Care homes - a product that no one wants
publication date: Jun 2, 2010
You can tear up all those demographic projections which suggest that care homes are a wonderful growth market as the European population continues to age.
The most striking thing to come out of the European Investor Conference in Frankfurt, organised by expert consultancy Avivre, was that elderly people hate the concept of nursing homes. This is reflected in length of stay which has shrunk at German operator Curanum to as low as 13-14 months from around 5-6 years in 1995.
The implications of this are stark. As Curanum chief executive Bernd Rothe put it: “We have to recruit three times as many people as we did five years ago.” If the only people who want your product are those who are dying, then do you have a serious problem.
Of course, public funding makes things worse. Public funds have not kept pace with demographics so, as the elderly population has grown, so the care home sector is increasingly medicalised. The more it is medicalised, the more the elderly will shun it.
Perhaps it is time to sit back and look at the alternatives. In the USA we have seen a huge growth in assisted living. Robert Kramer at research group the National Investment Center says “seniors want to continue their personal growth – this is the baby boomer generation. And they won’t go anywhere near anything called ‘senior’ or ‘home.’” However, in Europe it is much harder to construct and build the sort of Club Med facilities which the Australians and Americans can knock up so cheaply. Such assets would also have to be constructed entirely without help from the government.
In any case, Rothe says that Germans do not want to live in communities with other elderly people. They want to simply live at home for as long as possible. He has other solutions (we will be publishing an interview with him and other German care home operators shortly).
At least, Rothe has the courage to recognise that something will have to change. The traditional care home business model barely works in Germany - margins are too low, profitability is too unpredictable. Nor does it look very healthy in the UK. Southern Europe with its licensed model where beds can only be built when the state feels there is demand is less affected. But lengths of stay in France, Italy and Spain have all diminished in the same way.
