JUNE 21, 2016 The Silvers Series II: Homecare and Assisted Living • This is the second report in our series on consumers aged 65 and older and their impact on economies, industries and companies worldwide. • Some seniors need specific care as a result of illness or disability, but many also look to in- home care or assisted living to help them deal with everyday living. • We estimate that global public spending on long- term health and social care totaled approximately $1.40 trillion in 2015, and we expect it to reach nearly $1.71 trillion in 2020. • On average, across 12 major economies, spending on long-term care accounts for around 1.7% of GDP. • More seniors are using care services overall, but we seem to be seeing a gradual global shift away from institutional care and toward in-home care. • The move toward in-home care has prompted the development of new technology products and services that enable seniors to live independently for longer, and families to participate more directly in administering care to their elderly loved ones. DEBORAH WEINSWIG MANAGING DIRECTOR, FUNG GLOBAL RETAIL & TECHNOLOGY [email protected]US: 646.839.7017 HK: 852.6119.1779 CHN: 86.186.1420.3016
• This is the second report in our series onconsumers aged 65 and older and their impacton economies, industries and companiesworldwide.
• Some seniors need specific care as a result ofillness or disability, but many also look to in-home care or assisted living to help them dealwitheverydayliving.
• Weestimatethatglobalpublicspendingonlong-term health and social care totaledapproximately $1.40 trillion in 2015, and weexpectittoreachnearly$1.71trillionin2020.
• On average, across 12 major economies,spendingonlong-termcareaccountsforaround1.7%ofGDP.
• The move toward in-home care has promptedthe development of new technology productsand services that enable seniors to liveindependently for longer, and families toparticipatemoredirectlyinadministeringcaretotheirelderlylovedones.
D E B O R A H W E I N S W I G M A N A G I N G D I R E C T O R ,
F U N G G L O B A L R E T A I L & T E C H N O L O G Y d e b o r a h w e i n s w i g @ f u n g 1 9 3 7 . c o m
U S : 6 4 6 . 8 3 9 . 7 0 1 7 H K : 8 5 2 . 6 1 1 9 . 1 7 7 9
EXECUTIVESUMMARYAroundtheworld,manycountriesarewitnessingfastgrowthintheirsilverpopulations. As seniors become a larger proportion of the overallpopulation, government funding, market trends in care services andtechnological developments are all shaping the senior-care and assisted-livingindustry.
Weestimatethatglobalpublicspendingonlong-termhealthandsocialcaretotaledapproximately$1.40trillionin2015.TheOECDexpectsthesectortogrowatanaveragerateof4.0%peryear.So,atconstant2015prices,weexpect such spending to reach approximately $1.46 trillion this year andaround$1.71trillionin2020.
IntheUS,AccordingtotheUSCentersforDiseaseControlandPrevention(CDC), some 8.76million people in theUS used LTC services in 2014 (themostrecentyearforwhichdataareavailable).
Seniorsincreasinglyprefertoageinplace—toliveintheirownhomesandcommunities as independently as possible—and lower costs for in-homecarehavelikelydrivenmoreseniorsaroundtheworldtooptforhomecareoverinstitutionalcare.
Innovations such as online senior-care marketplaces are thriving incountries where technology and Internet adoption are high, but will beadopted more slowly in emerging countries that are less technologicallyadvanced. Sales of connected technology, sensors and cameras will likelygrowasmoreseniorsoptforin-homecare.
It looks likely thatmanycountries thatalreadyhavesignificantorgrowingsilver populations, as well as restrained budgets, will implement policiesthatencourageseniorstoliveintheirownhomesforlonger.Weexpectin-home care to continue to gain shareover assisted-living facilities, andweexpecttoseemoretechnology-drivensolutionstotheproblemofcaringforanagingsociety.
THESILVERSSERIES
Theeraofthesilvergenerationhasarrived.Silvers,orpeopleaged65andabove,aredrivingahugelydisproportionateshareofconsumer-spendinggrowthinmanykeyregionsglobally.Insomemarkets,theyaredrivingnearlyallsuchgrowth.Thistrendwillcontinueforthenext20years,andit isbeingfueledbytworelatedforces.Thefirstisdemographics,asthesilverpopulation isgrowing considerably faster than other age groups are. The second is economics, as silvers hold a disproportionate share ofwealthglobally.
Olderhouseholdstendtobewealthier,whenmeasuredbytotalassets—whichisunderstandableandinevitable,giventhatmostpeopleaccumulate assetsover their lifetime.What ismore interesting is thedisproportionategrowth in thewealth of seniorhouseholdsseeninsomecountries.Thistippingofthewealthbalancefromyoungtooldhasbeenfueledbychangessuchasthedegradationofjobsecurityandopportunities,andtheerosionofcompensationandbenefitsforyoungerworkers.Theimpactoftheeconomicdownturn,whetherthroughgovernmentausterityorprivate-sectorcutbacks,appearsonlytohaveamplifiedthisdisparity.
The Silvers Series: II. Homecare and Assisted Living Imagine you live on the East Coast of the United States and your olderparentslivehundredsofmilesawayontheWestCoast,butyouareabletolookafterthemalmostaswellasyoucouldifyoulivedrightnextdoor.Thatis now possible, thanks to technology. A host of new services andmarketplacesishelpingfamiliesfindon-demandcaregiversforparentsandlovedones,monitor if theyare taking theirmedicationon timeandeasilycheckinonthemregularly.
Nursinghomeswereonceviewedasthemainoptionforseniorswhowerenolongerabletoliveindependentlyathome.However,overtime,in-homecare servicesandassisted-livingcommunitiesevolved tohelp seniorswiththeir nonmedical daily needs, such as bathing, dressing, eating, shoppingandhousekeeping.
In this, the second report inourSilversSeries,weexaminehowprovidingseniors with assistance in everyday living has evolved into a thrivingindustry.Welookat:
2. Thedifferencesbetweenin-homecareandassistedliving;3. HowmuchtheindustryisworthgloballyandintheUS,inparticular;4. Globaltrendsinlong-termcare(LTC)forseniors;and5. How senior care is being transformed by technology and alternative
waysofprovidingcare.
We define silvers as people aged 65 and above, and the Silvers Seriesexamines the impact this demographic has on various industries, andservices,andtheglobaleconomy.
WHATSENIORSNEEDANDHOWSERVICESCANBEDELIVEREDWe concentrate on two areas of senior care: in-home care and assistedliving.
In-home care uses professional caregivers to provide help with everydaytasksintheclient’shome.Thisisalsoreferredtoasdomiciliarycare,socialcareorhomecare.
Assisted living uses skilled caregivers to provide care to residents ofcommunalfacilitiesandcenters.Alongwithroomandboard,thesecentersfeaturestaffwhoassistresidentswithdailytaskssuchasbathing,dressing,eatingandtakingmedication,aswellaswithsocializingandmobility.
Somefacilitiesprovidemorecomplexcareservices—forinstance,hospicecareforthosewhoareterminally illorcareforthosewithserioushealthconditions. In this report we focus on the segment of the industry thatassistsclientswithdailyactivitiesbasedontheirindividualneeds.
RoutineTasksMayBecomeChallengingwithAgeWhilesomesilversneedspecificcareasaresultofillnessordisability,manylook to in-home care or assisted living to help them deal with everydayissues,including:
GLOBALPUBLICEXPENDITUREONLTCISESTIMATEDTOREACH$1.71TRILLIONIN2020As with any community services sector, private companies, charitableorganizations and government-run organizations provide services andfacilitiesspecificallytothesilverpopulation.Next,weexaminethecurrentsizeoftheindustryandthepaceatwhichitisexpectedtogrow.
LTC, or long-term care, comprises health and social support services topeople with chronic conditions and disabilities who need care on anongoingbasis.ThehealthcomponentofLTCspendingrelatestonursingandpersonal care services; it covers palliative care and care provided in LTCinstitutionsor athome. LTC social expenditureprimarily covers assistancewithactivitiesofdailyliving.
Weestimatethatglobalpublicspendingonlong-termhealthandsocialcaretotaledapproximately$1.40trillionin2015.TheOECDexpectsthesectortogrowatanaveragerateof4.0%peryear.So,atconstant2015prices,weexpect such spending to reach approximately $1.46 trillion this year andaround $1.71 trillion in 2020. These figures include nursing and personalcare services provided in institutions and at home, and include publicspendingonly.
WhileyoungeragegroupsarealsoprovidedwithLTCservices,OECDdataalso suggests that the majority of the recipients are silvers. On average,almost80%ofthosereceivingLTCservicesare65orover,withmorethanhalfofthetotalproportionofcarerecipientsaged80andover.
Our estimates are extrapolated from OECD data from 2013 (published in2015andthemostrecentyearforwhichdataareavailable)onhealthandsocial care spending for 12 countries. In these countries, the categoryaccounted for an aggregate 1.7% share of GDP. We have assumed thatfigure was typical of global spending in 2013 and have estimated yearlyfigures for yearsafter thatbasedon theaverageannual real-termgrowthrate provided by the OECD. The data shown below are at constant 2015prices.
Source:OECD/WorldBank/FungGlobalRetail&TechnologyOfthe12countriestheOECDreportson,Polandspendsthelowestshareofits GDP on publicly funded LTC, at 0.4%, and theNetherlands spends thehighestshare,at4.3%.
Togetan ideaof totalglobal spendingonseniorcare through theprivatesector,weexaminedrevenuedatafor13,373companiesfrom53countries.We looked at firms listed in S&P Capital IQ’s company database that hadlistedas their primary activity “homehealthcare services,” “assisted livingservicesandfacilities,”or“hospiceservicesandcenters.”
Notallofthesetypesofcompaniescaterexclusivelytothe65+market,butasubstantialportionofthemdo.Thesecompaniesreportedtotalrevenuesof $134.2billion in 2014 (the latest full year forwhichdata are available)and,inaggregate,theypostedacompoundannualgrowthrateinrevenuesof 9.0% between 2009 and 2014—suggesting that this is a fast-growingsector.
Thesefiguresgiveanindicationofthescaleoftheprivatesectorofferinginsenior care. However, because they exclude nonprofit bodies such ashospitals,religiousinstitutesandcharities,aswellasmanyprivatelyownedcompanies, they do not paint a full picture of the broader sector. Inaddition, some geographiesmay be underrepresented in S&P Capital IQ’scompany database. Our total includes public spending that is directedthrough private sector providers but excludes publicly operated careservices.
ABREAKDOWNOFTHEHOMECAREANDASSISTED-LIVINGINDUSTRYINTHEUSThecostofprovidingeverydaycareforsilversissubstantialandgrowing.Inthe US alone, spending on assisted living (defined as “continuing careretirementcommunitiesandassisted-livingfacilitiesfortheelderly”bytheNorthAmericanIndustryClassificationSystem—astandardusedbyFederalstatisticalagenciesinclassifyingbusinessestablishments)wasanestimated$60 billion in 2015, based on revenue information from the US CensusBureau.
Spending in this sector has grown at an average annual rate of 5.9% inrecentyears.Giventhisgrowth,weexpectUSspendingonassistedlivingtototal$64billionthisyear,andtoriseto$80billionin2020.
• Adult day services centers: nonresidential facilities that support thesocial, health, nutritional and daily living needs of adults in acommunity-basedsetting.
Nearly3%oftheUSPopulationUsestheIndustry’sServicesAccordingtotheCDC,some8.76millionpeopleintheUSusedLTCservicesin 2014 (the most recent year for which data are available). This isequivalenttoalmost3%ofthetotalUSpopulation.
In2014:• About 282,200 people in the US were enrolled in adult day service
Overthelastdecadeorso,homehealthagencieshaveseensteadygrowth.ThenumberofagenciesthatarepartoftheMedicareprogram(thefederalhealth insuranceprogramforpeoplewhoare65orolder)grewby54%inthe eight years from 2005. Although growth slowed in the most recentreported years, we anticipate that positive growth will continue asadditional players enter themarket. Our estimates suggest that the totalnumberofhomehealthagenciesreached13,000in2015.
Growthintheassisted-livingfacilitysectorwaslessconstantinrecentyears,implying that demand for home health agencies is growing faster thandemand for assisted-living facilities. Our estimates suggest that the totalnumberofUSassistedlivingfacilitiesapproached16,000in2015.
Figure6.US:NumberofAssistedLivingFacilities
Source:IMSHealth/FungGlobalRetail&Technology
Another indicator of rising demand for home health agencies is that thenumberofhomehealthaidejobshasbeenincreasing.
HomeHealthAides:AmongtheFastestGrowingOccupationsintheUSTheUS’sagingsocietyisprovidingstrongandgrowingdemandforin-homecare provided by home health aides. These aides provide routine,individualized healthcare services such as dressing wounds, administeringmedicationandmonitoringhealth, andmayalsoprovidepersonal care tosilverclients,suchasassistingthemwithbathing,dressingandgrooming.
TheUSBureauofLaborStatisticsstatesthathomehealthaideisthefifth-fastest-growingoccupation in theUS, andprojects 38%growth in the jobcategory between 2014 and 2024—a rate that is much faster than theforecastratefortotalemploymentgrowthintheUSoverthesameperiod.
CostandIncreasingPreferencefor“AginginPlace”AreDrivingtheIn-HomeCareSectorOnefactorthatislikelydrivingthegrowthofhomehealthagenciesiscost.Inmanycases,itislessexpensiveforuserstoreceivecareathomethanitistomoveintoaresidentialfacility.FiguresfromtheUSDepartmentofHealthandHuman Services show that there aremajor cost differences betweenthesetypesofcare.Basedonthatdata,weestimatethefollowingaveragecostsperdayfordifferenttypesofcareservices:
Even ifauserhireda full-timehomehealthaide fora fulleighthoursperday, itwouldcost,onaverage, lessthanthemonthlychargesforcare inanursinghomeorinaone-bedroomunitatanassisted-livingfacility.
Asecond,andlikelystronger,factorinfluencingthegrowthofin-homecareisseniors’growingpreferenceforaging inplace,whichtheUSCenters forDiseaseControl andPrevention define as “the ability to live in one’s ownhomeandcommunitysafely,independentlyandcomfortably,regardlessofage,incomeorabilitylevel.”Over90%ofseniorsoverage65prefertostayintheirhomesastheyage,accordingtotheAARP.
THEGLOBALCAREINDUSTRYMany countries havewitnessed a shift from institutional care to in-homecareas theprimaryorpreferredoption for theagingpopulation. In somecountries, the difference is marginal, but in others, the proportion ofseniors receiving institutional care has dropped sharply while theproportion receiving care at home has risen—likely indicating a growingpreferenceforaginginplace.
Forthe10countriesshowninthegraphbelow,theaveragechangeintheproportion of seniors receiving in-home care (a 6.2 percentage-pointincrease)issignificant,especiallycomparedwiththeaveragechangeintheproportion of seniors receiving institutional care (a 1.8 percentage-pointdecrease).Moreseniorsareusingcareservicesoverall,butwedoseemtobeseeingagradualglobalshiftawayfrominstitutionalcareandtowardin-homecare.
Amongour10samplecountries,theoveralltrendisclear:in-homecarehasgrown at a faster clip than institutional care has. In five of our selectedcountries,institutionalcaredeclinedwhilein-homecareincreased.
AUSTERITYCONTRIBUTESTOMOVETOWARDIN-HOMECAREIn some countries, government austerity measures have contributed tothese shifts in the senior-care industry. In England, for example, between2011and2014,theproportionofthoseaged65andolderreceivingcareasapercentageof the total65-and-olderpopulationdeclined from10.0% to7.0%.Thiswaslikelyduetoadropinspendingoncarefortheover-65sbythe social services departments of Councils with Adult Social ServicesResponsibilities(thelocalcouncils)inEngland.
Austeritymeasures implemented inEnglandhave impactedtheamountofgovernment funds available to spend on senior care. In the UK, by 2014,about150,000elderlypeoplewhowouldhavepreviouslyreceivedpersonalcare andassistancedidnotqualify to receive anybecause they failed themore stringent eligibility criteria introduced to limit access to care,accordingtotheFinancialTimes.
Government funding and public policies play a vital role in social careadministration globally, andwill eventually influence demand for particulartypesofcare.Thereare,however,somecompaniesandcountriesthathaveadoptedinnovativeideastoaddresstheprovisionofcarethatgrowingsilverpopulationsrequire.Wetakealookatsomeoftheseinthenextsection.
NEWCONCEPTS,TECHNOLOGYANDBUSINESSMODELSTOTRANSFORMSENIORCARETraditionally, familieshavecared for their senior lovedonesbyemployingstafftolookaftertheirneeds,byhelpingthemmoveintocarecommunitiesor retirement homes, or by caring for them directly. New technology,however, has enabled many families to participate more directly inadministeringcaretotheirelderlylovedonesandhasenabledmanyseniorsto live independently for longer. In fact, AngelList, an online startup andinvesting platform, lists 297 companies related to elder care, with anaveragevaluationof$4.9millionasofJune6,2016.
OnlineSenior-CareMarketplacesThe disruption that Uber and Airbnb have brought to their respectiveindustries is well documented. The companies have succeeded byconnecting people as consumers and suppliers of services. Now, we areseeingonlinemarketplacessuchasHometeamandCareFamilydothesameinthesenior-caresector.Twoofthebetterknownmarketplaces,HonorandHomeHero,areprofiledbelow.
Honor: Honor was founded by Seth Sternberg in August 2014. Thecompany’smottois,“We’rebuildingHonorforourownparents,andwe’rebuildingitforyoutoo.”Honorhelpsfamiliesfindcaregiversonlineafteraninitial in-person assessment with a care specialist to identify the client’scareneedsandformulateacareplan.
After the assessment, families and individuals can schedule appointmentswith caregivers either online or through Honor’s mobile app. Familiesand/orcarespecialistscommunicatewithcaregiversthroughtheapptoletthem know the activities they would like the senior client to be assistedwith. Caregivers help with a range of tasks, such as preparing meals,shoppingforgroceriesandtakingtheclienttodoctor’sappointments.
HomeHero:Withamodel similar toHonor’s,HomeHero lets families find,hire and manage in-home caregivers for seniors. Families and individualslook for caregivers online and canwatch videos of thembefore they hirethem.FamiliescanaccesstheiraccountthroughHomeHero’sappanduseittocommunicatewithcaregivers.HomeHeroalsoprovidesahomesecuritycamerathatallowsfamiliestocheckinontheirseniorlovedonesandmakesure theyaredoing fine.ThecompanyhasbeenpartneringwithhospitalssinceMarch2016tohelpfamiliesandseniorsfindcaregivers.
FreelanceServicesMarketplaceJust like themarketplaces thathelpbring seniorsandcaregivers together,there are startups that connect users with freelancers who offer servicessuchashousekeeping,errandrunning,cookingandothers.
TaskRabbit: TaskRabbit is an online marketplace that helps matchprovidersoflabororservices—suchasfurnitureassembly,errandrunningor cleaning—with those inneedof such services.Although the companytargets consumers in all age groups, seniors who need help onlyoccasionally with tasks can enlist the services of those registered onthesite.
Chefs for Seniors: This marketplace helps connect seniors withprofessionalchefswhopreparemeals inthecustomer’shome.Userscanchoosefromthreemenuplansrangingfrombasictogourmet,andincludethepreparationoftenmealsperchef-visit.
Sa3ed: This is a marketplace to help users find people able to provideassistance with services such as senior and special needs homecare,tutoring, babysitting, gardening, carpooling and other errands, in theMiddleEast.Thoughthis isstartupcaterstoallagegroups, it isprimarilypositionedtocaterto“domesticservices,”soseniorscanfindpeopleforthosetasksthattheyneedhelpwith.
Alarm.com: Alarm.com’s system relies on household sensors and awearable device worn by the user to allow caregivers to track the user’sactivities. Sensors that detect activity are placed around the areas of ahome that the user frequents; the information the sensors collect is thencommunicatedtotheapp.Caregiverscanusetheapptocheckontheuser’ssafety,sleepinghabitsandotheractivities,includingwhetherandwhentheuser has takenmedication. The system notifies the caregiver if it detectsanynonroutinebehaviorbytheuser.
Other similar systems are ADT’s Senior Safety system and the Livelymedical alert watch. Several smart home security products, such asSamsung’s smart security systemsandGoogle’sNestcameras, canalsobeadapted and programmed for senior care despite being sold as generalhomesecurityproducts.
Sen.se: This company has developed a system called Mother that worksthroughasetofsensorsthatcanbeplacedinvariouspartsofahouseoronobjectsordevicestheclientusesregularly,suchasapillboxorarefrigerator.Thesensorsplaced in thehouse track thesenior’smovement,andasensorcan be carried to track physical activity. A sensor can even be placed on awaterbottleorcoffeemugtomeasureintake.Thesensorscanalsomonitortemperatureinaroom,andmeasuresleepandotheractivities.
Robots:Paro is a therapeutic robot designed to reduce its elderly seniorcompanions’stressandstimulateinteractionbetweencaregiversandthosein their care.The robot canbeprogrammed to respond tocertain soundsandgestures.
In 2004 in Japan, senior co-operatives (Koreikyo) were established toprovide job opportunities for able seniors (aged 55–75) to care for olderseniorswhowere less able. The system helps solve two issues: providingemployment for seniors who are still able towork and finding caregiverswhohaveagoodunderstandingofolderseniors’needs.
Another newer care concept is co-housing communities, residentialcommunities that are created and run by the residents themselves. Themodel hasworked successfully for seniors inDenmark,Germany, Swedenand the US. Under this model, each household has its own independenthome,butactivitiessuchaseatingandmanagementareshared.
In the Netherlands, student housing can be expensive, so some nursinghomesandcarefacilitiesproviderent-freelodgingtostudentsinexchangefor a stipulated number of volunteer hours per week. This helps seniorresidentsmakenew friends, learnhowtooperate technologyand receiveassistancewithothertasksthatthestudentsareallowedtoassistwith,thusreducing theirdependenceonpaid caregivers. It alsohelpsbringyouthfulenergy into facilities that otherwise might be quite somber, and givesstudentstheopportunitytobothhelpandlearnfromtheresidents.
• Global public spending on long-term health and social care totaledapproximately $1.40 trillion in 2015, according to our estimates, and atconstant 2015prices,weexpect it to reach about $1.46 trillion in 2016andnearly$1.71trillionin2020.
• In the US alone, spending on assisted living amounted to nearly $60billionin2015.
• OECDdatafor10countriessuggeststhatagreaterproportionofseniorswho need long-term care are receiving this in the home, and a smallerproportionininstitutionalcare.
• Innovations such as online senior-care marketplaces are thriving incountrieswhere technology and Internet adoption are high, butwill beadoptedmore slowly inemergingcountries thatare less technologicallyadvanced.
