Trends in integrated elderly care and medical services in China - exploring "the last mile" of healthy aging

Published: 27 July 2018

China's population is aging more rapidly. In 2017, the number of people aged over 60 in China reached 188 million, and it is expected to exceed 350 million by 2030, according to the Population Division of the United Nations. In a report delivered at the 19th CPC National Congress in 2017, it was mentioned a section on carrying out the Healthy China 2030 initiative that, "As we respond proactively to population aging, we will adopt policies and foster a social environment in which senior citizens are respected, cared for, and live happily in their later years. We will provide integrated elderly care and medical services, and accelerate the development of old-age programs and industries." The integration of medical service and elderly care service is a clear development priority for the elderly care sector in China.             

Integration of elderly care and medical services refers to the organic integration of medical and elderly care resources that draw together daily care and rehabilitation. The China National Committee on Aging has forecast that older people with special needs and old-age seniors will account for 30% of the senior population by 2020. According to National Health Commission, as of July 2017, there were 5,814 institutions providing integrated elderly care and medical services in China, accounting for only about 4% of the total number of elderly care institutions.

The insufficient number of institutions providing integrated elderly care and medical services means there is ample space for market development. Against this backdrop, Deloitte China has issued a new report – Exploring "the last mile" of healthy aging: trends in integrated elderly care and medical services in China. The report provides an understanding of development trends, opportunities and challenges in the elderly care sector in China by reviewing the status of elderly care-medical services integration through analysis and domestic and foreign case studies.                              

As the report points out, the private elderly care sector's business model is now beginning to take shape after nearly 10 years of development. However, as institutional elderly care products are increasingly dominated by the real estate sector, and home-based and community elderly care services are becoming more reliant on homestay helpers, a common issue has arisen – the lack of the medical elements to these services – which makes meeting the daily needs of partly incapacitated and incapacitated older people a challenge.

"The problems arising from the domination of the real estate sector and reliance on homestay helpers is not merely the lack of medical elements to these services, but also the issue of product homogeneity. Therefore, discovering and exploring more diversified modes of integrated elderly care and medical services, and related products, as well as avoiding homogeneous competition are priority tasks for the future," said Deloitte China Healthcare Leader Zheng Qun. 

Given the business model of integrated elderly care and medical services in China is still developing, different types of market player are proactively exploring models that fit the Chinese market. Specifically, institutional elderly care market players should focus on cross-industry entry and collaboration, while home-based and community elderly care providers should concentrate on resource integration and capacity enhancement. Furthermore, market participants and investors should proactively explore public-private partnership (PPP) and consider the development of peripheral segments of the elderly care industry.                 

The success of efforts to integrate elderly care and medical services requires persistent effort. In a global context, Japan and the United States went through a few decades of development before they became leaders in the integrated elderly care and medical services market. To facilitate the future development of integrated elderly care and medical services, China can refer to or draw on foreign models which are more sophisticated and market tested, such as the Program of All-inclusive Care for the Elderly (PACE) in the U.S. and Japan's three-level, integrated healthcare and medical care system.

"Elderly care market players and investors should proactively pay attention to policy developments and capitalize on the resulting policies. They should also clearly define their product positioning, and products should be designed sensibly, based on the country's situation and people's purchasing power," added Deloitte China Life Sciences and Healthcare Industry Leader Yvonne Wu.

"On the service side, effort should be devoted to discovering and meeting needs. Market players should also leverage digital technologies where appropriate to seize market opportunities from the integration of elderly care and medical services. They should consider implementing supply chain integration to build up an ecosystem for integrated elderly care and medical services."