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Kavil Ramachandran

THE lengthening shadow of life of our elderly is fast becoming a major challenge for society. This challenge needs to be addressed on an emergency basis before it acquires unpleasant proportions. While most advanced countries have some kind of social security mechanism in place, including a number of private, for-profit initiatives; unfortunately the same is not true for most developing countries, including India. Those addressing this challenge have failed to appreciate its complex sociological, psychological and economic dimensions that make it an extremely difficult one to handle. They have addressed the challenge so far as a one-dimensional sociological one leaving an enormous gap between expectation and delivery of service to the elderly. This gap can be leveraged to generate many interesting entrepreneurial opportunities.

India had around 77 million people above the age of 60, in 2001. This is up from 19 million in 1951. With life expectancy going up from 20 at the turn of the 20th Century to 62 now, thanks to advances in medical care and improvements in quality of life, and with birth rates falling, older people constitute the fastest growing segment of society.

While their numbers have been increasing, their negotiating capacity and bargaining power have remained low. This is evident from a public statement made by a Chief Minister recently that with limited funds in the treasury, he decided to pay salary of employees and deferred pension payments because employees, unlike pensioners, are organised and therefore can create trouble. This reality, though harsh, represents the sad state of affairs facing our elderly, and is a possible signal of the shape of things to come. We will discuss some of the key dimensions involved in meeting this challenge here.

Dimensions of the challenge

Our society has traditionally treated the care of the elderly as the responsibility of the younger generation. However, the rapid increase in the number of nuclear families, the growing urbanisation and the global nature of employment opportunities are forcing a change in this implicit social contract.

These changes are compelling many of our elderly to live alone, though it must be said that some of them have chosen to do so. Although the nature and magnitude may vary, their care is a major area of concern and a challenge to both the rich and the poor sections of our society.

As mentioned earlier, the care of the elderly has always been viewed as a sociological problem and has been traditionally addressed by charity organisations that have set up facilities for tending to them. Some of them have religious affiliations and run facilities for the benefit of members of their community while others are run by charitable trusts. While a few organisations such as HelpAge operate at the national level, a significant number of such facilities are "old age home" entities located in various cities and towns.

A recent survey showed that the number of such facilities is growing rapidly, particularly in the South. While the social developmental background of the organisers provides a service orientation to the functioning of such facilities, many of them lack efficiency and effectiveness in their operations for want of appropriately designed systems and practices. As a result, the level of satisfaction that is derived by the users is not always up to expectations. We are talking not only about minimum material comforts, but also opportunities to meet a number of socio-psychological needs.

This writer's recent case studies of two old age homes in a metropolis showed that the scope for improving services is huge. While one has a number of physical facilities in place, the other often has bitter fights among inmates for petty things such as an extra chair. One of the key conclusions that came out of this exercise was the realisation that human needs undergo changes dramatically as one's socio-economic status modifies around the age of 60.

It seems the government has not yet recognised the seriousness of this challenge. To start with, it has to study the status of the matter, and work out strategies to manage it. It may not be practical, and advisable for the government to get involved directly, but a number of policy initiatives can facilitate charitable organisations and entrepreneurs to offer high quality services.

Entrepreneurial opportunities

This critical challenge has opened up huge entrepreneurial opportunities in meeting the needs of the elderly. They have a number of specific needs. While some of the physical needs can be met by product/service modifications in existing areas, many innovations will be required in meeting their socio-psychological needs that have generally not been addressed by present service providers. This could include setting up counselling and recreational facilities.

There are a number of possible ways of slicing this market. One end of the market could be the premium segment requiring luxurious accommodation and support to the point of pampering, while the other end of the market may need commoditised services. Similarly, the range of services and their sourcing can be packaged in many ways. Opportunities for the state and charity organisations to offer minimal services are also enormous.

While the opportunity is great from a market perspective, translation of the concept of service into actual delivery is not always easy. This is for two basic reasons.

One, caring for the aged is a new business activity, with a fairly new value chain to be created. The needs of the customers are multi-faceted and involve social, physiological, psychological and economic dimensions.

While the hospitality industry offers expertise that can be tapped in meeting some of the needs of the elderly, available skills are not sufficient to meet the complete range of their needs that are extremely complex. The process of creation of a new value chain involves a number of steps, starting with the definition of consumer needs. Many a link on the chain has multiple dimensions to address. Synergising each link and the whole chain offers a number of managerial challenges.

Two, so far such services have been treated as charity. One of the major weaknesses of a number of charity organisations is their lack of efficiency in operations, though their level of commitment to services is undisputed.

A number of the value links are inefficient, leading to wastages in resource utilisation. Very often their systems and processes need a lot of improvement. One gets an impression that with some introspection, a lot of refinements are possible.

The recent announcement of a few social organisations such as the Non-Resident Keralite Association and a few private commercial organisations such as the Royal Palms of their intention to set up facilities for care of the elderly reinforces the entrepreneurial potential of this segment of the market. It is also interesting to add that some students of entrepreneurship are actively working on business plans for retirement homes to be run on a commercial basis.

It is useful to know that a range of retirement homes does exist in all advanced countries, catering to the needs of all categories of people. They have worked out variety of ways to ensure cash flow and profitability, ranging from a fixed amount at entry and monthly to transferring ownership of all personal wealth. The right mix of financing a retirement home whether for profit or not has to be worked out carefully. In short, we have a huge challenge ahead in caring for our elderly. Existing solutions fall well short of expectations calling for the creation of better and more innovative solutions addressing different segments of the market.

It is time that the challenges of caring for the elderly caught the attention of both policy makers, whose policy initiatives can facilitate the setting up of many such facilities, and entrepreneurs who can exploit enormous opportunities this offers. It is through such synthesised efforts that creative solutions to this challenge will emerge.

(The author is Professor of Strategy and Entrepreneurship at the Indian School of Business, Hyderabad.)

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