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Integration of Hong Kong and Guangong in Senior Care

 

Hong Kong citizens to retire up north

 

Statistics show that there were 980,000 seniors (aged 65 or above) in Hong Kong in 2012. Meanwhile over 30,000 older adults were queuing up to be admitted into a skilled nursing facility. The number of Hong Kong seniors (65+) is projected to reach 2.56 million in 2041. An increasing number of Hong Kong seniors have been planning to spend their retirement years in mainland, given the endless wait for nursing beds, exorbitant cost and over-crowded living conditions in Hong Kong. A survey by Hong Kong Census and Statistics Department shows that a visible trend of Hong Kong seniors’ northward migration has emerged since 1997 when Hong Kong reunited with mainland China. By 2011, there had been about 110,000 Hong Kong seniors aged 60 or above who resided in mainland, 72% of them being retirees. Specifically, 63.8% of the Hong Kong seniors choose to reside in Guangdong Province due to language and cultural affinity, ancestral origin and reunion with other family members, of which are approximately 46,000 seniors who are aged 65 or above, concentrating in Guangzhou, Dongguan and Shenzhen.

 

Out of concerns regarding the cost of an ageing population and land shortage, the government of the Hong Kong Special Administrative Region has been supportive of the phenomenon. The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) in 2007 has stipulated that Hong Kong capital is allowed to set up wholly-owned nursing facilities in Guangdong. Presently there are three solely Hong Kong-invested nursing homes in Guangdong.  They are the Hong Kong Jockey Club Helping Hand Zhaoqing Home for the Elderly (300 beds), Rehabilitation Yee Hong Heights of the Hong Kong Society for Rehabilitation (350 beds) in Shenzhen and Hongsheng Qiaoyi Home (210 beds). All are run by Hong Kong social organizations.

 

Plenty of nursing facilities in Guangdong have also trained their sights on this promising market, aiming to attract Hong Kong seniors with a pleasant neighbourhood and competitive prices. Guangzhou Shoukang Home and Guangzhou Friendship Senior Flats are two of them. Guangzhou Friendship currently houses 2,500 seniors, among them 3% hail from Hong Kong. Public nursing facilities such as Guangzhou Elderly Home(translated) and ZMT Sensational Resthome admit Hong Kong residents as well. However, the expanding ageing population in mainland requires resources to guarantee their care demands. Some facilities, public ones in particular, have reduced the intake of Hong Kong residents. All this casts doubt on whether more Hong Kong seniors can spend their retirement years in mainland. 

 

Bleak outlook for nursing facilities

 

There has always been a gap between reality and dream. Although the need to retire in mainland is potentially huge, most nursing facilities didn’t attract enough Hong Kong people after years of operation. In many facilities, almost half of the beds are not occupied. Successful projects are far and few between. Inflation and high costs of medical services drive Hong Kong people back, dealing a heavy blow to struggling nursing facilities. Social Welfare Department of Hong Kong stated that from 2009-2010 to 2013-2014, participants in Portable Comprehensive Social Security Assistance (PCSSA) Scheme (applicable in Guangdong and Fujian) have decreased by 30% from 2,985 to 2,096. Meanwhile, cases of seniors coming back from Shenzhen to Hong Kong processed by the Hong Kong Federation of Trade Unions have risen from 57 in 2011 to 504 in 2013. Hongshengqiao Nursing Home, one of the three Hong Kong invested facilities, has not gained a penny since its opening, peaking at over ten Hong Kong seniors and only one in 2013. In Zhaoqing Home for the Elderly, the number of Hong Kong seniors exceeded 60, but only 26 stayed by the end of 2013; almost 200 beds were not in use. The number of retired Hong Kong seniors in Kanghu Holiday Village of ZMT has slumped from 300 to 103 after six years.

 

Challenges and obstacles

 

Dual challenges in resource and system present obstacles to Hong Kong seniors’ wish to retire in mainland.

   

   1. The incompatibility of social welfare and medical care systems of the two areas

 

In earlier days, Hong Kong seniors with relatively sufficient savings were able to find a comfortable retirement place on the mainland. However, in recent years, surging inflation, the appreciation of Chinese currency and severe environmental issues have immensely compromised the quality of retirement life in mainland. Furthermore, Hong Kong seniors are having a tough time dealing with two separate social welfare and medical care systems of mainland and Hong Kong. Due to certain cross-border restraints, Hong Kong seniors who live in Guangdong find it challenging to receive their public healthcare benefits, housing support, and social services provided by the Hong Kong Government and at the same time they are not eligible to receive the equivalent services and benefits in mainland.

 

Hong Kong citizens who wish to live in Guangdong are further constrained on old-age subsidies and especially troubled by the reimbursement of cross-border medical costs. For instance, hospitalization expenses for a Hong Kong senior in a public hospital in Hong Kong is only HK$ 100 per day, which is out of the question on the mainland, not to mention the HK$ 2,000 health care voucher issued annually for acquiring basic services from private doctors in Hong Kong. Any hospitalization expenses and other medical service expenses in mainland incurred by Hong Kong seniors will not be reimbursed, including ambulance services. The issue of reimbursement has become the heaviest burden of the retirees from Hong Kong and a main hurdle for Hong Kong seniors to overcome when considering moving up north. It brings about a chain reaction in which low occupancy rates lead to further operation challenge of aged care facilities targeting at Hong Kong seniors in Guangdong Province. A few facilities supported by the Hong Kong Government are still struggling for survival while most facilities are faced with a bleak outlook.

 

   2. Stalled integration process of Guangdong and Hong Kong

 

Although Hong Kong capital is allowed to open elderly care facilities in Shenzhen according to the CEPA scheme, complicated administration procedures for approval and stringent admission policies make the integration of Hong Kong and Guangdong all the more difficult. On the mainland, care facilities will be granted with bed and operation subsidies. But for admitted seniors from Hong Kong the operator will receive no subsidy and therefore a higher fee will be charged, which is less appealing to both seniors and service providers.

 

Hong Kong invested facilities in Guangdong are set up specifically to satisfy the care need of Hong Kong citizens, they seldom admit mainland elderly. Rehabilitation Yee Hong Heights in its early days only provided services to Hong Kong seniors, and it was stipulated that the ratio of Shenzhen seniors to Hong Kong seniors stand at 1:1, namely, the number of Shenzhen seniors cannot exceed Hong Kong seniors. Therefore, even with plenty of idle beds (due to the departure of Hong Kong seniors) and lots of Shenzhen seniors still have to wait in line. This kind of limitation is the reason why Yee Hong Heights had been in the red before 2011. The same scenario applies to the two other Hong Kong nursing facilities built in Guangdong after the implementation of the CEPA scheme. Mainland nursing homes are less willing to admit Hong Kong seniors; Hong Kong-invested facilities are confronted with low occupancy rate and operation difficulty. All this has cast a cloud over the integration of Guangdong and Hong Kong in senior care.

 

Breakthroughs and improvement

 

As mentioned in the above text, with limited land space and a surging need for nursing beds, Hong Kong seniors are still considering retirement in Guangdong. Therefore, the Hong Kong Government, local government on different levels of Guangdong, medical institutions and nursing facilities have been pulling in concerted efforts to seek further improvement.

 

   1. Guangdong Scheme – a shot in the arm to stall the flow back to Hong Kong

 

Hong Kong government has implemented the Guangdong Scheme since Oct 2013, stipulating that eligible Hong Kong elderly moving to Guangdong are entitled to an all-year old-age subsidy of HKD 1,135 per month provided that the applicant has been staying in Guangdong Province for over 60 days each year (the previous requirement is 180 days in Hong Kong). By May 31, 2014, there had been 16,904 applicants receiving the Old Age living Allowance through Guangdong Scheme. Since 2014, the Hong Kong Government have been purchasing beds from Yee Hong Heights and Zhaoqing Home for the Elderly, inviting applicants of senior care facilities in Hong Kong to try out and arranging admission starting from the third quarter of the year. The admission of Hong Kong seniors is prioritized, while in Hong Kong they have to wait for years to get a bed. The measures taken have boosted Hong Kong senior’s confidence to retire up north. Take Yee Hong Heights for example, there were 175 residents, of which 65 were from Hong Kong as of 2013, a 50% rise (20) compared to 2012. The Guangdong Scheme does help to attract more Hong Kong seniors into Guangdong against the backdrop of rising CPI and the appreciation of the yuan against the Hong Kong dollar.

 

   2. Relaxing admission policies

 

The adversity in which Hong Kong-invested senior care facilities in Guangdong find themselves is partly due to stringent admission policies towards mainland seniors, for example, the inflicted 1:1 ratio inflicted on Yee Hong Heights. In recent years such restrictions have been gradually lifted. Hong Kong Jockey Club, for example, has raised the quote of mainland residents in 2013, mandating that half of the nursing beds should be preserved for Hong Kong seniors while the remaining beds can be offered to mainlanders on market rate, with no regard of the number of Hong Kong residents. In addition, Guangdong has also issued stimulus policies towards Hong Kong capital, such as waiver of land purchase fees, higher priority of land allocation, the simplification of application procedures and expanding subsidies to Hong Kong invested facilities.

While stabilizing and expanding customer base, Hong Kong facilities has posed challenges to their mainland counterparts by delivering better services and more market-based customer-oriented products. Now competing side to side with each other, more attractive Hong Kong-styled nursing homes may have incentivized mainland facilities to introduce higher standards, better services, optimized management and operation model. The integration of Guangdong and Hong Kong has direct and indirect impact on the overall improvement of the silver industry in Guangdong.

 

   3. The integration of healthcare system: One step at a time

 

The cross-border reimbursement issue, if solved, will enable Hong Kong elderly to enjoy timely and premium healthcare services in Guangdong, conducive to attracting Hong Kong seniors to retire in Guangdong in the long run. However, it takes time to integrate the two widely divergent systems. Guangdong has been promoting actively Hong Kong-funded hospitals and referrals between Guangdong and Hong Kong. In 2010, Guangdong has opened the gate for wholly-owned Hong Kong hospitals and allowed Hong Kong government to procure nursing beds and services in mainland facilities. In March 2011, Shenzhen has reached an agreement with Hong Kong Hospital Authority, allowing six mainland hospitals including Shenzhen People’s Hospital and Hong Kong Tun Mun Hospital and Hong Kong North District Hospital to refer patients among them. For the severely ill, measures are planned to speed up customs checks to facilitate cross-border referrals.

 

Hong Kong funded facilities in Guangdong are seeking breakthroughs themselves. Zhaoqing Home for the Elderly has signed agreements with the tier-three Zhaoqing Gaoyao People’s Hospital, by which Hong Kong seniors pay a monthly fee of RMB 680 to be reimbursed on all outpatient services. A new and exciting pilot on cross-border services and reimbursement is being launched: In Oct 2, 2015, Hong Kong Food and Health Bureau has announced that the Elderly Health Care Voucher Scheme will be extended to the University of Hong Kong affiliated Shenzhen Hospital. As long as Hong Kong retirees own a voucher account, they can use the account to pay expenses in that hospital without a trip back to Hong Kong. The pilot project is likely to cover other medical institutions, signifying a trend of closer integration of cross-border healthcare services in Guangdong and Hong Kong, creating momentum for sharing senior care resources in Hong Kong and Guangdong.

 

Full of expectations, Hong Kong people came to mainland to retire only to be discouraged by a mismatch between the rising and more urgent need on the one hand and the disparity in policies and welfare systems as well as narrowing living standards on the other hand. The problems and obstacles that emerged out of this experience may shed light on the development of China’s nascent senior care industry. Recently, models of offsite retirement or time share have become increasingly popular. Since senior care is subject to local political and socioeconomic constraints, the integration of services, policies, benefits and medical care across regions merits thoughtful consideration and gradual improvement.

 

Trend: mainland middle-to-high end aged care projects targeting Hong Kong seniors

 

In the past, comparative lower price, spacious environment, good services, namely good value with relatively lower costs, weighted in largely on their consideration. Compared with private nursing homes of varied service standards, they would rather choose public nursing homes. With the development of the transportation system between Hong Kong and Guangdong as well as the improvement of service quality of private nursing facilities, an increasing number of well-off Hong Kong seniors become interested in middle-to-high end aged care facilities and senior housing projects. Yue Garden of Taikang Community invested and operated by Taikang Insurance, for instance, targets the Hong Kong market, selling high-quality services below the Hong Kong levels and promoting supplementary high-end medical insurance products. The insurance products are to cover the Greater China region which includes mainland China, Hong Kong, Macao and Taiwan, dissipating likely concerns of medical service procurement and reimbursement.

 

The northward retirement trend has ups and downs during the past few years. With the growing pressure of an ageing population, the attempts at implementing social benefits policies and the integration of healthcare services, there is reason to believe that another flourishing period will ensue. The current market trend has shown that Hong Kong-funded nursing facilities endorsed by Hong Kong Government and middle-to-high end senior care projects targeting at Hong Kong high net value individuals have demonstrated remarkable growth potential. Middle-to-low end private nursing homes in Guangdong, whether funded by Hong Kong or mainland investors, do not make inroads with Hong Kong retirees. What kind of strategies they will adopt and whether they can ride on the Hong Kong Guangdong integration momentum to capture business opportunities remain to be seen.