Nursing Homes

Caring for Germany's Baby Boomers

ARCHIV - Mehrere ältere Personen sitzen am 31.05.2016 auf einer Parkbank im Schlosspark Pillnitz (Sachsen). Foto: Arno Burgi/dpa (zu dpa "Bericht: Geplante Angleichung der Ostrenten kostet 5,7 Milliarden" vom 21.07.2016) +++(c) dpa - Bildfunk+++
Germany's aging population means the business of providing care will boom over the next few decades.
  • Why it matters

    Why it matters

    Germany is the country with the largest population of people aged 65 and older in Europe.

  • Facts

    Facts

    • Germany will need up to 321,000 new nursing home beds by 2030.
    • More than 70 percent of people in need of care in Germany are cared for by family members.
    • Of the total of 13,000 nursing homes in Germany, more than half are run by independent non-profit organizations.
  • Audio

    Audio

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People born during the baby boom of the 1950s and ’60s are already used to the phenomenon of there being too many of them where ever they go, whether it was in school as children, or today on the labor market as workers. And soon, there will be too many of them needing to be cared for in nursing homes.

With this demographic development, the country faces a looming shortage in nursing-home care. In fact in order to care for the baby-boomer generation, tens of billions of euros will need to be spent on the construction of new retirement homes between now and 2030.

In 14 years, Germany will require up to 321,000 new beds in nursing-care facilities, according to the projections in a 2015 nursing care report. By 2030, the construction of new retirement homes will require €80 billion ($88 billion) in investments, the forecasts say.

“The number of residents will also continue increasing across regions ... especially as societies’ traditional family-based care structures continue to break down.”

Matthew Oster, Senior analyst, Euromonitor International

This demographic development also provides a business opportunity.  The growing market for outpatient and inpatient care represents €28 billion ($30.8 billion) in annual revenues today. Even so, families still provide the overwhelming majority of elderly care in Germany today. Of the 2.6 million Germans in need of care, about 71 percent are cared for by family members, according to the latest statistics from 2013. About 764,000 people are cared for in nursing homes.

With the market in Germany likely to grow rapidly, large French operators are expanding into the country, buying up local nursing-care companies.

 

27 p17 Nursing Homes in Germany 2016-01

 

Take, for example, Korian Group  which in November announced its takeover of German nursing-home group Casa Reha, and immediately became the market leader in Germany. With 224 facilities and 28,711 nursing home beds, the group, which also bought publicly traded Curanum in 2013, has pulled ahead of Pro Seniore, long the largest nursing home operator in Germany.

The Orpea Group, another French company, also entered the top rankings of German nursing home operators with its acquisition of providers Silver Care and the Bremen Residence Group.

Korian first entered the German market in 2007 when it acquired the Phönix chain of nursing homes. The company sees Germany as the largest and fastest-growing market for senior care in Europe. Germany obviously plays an important role in the corporate goal of achieving sales of €3 billion by 2017 (compared with €2.58 billion in 2014).

Sophie Boissard, chief executive of Korian Group, explains that the situation in Germany differs somewhat to other European countries where the company operates such as France, Italy and Belgium. “There are more people here with no children and no relatives,” she told Handelsblatt. “If they then need care, they definitely need external help, whether that be inpatient or outpatient care.”

While the 46-year-old French executive doesn’t plan any more German acquisitions in the immediate future, she still has plans to expand in the country, whether geographically or by extending the company’s existing offers in certain locations.

Germany has a total of 13,000 nursing homes, and private nursing homes, like those operated by Korian, make up 41 percent of the total, while 54 percent are run by independent nonprofit organizations. Publicly held organizations have only a 5 percent market share. A nursing home cares for an average of 63 people.

A total of 903,000 nursing-home beds exist in Germany. Korian, with its 29,000 beds, holds only about a 3 percent total market share. Operators with sales of about €200 million, such as the Marseille Clinics, are already big enough to enter the league of the 10 largest providers. Many of these companies are privately held.

The topics of aging and care trigger many reservations within the population, according to a recent survey Korian commissioned in Europe. According to the survey, 87 percent of German seniors and 78 percent of their European counterparts feel positively about their age. But only 60 percent of younger people believe older people still enjoy life.

Even after turning 80, the majority of respondents say they still enjoy life, feel balanced and also feel the need to amuse themselves and discover new things. Some 98 percent of German seniors see themselves as full-fledged members of society. But of Germans under the age of 65, just 83 percent view seniors as full-fledged members of society.

According to market research group Euromonitor International,  senior care facilities are projected to experience rapid growth in both developed and emerging economies between now and 2021.

“The number of residents will also continue increasing across regions, reflecting the need for senior care, especially as societies’ traditional family-based care structures continue to break down,” said Matthew Oster, a senior analyst at Euromonitor.

By 2021, there will be more than 789 million people aged 60 and older in emerging and developed countries, boosting demand for senior-care facilities, Euromonitor says. The top four countries for the number of nursing homes in 2021 is expected to be (in  descending order) India, China, the United States and Germany.

In global per capita ranking, however, Germany currently ranks first with about 326 senior-care establishments per million people, a number forecast to grow to 328 by 2021. Germany also represents the European country with the highest number of nursing homes and the largest population of people ages 65 and older.

 

Maike Telgheder is an editor at Handelsblatt covering the health economy, pharmaceutical companies and chemistry. To reach the author: telgheder@handelsblatt.com

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