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How do other countries handle aged care?

By BRIGITTE ROZARIO

EVERY country has a different approach to aged care. Some have a heavy reliance on government and public funding. Others rely more on the private sector.

As every nation has different resources, financial systems and legal framework, no one model can be replicated in its entirety in another country.

However, we can learn from those who have and are trying various methods and models and have been doing it for a longer time than Malaysia, especially since we are only now trying to build our retirement industry.

At the recent Sustainable Retirement & Aged Care Conference (SRACC), organised by Kenanga in partnership with Aged Care Group (ACG), one of the panels featured speakers from the US, Australia and Singapore. They shared their experiences in the panel titled “Lessons and Experiences from Abroad”, which was moderated by David Ong, a partner in Chooi & Company Advocates & Solicitors.

“When we start thinking about retirement and aged care, the immediate thought that comes to mind is living assistance, nursing care, general healthcare services, but in reality it involves much more than that. It requires a very holistic and multi-disciplinary approach to get the whole ecosystem set up properly. What are the key factors to bear in mind when trying to set all this up?” asked Ong.

Building for the future

Dr Jason Yap, Associate Professor in the Saw Swee Hock School of Public Health in the National University Health System, shared his experiences as a public health physician with 28 years experience in public and private healthcare in Singapore, covering public policy, informatics, marketing and education.

He explained that aged care is challenging and complex. In the past, healthcare providers only had to rectify health problems and send the patient home. These days, they also have to consider whether the patient needs support and care at home and who will be there to administer it.

Dr Yap said that a lot of people talk about doing things holistically, not knowing what it really means and with processes and results that were not in tandem with this aim.

Another challenge is building for the future. “We need to realise that things evolve. The people who are going to be in these nursing homes by the time you finish building in about 10 years, will be a different group from the ones who are there today,” said Dr Yap.

He emphasised the need to have a balance between individual and unique designs, and centralised standards when building facilities for the aged.

“At the national level, if the government spends too much time on the nitty-gritty of housing design and smaller things, and not enough time on the larger things, then you will have a mismatch of trying to put the whole thing together. You will have beautiful houses but people can’t get to them because there are no roads leading to them.

“Architecture, model of delivery of care, the needs of the people, the groups of people we are talking about, financing – those are the big picture things we have to be clear about and which we have to have some form of conversation about before we go into the specific components,” he added.

Inter-ministerial committee

Adrienne Mendenhall, country manager of ACCESS Health International Singapore, a non-profit think tank and advisory group, praised the way Singapore has gotten all the ministries involved in the “conversation” by having an inter-ministerial Committee on Ageing.

“In Singapore what we find is really unique is the Committee on Ageing, which has many ministries represented on it and is headed by the Health Minister. The administration part of the committee is under the Ministry of Health but it really involves all the ministries. It is very unique because when you have a meeting with MoH, you’ll have someone talking about transportation, manpower initiatives, and education.

“It’s a very unique way of saying, here are our goals as a country for ageing in place, for active ageing, what we want people to be doing, what we want their lives to look like, how we help people get around so they can be active,” she added.

According to Mendenhall, Singapore’s Committee on Ageing seems to be able to work together in a comprehensive way, unlike other countries where the programme seems more fragmented in terms of health goals and what is actually implemented.

Still looking for the right model

In China, it’s a very different scenario. Paul Phillips, managing director and founder of Grange Senior Living in Australia, has firsthand knowledge as he has been working with operators there to develop their aged care facilities.

Paul Phillips: 'China's market has been developing different concepts, trying to identify what the market would want.'

Paul Phillips: ‘China’s market has been developing different concepts, trying to identify what the market would want.’

“The China market is quite unique. It’s rapidly expanding. There are over 200 million seniors in China. They’ve got 140 million people, or 12% of the adult population, who have diabetes. In addition, the single child policy and urbanisation are all pushing towards senior living.

“The confusion in the market in China, which is probably not greatly different from here, is that currently there is no established senior living business model that’s been proven to work.

“In Australia, we’ve had the aged care framework, which has been operating, has been regulated and funded by the government, for the last 60 years, so we’ve got a very established system.

“China’s market has been developing different concepts, trying to identify what the market would want,” said Phillips.

The “F” word

One of the other challenges faced in China is funding.

“The government has now realised that it has a very big problem coming on. So, the government is looking at providing incentives to operators and trying to get foreign investment into China, which is a significant change from four years ago when there was no foreign investment in healthcare,” he said.

In contrast, there is a lot of government funding in Australia. He explained that the Australian government contributes about 65% of the revenue for aged care facilities.

“So about A$52,000 per resident is funded by the government. Clearly that’s not sustainable as our population ages, so our government has taken steps towards pushing the cost of care across to users. People who can afford to pay, pay. Those who can’t, the government subsidises,” he said.

Samuel Murphy, director of Knight Frank Valuations in Australia, with expertise in retirement villages, aged care facilities and hospitals, said there are always challenges in accessing capital for development.

“What broad numbers we see, and I saw some the other day, say that in addition to the cost of land, an average aged care facility in Australia will cost around A$200,000-A$250,000 per day to build. That’s to provide adequate treatment rooms, utility rooms, kitchen areas, recreational areas, all those beyond just the resident’s accommodation. So, there is a continuing difficulty in accessing capital,” he added.

Government role

Ong opined that the government needs to do a lot to spur the industry and it must increase the importance of the private sector to provide pensions and healthcare assistance.

Should Malaysia follow in the footsteps of our southern neighbour?

Dr Yap explained that the island nation is one of the fastest ageing populations in the world. Although this scenario was predicted as far back as 20 years ago, it is only in the last five or 10 years that Singapore has started moving towards having an aged planning office and the inter-ministerial committee.

“In terms of getting adequate facilities up, the nursing home beds are going to be doubled by 2020 or so, the number of home pay services is going to grow by 2.5 to 3 times in the same time span, we are launching a new hospital every three years. We just opened one. There will be two more coming up by 2022. So, obviously we are expanding the services.

“We realised it is not possible to get industry to do this. Historically, we have these convalescent or step-down hospitals for patients who have rehabilitation needs in a semi-acute environment. The first four or five were done through the voluntary welfare organisations (VWOs) and faith-based organisations. After the first five or so were created, the rest are all going to be government-funded because the sector just doesn’t have the capabilities. Even when the original VWO community hospitals were built, government funding was in excess of 80%, and the last 20% was a major challenge for them to raise. These days, some cost S$400-S$500 million to build a community hospital,” said Dr Yap.

While that may look like a lot of funding from the government, Dr Yap explained that in Singapore the public sector actually consists of private limited companies, or private hospitals owned by the government. These hospitals function separately from the government, under a holding company.

Samuel Murphy ... tax incentives have worked in the past in Australia.

Samuel Murphy … tax incentives have worked in the past in Australia.

“So, it is government funding but it’s not given to the private sector, but to the VWO sector. It’s money that remains within the public sector ownership, but within private limited company entities. It’s a different way of approaching things,” he said.

Tax incentives have worked in the past in Australia, said Murphy.

“We had tax incentives back in the early 1990s for the development of retirement villages. We had a tax deferral for the capital that was put into these villages. What that gave operators was the encouragement to put significant capital in and what has happened is we now have this generation of retirement villages that market themselves along the lines of a lifestyle environment.

“The tax deferral is not in place now but it did encourage a lot of investment into the sector then,” he explained.

Challenges

Comparing the various countries she has worked with, Mendenhall said all governments are now grappling with cost.

Adrienne Mendenhall ... all governments are now grappling with cost.

Adrienne Mendenhall … all governments are now grappling with cost.

“I’m not sure how the US is going to deal with this. Nursing home facilities are just abhorrently expensive.

“It becomes challenging even for upper middle class people to afford. A standard nursing home is going to cost a resident about US$100,000 a year. So, families start to move their properties, put their house in the kids’ names, try to pass off as much property and investments to the kids as quickly as possible so that that doesn’t get taken because they need to spend down their money so they can ask for more Medicare in order to pay for this,” she explained.

It has come to the point that Americans are facing tough decisions in order to get aged healthcare. Some even consider getting a divorce to make it affordable!

In Singapore, the advantage of a small country and a small government is that it can move much quicker. While Singapore can build quite fast, it faces a sizeable problem when it comes to manpower.

But, it is not alone in this struggle. Phillips added that manpower shortage seems to be a worldwide challenge. “In the Australian market, there’s a forecast of a shortage of 20,000 registered nurses in the next 20 years. And it extends to caregivers as well.

“The whole industry is moving towards, rather than just a care business, a service business as well,” he said.

As people pay more, their expectations also increase when it comes to facilities and services.

Phillips informed that one way to overcome the manpower shortage is to have training programmes and offer subsidies to the trainee organisations and the people undergoing the course.

Innovative models

Challenges notwithstanding, Malaysia still needs to look for the right business model.

In Australia, a resident coming into an aged care facility pays a bond. The operator then has the use of that money until the resident leaves. At which time, the money is refunded.

The rationale is that when they have their own home, they put money into their place of residence. Their place of residence is now a nursing home so it’s appropriate that they pay for, if they can afford it and as long as they’re not dispossessing a spouse of a family home to pay for it.

“What that means is that if the capital that the operator has used to build the facility and establish the facility can be replaced with those incoming bonds from residents, their return is much more palatable and that encourages investment. It also encourages operators to pay more in terms of staffing. It is one way that operators address that challenge of getting staff,” said Murphy.

Another model practised in Australia is the deferred management fee model.

This means that while the price of a unit is $950,000, incoming residents have the choice of paying the full sum upfront or to pay less when they move in and the balance when they leave and the unit is resold.

“In my experience, what I’ve seen is if operators provide potential residents with an environment that they want at a price point that’s compelling, it is absolutely grabbed by the market. The deferred management fee model is not a disincentive for residents coming in,” he added.

Mendenhall said that while there is a lot of interest from the private sector, they don’t know how to get involved.

She believes it is just a matter of finding the right model to suit Malaysia and its citizens. If it’s not retirement living, then perhaps assisted living. This is where the private sector and the government will need to be innovative to find the suitable models.

Lessons from others

A good step up for Malaysia would be to learn from others and their mistakes so that we avoid those pitfalls.

Murphy and Phillips believe strongly in ageing in place so that residents don’t have to keep relocating as their care needs change. Ideally, the facility would be where they live and within their community so that the seniors can still carry on with their daily routine.

Murphy highlighted a project in Australia where the residents can move from independent living to assisted living and dependent living as it is an integrated model in an encompassed community.

Mendelhall said such a model would work best if the facilities offering the three levels of care are built right next door to each other.

“This is very advantageous in a small town because I think people are more willing to move into these apartments because they are still in their community and they will still be able to meet friends and family for lunch or do whatever they would normally do,” she said.

Dr Jason Yap ... you need to nurture and guide the industry.

Dr Jason Yap … you need to nurture and guide the industry.

Dr Yap added that the retirement and aged care industry should be nurtured as we would our children.

“You need to nurture them, grow them, give them opportunities. At the same time you need to constrain and lead them and they will come up with something that you never thought of. My point about this is the top-down deliberate planning is only part of the story. Don’t forget that you need to nurture from the ground up. You need to nurture and guide it as you go along, so the planning process is not planning to do something; it is planning to lead and guide and manage an evolving scenario over time,” he said.

Mendenhall summed it up nicely:

“The biggest lesson is to not let politics get in the way of needs.

“How do you have these transparent conversations? How do you relay information to the right people? How do we find solutions?

“I think solutions are more important than politics and I think that is something that every country grapples with. The question is not about who is right and who is wrong, who’s saving face, am I supposed to be aligned with you or not aligned with you, which side am I on? That’s not the question.

“The question is, we understand what a common need is, so what’s the solution and where’s the evidence? We need to demand for evidence over talking points. How do we find the best solutions and prioritise those solutions over politics?”

Main photo: David Ong (left) moderating the panel discussion on ‘Lessons and Experiences from Abroad’. Looking on is Samuel Murphy, director of Knight Frank Valuations in Australia.

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