Senior Care Market to Reach 68 Trillion Won by 2035... "Capital Burden on Care Facilities Must Be Reduced"

Insurance Research Institute Seminar: "Conditions for Commercializing Senior Care"
"Rising Senior Assets... Business Expansion Possible Centered on Housing and Care"

As the aging population is expected to fuel the rapid growth of the domestic senior care market, there is a recommendation to reform relevant systems. Specifically, it suggests alleviating the capital burden tied up in care facilities and enabling a more diverse range of revenue models, in order to expand the market participation of private companies, including financial institutions.

Kwon Jeonga, Head of Handone Next Lifecare Division, is making a presentation at the seminar held by the Korea Insurance Research Institute on the 16th. Photo by Lee Seunghyung

At the seminar titled "From Care to Industry: Conditions for Commercializing Senior Care" held at the Korea Insurance Research Institute conference room on the 16th, Junga Kwon, Head of Hanadhenext Lifecare Division, addressed the growth potential of the senior care market and the regulatory and profitability issues that are limiting private sector entry into the business.

The size of the domestic senior care market is projected to grow from approximately 23 trillion won in 2024 to 68 trillion won by 2035. Industry experts attribute this anticipated expansion to the influx of baby boomers into the elderly population, the increase in assets owned by seniors, and rising demand for care services, such as for dementia patients.

Although the market has significant growth potential, high initial investment costs for care facilities and limited revenue structures are identified as key barriers to private sector participation. Division Head Kwon stated, "Operating a care facility requires substantial capital tied up in large-scale real estate purchases, exposing businesses to low profitability risks. Diversifying non-reimbursed service items and connecting external ancillary businesses or financial services with care facilities are ways to secure comprehensive value."

The shortage of personnel was also highlighted as an issue that must be resolved. The aging of the population is driving up demand for care, but improvements in working conditions for care workers are proceeding slowly, creating restrictions on labor supply. Without sufficient manpower, it becomes difficult to maximize facility utilization rates and to offer premium services. Division Head Kwon said, "Although the recent interpretation allowing subsidiaries in the care business sector to train care personnel is a positive step, it remains challenging to pursue as an immediate business. If trainees, interns, or students from other organizations are utilized, the provision of support funds should be considered. Additionally, to improve the overall treatment of care workers, it is necessary to increase financial support for employee benefits and various allowances."

Kwon also pointed out the need to improve regulations to encourage private companies to participate in the long-term care market and to permit the establishment of facilities that combine housing and care. "We need to consider ways to allow seniors to receive care and nursing services in a single facility throughout different health stages of their lives," she stated. "It is also necessary to establish facilities where both those recognized for long-term care eligibility and other elderly residents can live together."

She further recommended, "System improvement is needed so that companies with capital strength can participate in the installation of care and residential facilities, which are capital- and labor-intensive, in order to generate profits. For-profit operators must be able to secure profitability and generate surplus earnings to ensure continual reinvestment, achieve economies of scale in the care business, and ultimately improve the quality of care services."

This content was produced with the assistance of AI translation services.