A presentation on how the Hong Kong Housing Society has approached senior care.

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Hong Kong Housing
Society’s Senior Care
Facility and Business
www.AsiaHealthcareBlog.com Model
www.RubiconStrategyGroup.com

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Overview
 Hong Kong Housing Society (HKHS)
 History of the Organization
 HKHS’ Mission and Mandate
 Role of the Hong Kong Government (past, present, future)
 Structure of Senior-Care Market in Hong Kong
 Role of the Family as Caregiver
 Available Residential and In-Home Care Options
 Role of Government and Private Insurance as Payer
 HKHS’ Solution
 Facility Structure (Services, Amenities, Infrastructure)
 Payment Options (Financing, Qualification Standards)
 Role of Government (Land Incentives, Eldercare Regulation)
 What HKHS Plans to do Differently
 How Their Next Two Facilities will be Different
 How They Want to Shift Their Relationship with the Hong Kong Government

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Hong Kong Housing Society
History of the Organization
Mission & Mandate
Role of the Hong Kong Government (Past, Present and Future)

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Hong Kong Housing Society
 History of the Organization
 Started in 1948.
 Play a role renovating existing properties,
rebuilding distressed properties, or providing
housing for people who have lost housing due to
reclamation.
 As of today, have built over 67,000 individual
housing units.
 Today, in addition to managing their own
properties, they provide commercial property
owners with housing management services and
retail leasing as well.
 Mission & Mandate
 Help create housing initially for low-income
families.
 As housing in Hong Kong become more
expensive, mission migrated to address housing
needs of middle-income families also.
 Role of the Government
 Past: Government funded the HKHS.
 Present: Government offers incentives and
some remediation, but little direct support.
 Future: Government may continue to offer
incentives, but HKHS sees its reliance in
government support dwindling.

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Structure of the Senior Care
Market in Hong Kong
Role of the Family as the Caregiver
Available Residential and In-Home Care Options
Role of Government and Private Insurance as Payer
Public versus Private Residential Senior-Care
Key Similarities & Dissimilarities Between Hong Kong & China

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The Family
 Role of the Family as Caregiver
 74.1% of the elderly population live w/ family1.
 17% of elderly over 60 are receiving social security2.
 55% of elderly over 65 are also receiving old age allowance3.
 Even with elderly parents who have dementia, families are reluctant
to turn over caregiving services to outsiders.4
 Studies of ex-pat Chinese and Hong Kong communities in Boston,
Vancouver and Toronto show that cultural barriers to third-party care
giving continue to lower; however, strong concepts of familial piety
still govern how Hong Kong families view senior care.5
1Report no. 27: Life, Health and Financial Conditions of Elderly Persons and Middle-Aged Persons – Census and Statistics Department 2000.
2”Elderly Services in Hong Kong” – The Hong Kong Council of Social Service.
3Ibid.
4”Caregivers’ Informational Needs on Dementia and Dementia Care”, Asian Journal of Gerontology & Geriatrics, Vol 2, No 2, August 2007.
5Intergenerational Family Support for Chinese Older Adults, International Journal of Social Welfare, Volume 20, Supplement 1, October 2011.

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The Market
Hong Kong
Government Provided
Community Care &
Support Services
District Elderly
Community Centers & Social Centers for the Residential Care
Neighborhood Elderly Elderly Services (RCH)
Centers
Services for active and healthy More involved services which RCH can be subsidized (what HKG
seniors: education, social provide the option of either center- government calls “subvented”), or
development, career support, based services or some minimal in- some combination of public/private.
outreach, networking, basic home care. These are more involved services
counseling, meals, referrals to service than social centers.
providers, etc.
NOTE: After this stage, the HKG
government does provide limited
assessment-based subsidized long-
term care.
As a HKG senior moves further to the right, services get more involved to reflect growing healthcare
needs and typically diminished ability to pay for these services themselves.

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Available Residential & In-Home
Care Options
Number of Facilities
17% 3%
RCH Hybrids
15%
RCH Non-Subsidised
65%
EBS
Private
RCH Hybrids are combinations of subsidized (public and NGO), self-financing, contract, contract-based, etc.
RCH Non-Subsidized receive no government assistance but are not self-financing. These are NGOs.
EBS (also called EBPS for Enhanced Bought Place Scheme) are facilities purchased by the HKG Social Welfare Department.
Private facilities are individually run, for-profit senior housing operators.
NOTE: Data compiled from four databases provided by the HKG Social Welfare Department; 2 (the RCH components) updated 9/30/2011
and 2 (EBS and Private) updated 11/30/2011.

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Available Residential & In-Home
Care Options
RCH Openings
0% 2%
Hostel
16%
Home
48%
Care & Attention
34%
Care & Attention Plus
Continuum of Care
Nursing Home
These are only openings for RCH categorized senior care facilities.
The “Hostel” and “Home” categories can essentially be overlooked (2% of the total); categories not of practical analytical value.
“Care & Attention” – basic in-home services ranging from social visitation to basic medical care.
“Care & Attention Plus Continuum of Care” – more involved medical care up to hospice.
NOTE: Data compiled from four databases provided by the HKG Social Welfare Department; 2 (the RCH components) updated 9/30/2011
and 2 (EBS and Private) updated 11/30/2011.

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Available Residential & In-Home
Care Options
Number of Facilities Number of Openings
(% of Total) (% of Total)
RCH Hybrids 147 (16.5%) 17,739 (17.8%)
RCH Non-Subsidized 29 (3.3%) 1,304 (1.3%)
EBS 136 (15.3%) 21,698 (21.8%)
Private 578 (64.9%) 58,744 (59%)
Total: 890 99,485
Estimates are that there are 19,000 on the waiting list currently for the RCH Hybridized senior care.1
NOTE: Data compiled from four databases provided by the HKG Social Welfare Department; 2 (the RCH components)
updated 9/30/2011 and 2 (EBS and Private) updated 11/30/2011.
1”Who Pays for Long Term Care in Hong Kong”, Laurence Wing Him Ho, Chief Executive, Hong Kong Policy Research
Institute.

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In Case You Are Curious
How that stacks up against the need in Hong Kong …
Number of Seniors 65+ Percentage of Population
2009 913,000 13.01%
2025 1,766,000 24.01%
2050 2,427,000 39.32%
Suggests Hong Kong has services in place for about 11% of seniors.
Current dependency ratio is 168:1000 (seniors over 65 : workers).
Projections are by 2023 this will rise to 282:1000, by 2033 to 428:1000.

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A Word About EBS
The “Enhanced Bought Place Scheme” was the outgrowth of a major
policy review by the Hong Kong government where they attempted to
develop solutions to the shortage of senior care facilities. With the EBS,
the government purchases an existing privately owned senior care operation
and upgrades them (there are two standards as shown below: EA1 offers more
care than EA2). The government saves CapEx by renovating an existing facility.
EA1 EA2
Per Capita Net Floor Area 9.5 m2 8 m2
Home Manager 1 1
Registered Nurse 2 0
Physiotherapist 0.5 0
Health Worker 2 4
Care Worker 8 8
Ancillary Worker 8 6
Total 21.5 19
Note: Source data from Hong Kong Social Welfare Department and “Who Pays for Long Term Care in Hong
Kong”, by Laurence Wing Him Ho, Chief Executive, Hong Kong Policy Research Institute.

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Payer – Government & Insurance
 How seniors in Hong Kong pay for services:
 12% who are 60+ are still working in some part-time capacity.
 80% are living off of savings.
 17% receive social security allowance.
 55% over 65 receive additional old age allowance.
 Private insurance plays a very small role.
 New efforts by the Health & Wealth Bureau are recommending a
required 2% contribution of salary to Health Protection Account for
use in retirement.

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HKHS’ Solution
Facility Structure (Services, Amenities, Infrastructure)
Payment Options (Financing, Qualification Standards)
Role of Government (Land Incentives, Eldercare Regulations)

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HKHS’ Solution – Facility Structure
Cheerful Court Jolly Place
Location No. 55 Choi Ha Road, Ngau Tau Kok, Kowloon No. 2 Pui Shing Lane, Tseung Kwan O
Number of Units One Bedroom Flat 254 162
Studio Flat 79 81
Total: 333 243
Floor Area (sqm) One Bedroom Flat 35 37
Studio Flat 23 25
Carparks Private Cars 48 14
Motorcycles 0 5
Hospice Beds 57 40
Club Facilities Restaurant, Convenience Store, Coffee Bar, Hair Lounge, Restaurant, Hobby Room, Multi-
Salon, Music Room, Chinese Medicine Store, Purpose Hall, Garden, Games, Gymnasium,
Library & Hobby Room, Indoor Swimming Pool, Reading Room
Hydropool, Garden, Fitness / Rehab Room,
Dancing Room

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HKHS’ Solution – Facility Structure
These pictures were taken during a site visit at Cheerful Court in November 2011. They show
the one-bedroom flat in their model configuration. Kitchen to the LEFT, Dining Area to RIGHT.
As pictured, this unit would sell for approximately $600,000 HKD.

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HKHS’ Solution – Facility Structure
These pictures were taken during a site visit at Cheerful Court in November 2011. They show
the one-bedroom flat in their model configuration. Living Room to the LEFT, Bedroom to the RIGHT.

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HKHS’ Solution – Payment Options
 HKHS is one of the other major policy initiatives that came from the Hong Kong municipal
government’s review of senior housing and the chronic shortage.
 With HKHS, the government chose to offer land incentives for development versus additional
subsidization of those seniors who wanted to move to either Cheerful Court or Jolly Garden.
 Consequently, HKHS has some financial criteria that potential candidates must meet in order to
move to one of these residences:
 Residents must have net assets between $1-5m HKD.
 If less than this, the income of the children can be used to qualify.
 In this eventuality, the children’s income must total $29,000 HKD/month.
 Services for in-home care range from:
 Minimum of the basic management fee of $1,260 HKD/month plus a $300 HKD/person/month for
basic care services.
 A la carte services (social visits to in-home hospice) range from $10,000-$30,000 HKD/month.
 Families can provide their own in-home care through a maid or other domestic help.

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HKHS’ Solution – Payment Options
 Some additional points:
 Rights of ownership are not inheritable.
 Projected turnover was 10% when they opened; actual turnover has
been 4% (project is only 7 years old, so this could adjust in time).
 10% of the population has some sort of dementia.
 90%+ is over 70 years of age.
 Average age currently is between 72-73.
 Homes feature panic buttons, two-way locks, non-slip tiles, stabilizer
bars throughout home, etc.

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HKHS Solution – Role of
Government
 The Hong Kong government agreed
to sell these two plots of land to the
developer for $1 each.
 HKHS has a 10-year management
contract w/ the government.
 As of year 7, they are not yet
profitable because in order to take
advantage of the $1 land purchase
price, they had to agree to service
pricing schemes that have been too
aggressive.
 The Hong Kong government has
2,167 accredited assessors that can
assess the needs of seniors who are
receiving public money.

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What HKHS Plans to do
Differently
How Their Next Two Facilities will be Different
How They Want to Shift Their Relationship with the Government

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What HKHS Plans to do Differently
 HKHS has two new facilities in the works:
 Tanner Hill (600 units) and Tin Shui Wai (1,000 units).
 These will be purchased w/o government subsidies.
 Consequently, the Hong Kong government cannot set prices (for either the
flat or the services offered).
 The HKHS has not been happy w/ the role of the government and believes
they may not be able to operate profitably unless the government
reimbursement model changes.
 These two new facilities will double the income and net-asset
requirements in order for a senior to qualify.
 HKHS is moving away from what the Hong Kong government intended as
a solution for middle-class seniors to a higher-end offering.

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Conclusions
The four lessons from HKHS’ experience

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The Four Lessons from HKHS’
Experience
 The role of government was not helpful.
 A middle-income solution is still needed.
 Longer lifespans mean longer ROI horizon.
 Even in Hong Kong, the need for soft-skills (nursing) is high.
 Each of these begs the question of whether the elder care
market in China is ready to explode or whether more
development work is necessary before the Chinese market
can be ready. Perhaps the bigger market opportunity in
China is not housing, but training the trainers?

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Contact Information
Benjamin Shobert
Founder, Managing Director
Rubicon Strategy Group, LLC
Two Union Square
601 Union Street, Suite 4200
Seattle, WA 98101
Phone: 206-652-3572
Fax: 206-652-3205
Mobile: 317-777-2926
Email: bshobert@rubiconstrategygroup.com
URL: www.CrossTheRubiconBlog.com or www.AsiaHealthcareBlog.com