Happily Aging: International Opportunities in Independent/Assistive Living

Harry Wang, Director of Mobile and Health

Slide 2

Graying is a Global Phenomenon & Challenge

• U.S.: 65 years and older will double to more than 70 million by 2030

• Europe: Senior population will increase 77% and 80+ subgroup will rise 174% by 2050

• Japan: 65 years and older will rise to 32% in 2030 and 41% in 2055, up from 20% in 2000

• China: 60 years and older will rise from 10% in 2000 to 16.6% in 2020 and 28.8% in 2050 and 100 million will be 85 years and older by 2050

Alarming Numbers Is the World Readily Prepared?

• U.S.: Shortage of care workers and high cost of institutional care put its long-term care system in crisis

• Europe: Government is under the gun to improve long-term care coverage, increase staff, and make the service affordable

• Japan: Severe shortage of skilled care workers and threat of pension cut

• China: Insufficient long-term care infrastructure and rapid rising expenditure on senior care services threaten quality and affordability of senior care

Slide 3

Retirement is a Financial Choice• In the U.S., the average cost of

an assisted living home is about $3,000 per month while the average amount of social security check is around $1,200 per month.

• The continuing-care retirement community (CCRC) in the U.S. usually asks for an entry fee averaging $250,000, plus a monthly expense of $2,500 to $5,400

• In Japan, a one-month stay in a municipally operated nursing home costs close to 366,000 yen (3,000 dollars); a private nursing home room cost a move-in fee of $3,500, plus $1,200 to $1,650 per month to cover rent, utilities, and food

Slide 4

Institutional Long-Term Care is Supplementary in Nature

• U.S., institutional long-term care facilities accommodate about 2.5 million seniors or 8-9% of the total senior population

• Canada: about 200,000 live in government provided or private long-term care facilities, and shortage of nursing home beds leads to long waiting time for prospective residents

• China: less than one million seniors are living in a long-term care facility—the majority are living in with their grown-up children

• Europe: although there has been quick expansion of private and public funded nursing homes across Europe, total number of residents remain small.

Slide 5

A Home/Community-based Care Model for Seniors

<1%

1%

3%

4%

23%

49%

0% 20% 40% 60%

Location tracker

Home presence sensor

Drug dispenser with electronic reminder

Emergency response button or pendant

Glucose/Blood sugar meter

Blood pressure meter

Ownership of Health or Safety Monitoring Devices(Q3/10)(Among 644 seniors 65 years and older, +/-3.86%)

Source: Personal Health Tools and Solutions©2010 Parks Associates

17 million

1.4 million

1 million

210K

100K

8 million

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Consumers are Searching for Options

A location tracking service

A medication management reminder service

A vital sign monitoring service

An in-home activity monitoring service

A video conferencing service

A fall detection service

An emergency response service

37%

37%

39%

40%

46%

55%

72%

Interest Level for Purchasing Senior Care Service (Q2/10)(Among Respondents Taking Care of or Anticipating to Look After Loved Ones, % rating 6-7)

Slide 7

Living in the Home: Needs and Wants

Health

• Control symptoms• Prevent hospitalization• Manage medication• Comfort diagnosis

Connection

• Family members• Circle of friends• Community access• Fun in life

Safety • Fall detection &

prevention• Safe environment• Emergency response

Contribution

• Sense of fulfillment• Legacy left behind• Satisfaction of life

Basic Needs

Emotional Wants

Slide 8

Miscues by Tech Vendors Selling to the Eldercare Market

• “Build it first” mantra: Great engineering does not translate into market success

• Underestimate the intricacies of the healthcare marketplace: Even in the direct-to-consumer market, rules of engagement are different from the traditional tech market

• “It helps manage your health condition (save your life)!”: Nothing wrong in the message itself, but completely wrong for marketing’s sake

• Dedicated home gateway: Another box in the home?

Recommended Steps

Slide 9

Success Factors for Home-based Eldercare Models

Challenges

• Technology complexity puts off seniors

• Seniors live with limited financial resources

• Compliance rate goes down over time

• Low awareness and trust about solution

Opportunities

• Bring learning fun into user’s experience and add killer apps like connecting to family

• Lower prices to mass market levels

• Auto-configurable, highly interactive, low maintenance, and constant feedback with rewards

• Leverage partners’ influence to gain market advantages

• Make it less about technology specs, but fun and immersive

• Make it affordable or secure private or public reimbursement

• Make it less intrusive or reward continuous use with incentives

• Work with partners and care givers to nurture market

Slide 10

Success Factor: Affordability

$34

9%

$33

55%

Average price they are willing to pay Interest in paying for home monitoring services (e.g. fall detection) ratings of 6-7

Seniors Those who care for them

Percentage Willing to Pay and Average Price Willing to Pay"What price per month do you consider a good value for this home monitoring service?"

"How Interested are you in paying for the following services"

Source: Personal Health Tools and Solutions©2010 Parks Associates

Slide 11

Success Factor: Revolutionary Designs

Intel Health Guide

• 10.4-inch screen and $500 and up

• Features personalized care management, patient reminders, surveys, multimedia educational content, and communications tools

• It is medical grade, but who cares in the consumer market?

Apple iPad

• 9.7-inch screen and between $499 to $749

• Numerous apps will surface to support self-care needs of all kind of people, including seniors

• It is not a medical device, but who cares in the consumer market if it offers easy and immersive experience

Slide 12

Success Factor: Partners

A Good Partner Must:

Have a long-term vested interest in the eldercare market instead of short-term financial gains

Have resources to reach out to potential users or payers of eldercare

Have expertise or a platform to drive down total solution costs

Have channels to support feasible business models

Have expertise to guide through regulatory and policy landmines

Types of Partners Include:

Health plans or employers

Healthcare provider groups or retail operators

Existing popular device/service platforms

Have channels to support feasible business models

ACOs, retirement communities, medical home centers

Industry associations and consortia

Slide 13

Example 1: Grandcare Systems

Slide 14

Example 2: Halo Monitoring

Slide 15

Example 3: American Medical Alert Corp.

• Basic/Mobile PERS: Emergency response made more convenient with built-in mobility

• MedSmart: Medication reminder and dispensing system

• Health monitoring: Daily health symptom monitoring adds additional value

Slide 16

Market Opportunity: United States

Near-Term:

PERS Upgrade: slower industry growth encourage PERS providers to diversify revenues

Telecom and broadband service providers: eager to launch value added services to mitigate revenue loss on fixed line or voice services

Residential and retirement home

builders: independent living is a strong selling point of new breed of retirement homes/communities

Post-discharge at-home rehabilitation: reduce re-admission by keeping patients in the home

Longer-Term

Obama health reform provisions reward care coordination through payment model innovations

Cash benefits for long-term care beneficiaries may spur higher usage of in-home safety and health monitoring for independent living

Self-insured employers begin to understand caregiving’s impact on employee productivity, thus willing to subsidize independent living solutions

Expansion of Medicare/Medicaid long-term care benefits to cover independent living solutions

Slide 17

Market Opportunity: Canada

Longer-Term

Plan to offer integrated care services will increase senior’s appetite for aging-in-place technologies

Expansion of the Veteran Independence Program (VIP) to seniors

Expansion of the compassionate care benefit will provide better incentive to caregivers for adopting independent living solutions

Government’s inability to meet fast growing demand for independent living housing could lead to a private boom of senior retirement housing market

Near-Term:

PERS Upgrade: slower industry growth encourage PERS providers to diversify revenues

Telecom and broadband service providers: eager to launch value added services to mitigate revenue loss on fixed line or voice services

Provincial government ‘s interest

in pilot programs that solicit private and public sectors’ collaboration to address seniors’ independent needs

Slide 18

Market Opportunity: Japan, South Korea, China

Longer-Term

Expansion of coverage of house call program as part of long-term insurance scheme (Japan)

Reorganization of informal care as reimbursable within the long-term insurance scheme (Japan & Korea)

Urban housing project and retirement home for seniors (China)

Near-Term:

Fast growing of private nursing homes for home-alone seniors (Japan)

Employer market as employment benefits for expatriates who are concerned about elderly parents (Japan & South Korea)

Telecom and broadband service

providers: eager to launch value added services leveraging their existing infrastructure and client devices as part of their smart home initiative (Japan & South Korea)

Slide 19

Market Opportunity: Europe

Longer-Term

Consumer allocation of “personal budget” to independent living technology acquisition

Adoption of technology by government-owned or subsidized long-term care facilities

Expansion of the informal care benefit will provide better incentive to caregivers for adopting independent living solutions

Near-Term:

EU-sponsored independent living pilots and research programs

Government sponsored senior housing programs and/or grant programs (e.g. U.K.’s Preventive Technology Grant)

Private nursing home builders and

operators and home care agencies in Europe

Telecom and broadband service providers: eager to launch value added services leveraging their existing infrastructure and client devices as part of their smart home initiative

Slide 20

Concluding Thoughts

• From Passive Aging to Active Aging: New wave of retirees are much more well-versed with technology and have a different perspective on aging than the previous generation

• From Episodic Solutions to Continuum Solutions: from early aging to late aging, consumer needs shift

• Business Models, Business Models: what’s the right price point for whom? What partners matter most to you?

• Interest Alignment: Who gets the benefits and who gets paid? Will we cross the chasm between private pay and insurer reimbursement?

Slide 21

Thank You

Harry WangDirector, Health & Mobile

Parks Associates5310 Harvest Hill Road, Suite 235

Dallas, Texas 75230

Direct: 972-996-0227Harry@parksassociates.com

Parks Associates’ expertise is derived from a combination of primary research and industry analysis. Each year, Parks conducts a number of primary research surveys to understand the connected home and consumer digital lifestyles.

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Coverage

Scope of Research

Global markets

Features & differentiation

Innovative / disruptive technologies

Market participants / profiles

SWOT analysis

Customer preferences / intent

Consumer behavior / habits

Adoption / pricing

Segmentation

Optimal bundles / features

Channel dynamics

Market trends / dynamics

Market sizing & forecasts

Value chain analysis

Branding

Consumer decisions & purchasing

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