Recently I have taken some time to think and visualize what might be happening to the healthcare industry in the next 5 – 10 years. Today, I will share one trend that has been running in my head for some time.
Increased Popularity in Overseas Aged Care Facilities!
While the idea may seem controversial to some, and you may even want to start ranting at me. Please hold your horses as there are compelling reasons that leads to this insight. Singapore, Australia and New Zealand are developed countries with an ageing population. The table below shows an upward trajectory of 65 years old and above in these respective countries, which essentially means three things.
Source: Statista 2024 report
Source: United Nations, Department of Economic and Social Affairs, Population Division
Source: Australian Institute of Health and Welfare
1. The demand for aged care facilities will only increase in the years ahead. As people longevity increases, the duration that they reside in the aged care facilities are likely to increase as well.
2. Strain on the government budget due to increased social security and healthcare cost for elderly. There are essentially 2 ways to address it. Either you increase your tax revenue (Always an unpopular option!) or you find ways to stretch the existing dollars.
3. High cost of operation in the respective home countries. Whether it is the cost of land procurement, construction cost, labour cost etc. Given that the aged care facilities (nursing home) are presently stretched or under-funded, the future cost of such project at this scale can be prohibitive. This reinforce the value proposition of an overseas aged care facility (nursing home).
In my opinion, Indonesia and Malaysia might be an interesting choice for Singapore, Australia and New Zealand based healthcare facilities to set up aged care facilities (Nursing homes).
These are my rationale for it:
1. Geography – Indonesia is fairly close to Australia, New Zealand and Singapore. The direct flight hours from these 3 countries to Denpasar International Airport (Bali), ranges from 3 hours to 9.5 hours. Malaysia, on the other hand is connected to Singapore by land bridge. One can choose to take a flight, by bus or even swim across!
2. Low cost of land acquisition and construction – Land procurement, construction labour cost and material cost in Indonesia are easily 50% to 80% lower than in the respective countries. Whereas building costs in Malaysia can be 30-60% cheaper than Singapore, Australia and New Zealand.
3. Lower labour cost – The average monthly salary of a registered nurse with 5 years of experience in Indonesia is about SGD 430 to SGD 660. (AUD 486 to AUD 745) Whereas the average monthly salary of a registered nurse with 5 years of experience in Malaysia is about SGD 1,140 to SGD 1,790. (AUD 1,287 to AUD 2,020)
4. Open to Foreign Direct Investment – Both countries are receptive towards foreign direct investment. In 2022, Indonesia attracted over USD 90 billion in total investment, whereas Malaysia attracted over USD 36.9 billion.
While one may argue that cost should not be the main driving factor for healthcare and citizen welfare in their twilight. Ensuring sustainability for long term care is of paramount importance. According to Age Concern, aged residential care providers in New Zealand are losing up to $15 per resident per day. They struggle with manpower issues too.
In Australia, 66% of the aged care home are operating at a loss in 2023, according to Steward Brown Financial Performance Survey Report. This represents a loss of more than $1.05 billion for the financial year in the residential aged care segment. The data is drawn from 1,237 homes, which represents 47% of the residential aged care sector.
Whereas in Singapore, the circumstances might be different in my opinion. There are myriad factors contributing to it. From a cost saving perspective, yes this can be an important one. According to Economist Intelligence 2023 report, Singapore and Zurich has the highest costs of living in the world. (Although I do not agree with the ranking and cost computation in their report, living in Singapore is definitely not cheap!)
From a cultural standpoint, it is fairly easy for Singaporeans to settle down in Malaysia or Indonesia due to its cultural similarity. But more importantly, Singapore is a city state that is essentially a business hub rather than a retirement place. (My 2 cents opinion)
Perhaps 5 years from now, we may start to see overseas nursing homes that catered specifically for residents from Singapore, Australia and New Zealand. What do you think?
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Resource:
https://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/3235.0Main+Features12013
https://knoema.com/atlas/Australia/Population-aged-65-years-and-above
https://www.statista.com/statistics/1112943/singapore-elderly-share-of-resident-population/
https://www.aihw.gov.au/reports/older-people/older-australians/contents/demographic-profile
https://www.straitstimes.com/singapore/at-least-8-new-nursing-homes-in-singapore-in-next-5-years