China's bid to provide care system for elderly faces hurdles, warn experts

Groups providing residential nursing services say the State Council's plan to expand the industry ignores some realities of the market

PUBLISHED : Wednesday, 04 September, 2013, 12:00am
UPDATED : Wednesday, 04 September, 2013, 7:42am

The State Council's plan to overhaul care for the elderly by expanding in-home services faces obstacles, warn academics and executives at companies that are struggling to make a profit in the business.

At a meeting chaired by Premier Li Keqiang on August 16, the State Council pledged to set up a multi-layered care system by 2020, largely based on in-house services, supplemented by community care centres and nursing homes.

The central government hoped a strong elderly care industry could help to bolster domestic consumption and create jobs as the nation undergoes a demographic shift towards a greying population, Xinhua reported.

Latest figures from the Ministry of Civil Affairs show the number of people aged above 60 will surpass 200 million by year's end, accounting for more than 14 per cent of the total population. By 2020, the figure will rise to 243 million, and hit 300 million five years later. The mainland last year had 44,000 elderly care institutions, which provided beds for 4.15 million people.

Under the State Council's plan, elderly who cannot work, do not have a source of income or a family support network will be eligible for admittance to government-funded nursing homes, either at no charge or for a low fee. The government will also move to cut red tape and administrative costs to lower the barrier to entry for private and foreign investors to the elderly care market, including in-home services and nursing homes.

While recent years have seen a rising demand for high-end nursing homes for the urban rich, the most urgent need was for basic home-based elderly care for families with moderate-level incomes, experts said.

Wu Yushao, director of the China Research Centre on Ageing, said the traditional emphasis on filial piety meant about 90 per cent of elderly people stayed at home, looked after either by their children or professional care-providers. Another 6 to 7 per cent received care at community-based service centres, with the remainder living at nursing homes.

But the business of home-based elderly care, still in its infancy, has already run into serious problems: most existing in-home service providers struggle to make money or break even. Fangyuan Shengshi, a company appointed by Beijing's Chaoyang district government to provide such services to nearby communities, has suffered losses since its launch in 2009.

The company had to pay its bills with revenue from the other housekeeping services it provides, according to China Real Estate Business, a Beijing-based industry newspaper.

Similarly, Wang Zhiqiang, director of Jinzhuyou, a service provider that concentrates on elderly care in the capital city's Xicheng district, said the company had struggled to make money, with rising labour costs eating into narrowing profit margins.

Government intervention has kept the price of elderly care relatively low compared to other housekeeping businesses to ensure it is affordable, Wang said. The company provides services to about 6,000 elderly each year, about two-thirds of whom are disabled.

"The company has received numerous certificates of merit for our good service and social benefits, but has not been entitled to any government subsidies as it is privately funded," he said.

Currently, 18 provinces and municipalities offer subsidies for people above a certain age. Beijing provides a 100-yuan (HK$126) voucher every month to people more than 80 years old to buy either food or services. But the elderly face many restrictions in using the vouchers, and the care companies often wait a long time to get reimbursed.

"Policy breakthroughs are what the business needs most," Wang said.