Deputy Secretary for Health and Welfare, admits: 'The conditions in some are really bad.' The new homes in Kwai Chung are mostly massive dormitories on the first, second or third floor. A coat of paint, a lino floor, a kitchen and 200 beds separated only by chest-high dividers mean the operator can be in business.

The white-coated supervisor of one home explains: 'My boss spent $1.5 million doing this place up. Before, it was a big restaurant. It has 250 people and we're more than half-full. They clear $150,000 profit a month, in cash, and can make the capital costs back in less than a year.' Even though it is midday, more than half the residents are lying in their beds. The only source of entertainment: a 36-inch colour TV.

Strange as it may seem, the Government is encouraging private-sector elderly homes. But it does not want the low-grade operators.

Professor Nelson Chow Wing-sun, who studies elderly issues at the University of Hong Kong's Department of Social Work and Social Administration, believes it is the right policy. 'There is no other alternative,' he says.

'All over the world providing homes for the elderly is a thriving business.' For an explanation of the boom, and the low standards, it is necessary to look at the condition of the elderly themselves.

A report last year for the Elderly Commission by Deloitte and Touche Consulting Group produced for the first time an in-depth profile of our elderly. Its conclusion: that those over 60 are generally in good physical health, but broke.

They were the people who built Hong Kong, and their active lifestyle and modest diet mean that 73 per cent have no physical or mental impairment.

But 71 per cent rely on Comprehensive Social Security Assistance (CSSA) welfare for income, as their labouring jobs had no pension scheme and their pay was too low to save or even buy a home.

As they became infirm, they put their names down for a government home. But starting in the 1980s queues lengthened for government-funded homes, which are operated by religious or other social groups and are acknowledged as having high standards.

For Care and Attention homes, offering limited nursing care, there are 17,468 people for 10,552 places. The waiting list is two years. For Homes for the Aged, which offer no nursing care, the queue is 19 months, but so long that the most common reason for coming off the waiting list is death.

So the elderly started turning to - or being put in - private homes, which were first set up in the 80s by immigrants from the mainland who had medical training but whose qualifications were not recognised in Hong Kong. No control was put on standards or quality until 1996, after public outcries about elderly people being tied to beds, newspapers being used instead of incontinence pads, and fires in which residents died.

The Government's Mr Ho says a paradox has been created.

'It's usually the private sector that provides a better service. But here it's the other way round. We have a private sector providing an awful service, and the public sector provides a better service.' The reason, he says, is that the elderly pay their home fees out of their CSSA. 'At $5,000 to $6,000 a month, with profit margin built in and three meals a day, inevitably the level of service is not as good as it should be.' Ng Wai-tung, a community organiser with Society for Community Organisation, says: 'If the subsidy to the elderly was better, say, $2,000 or $3,000 a month higher, then private home owners would have enough money to improve the situation.' The Government has ruled this out.

It is into this environment that entrepreneurs have plunged.

Their undisputed queen is businesswoman and Liberal Party member Irene Luk Ngai-ling, whose group of Cambridge Nursing Homes and Hong Kong Nursing Homes now has 23 premises.

Ms Luk, who declined to be interviewed, says she wants to be the first company on the local stock market to specialise in elderly homes, and her firm's performance makes this feasible: if each home has 150 residents, turnover will exceed $200 million a year.

Also with big plans is Quality HealthCare Asia, whose chairman Brian O'Connor says: 'We want to be the largest quality operator in Hong Kong.' The company, which also owns the Anderson and Partners medical business and other related operations, is already listed on the stock market and he says it can use cash generated elsewhere to fund fast expansion in elderly homes.

He believes that by 2001 his firm could run homes with a total population of 4,000 and a turnover of more than $32 million a month.

'It's a hotel-type operation. The same rules apply,' he says. 'If you've a little hotel with 50 rooms you have to charge a lot to make money. If you have 300 rooms you've economy of scale.' On an unscheduled visit to Mr O'Connor's first home in Tai Kok Tsui, the Sunday Post discovered an environment very different from the converted warehouses of Kwai Chung, with residents undergoing physiotherapy and much more happy to chat.

'I certainly have no complaints about this place at all,' said one 83-year-old woman.

Residents of Ms Luk's Cambridge homes are also good referees. A Post reporter who enquired about a place for his wife's mother found one 93-year-old resident of a Cambridge home in Kwai Chung acting as a saleswoman.

'She'd like it in here. You should get her to come. Look, they bring us tea all the time,' she said, pointing to a tea-trolley.

The Government wants to encourage quality operators to draw residents away from the poor homes. They also provide a way of cutting waiting lists, as the Government is now 'buying' places for up to $7,093 a month.

This is still less than the cost of putting someone in a government-funded home.

Mr O'Connor says pledges in Financial Secretary Donald Tsang Yam-kuen's most recent Budget to encourage private-sector participation in welfare services meant his phone rang non-stop from stock market analysts.

The sector will be given another push if the proposal in the Harvard Report is adopted. Professor William Hsiao suggested a compulsory MediSage insurance plan that would pay for long-term care for the elderly, structured in such a way as to allow them to shop around.

Even without this insurance, within the next five to 10 years a new generation of elderly people will start appearing. Born in Hong Kong to the children of the refugees of the late 1940s and the 50s, they have lived their life in Hong Kong and may have a pension or a home.

Mr O'Connor wants to be ready for them. His current home is rated A1 by the Social Welfare Department, but he regards it as three-star. His next home in Waterloo Road will be four-star, with some rooms having just one bed and ensuite facilities. He is pondering five-star homes.

'It's the quality that makes you the money,' he says, pointing out that even his $5,888-a-month 'basic package' includes daily physiotherapy, and that all his homes will be fully air-conditioned.

The big difference is the level of investment. Mr O'Connor's first home cost more than $45,000 per bed after paying for installation of special toilets and showers, nurse call systems, and individual reading lights for all beds. This investment is six times that of a basic home.

Even then, he had to set it up in premises that previously housed the headquarters of a hi-fi company.

As an experiment, a parcel of land to be auctioned in the beginning of 2000 will have a requirement that it include premises for an elderly home.

'I think it's inevitable that some of the major developers in town will get into this business in one way or another,' Mr O'Connor says. 'This is a huge market. As the population ages in Hong Kong they are going to have to look at this sector.' This would represent a shift in thinking for many senior businessmen. Li Ka-shing and other businessmen have previously supported many elderly homes with donations, but regarded commercial involvement in running the homes as a form of exploitation.

Dale Stevenson, a former Australian government official who now works as a consultant in Hong Kong and elsewhere on health and care for the aged, says developers can build new types of blocks that will have facilities for the elderly and a range of nursing and personal services. An elderly resident can then get increasing care without ever having to move.

But if developers do jump in, they still face competition from the existing unlicensed, low-quality homes. Nearly three years after introducing licences - only given to homes with adequate fire escapes and other basic facilities - just 296 out of 466 homes have them. Others operate on 'Certificates of Exemption' and the Government's Mr Ho says he will not set a cut-off date when unlicensed homes may shut.

Professor Chow says: 'I blame the Government for taking action too late. Once these places were in existence and taking care of the elderly how can you turn all the old people out on the streets?' The Government believes 100 homes a year may get licensed, which will mean unlicensed ones may still be operating in 2001 - 13 years after licensing was first mooted.

'I think for a country that is economically in the First World, the standard of care given to the majority of old citizens is poor by First World standards,' Mr Stevenson says.

Mr Ho replies: 'If you look at the current situation, and say it is not satisfactory I agree with you. But if you compare it with two or three years ago and say it is better, then I would also agree with you.' Back in Kwai Chung, the manager who wishes to remain anonymous surveys his humanity-filled empire, lying motionless on their beds or gazing at the cathode-ray tube. 'This place certainly makes money,' he says. 'If I had the cash to do it, I would set up my own.'