Tag Archives: Global Aging

Replication – An uphill battle?

27 Jun

Replication becomes a moral imperative for social entrepreneurs. Once we find out that we are making a difference in our communities we have this undying desire to replicate our idea. Most, if not all, social issues are global, and a good solution can travel anywhere, with some caveats. We know through experience that global aging is posing challenges to all developed countries. In places like Japan & Italy the growing senior population comprises over 30% of the population. This aging wave affects may aspects of society: work, retirement and healthcare among others. So why not introduce our idea to them? While it makes common sense, for an idea to travel many factors must be in place. Capital, connection, understanding of regulations, the culture and language are critical if we are going to be successful. These were the issues we confronted when we tried to bring our program to Japan last year. While both parties agreed that it could be transplanted and we were both eager to do it, several obstacles had to be overcome.

Last year, through the Ashoka network, we discussed introducing our model to a very prominent woman that started a large nursing home business in Japan. She was interested in bringing about a less institutional model like ours. There were few if any regulations in Japan that would prevent implementing such a program, no competition exists and the government could reimburse for services through their healthcare/pension plans. However, for our program to work, we needed to overcome some major barriers like language and raising the capital to establish relationships in such a close knit culture. Overcoming the language problem (only 3% of Japanese converse in English) required the hiring of a full-time interpreter. We also needed to employ an agent so we would have a direct presence there. Trying to raise capital in Japan became difficult as there are today very few foreign investors. The initial investment proved to be too onerous for us.

Raising capital for our social ventures is an arduous job, absorbing a big chunk of our time. We knew that when we started and that was the main reason we decided to create a for profit company. We were also in a hurry and could not wait the time it takes to create a non-profit entity. Our first contract was the most difficult. Once you have created a successful and replicable model, it becomes easier to sell to others. There are no blueprints and no road maps with a new idea and a lot of non-believers. We took three steps, first: change individual behavior, second: create a successful program and third: change national policy so we can replicate with ease. We never wasted the opportunities that this global crisis offered us. From the onset we knew what we wanted to achieve and what outputs we needed to derive (number of people served, cost efficiencies, operating margins) and the impact we wanted to effect (change the way we care for low income seniors). From day one we established clear outcomes and collected data to measure progress. Performance management became our principle. When you provide data to mission driven people, the results are profound and these measurable results are essential if we are going to obtain capital needed to scale.

Connections and collaborations were a turning point to our small firm. We have never acted alone, but we realized that we needed to be connected to a larger network if we were going to make a difference. These connections are not easily made; it takes a lot of time and effort to achieve. Becoming an Ashoka Fellow in 2010 opened a multitude of doors and connections that have propelled our mission inside and outside the U.S. We formed a Board comprised of private investors and successful business owners that have guided our steps, re-engineered our firm and paved our way to the corporate world.

My years of working in government made it possible for our firm to change national policy. I understood how it works as well as their reluctance to deal with social issues. My approach in understanding regulations, culture and language has always been to understand before asking to be understood, respect and a sensible approach has served us well so far. We would have thrown out many babies with the bathwater if we were not able to work with the government as an ally.

Every single day for the past sixteen years I wake up in the morning and ask myself a simple question, if not now, when? 

Advertisements

The Challenges of Global Aging

23 May

America is a relatively young country as far as the percentage of individuals 65 years and older in the U.S. today. About 12% of the population in the U.S. is 65 years and older. However, that percentage is projected to increase to 20% within the next decade. Compare those numbers with that of other countries like Japan with the highest percentage of seniors currently at 21.5% of the population. Global aging affects all aspects of our society: work, health care, retirement, services and housing, among others. One of the major challenges is what we call the dependency ratio which means that for every person age 65 years and older there will be fewer than two persons in the workforce and available to care for the older generation. Exceptions are those countries with high birth rates (Mexico, Iceland and Turkey) or in countries like Australia, Canada and New Zealand with high immigration. However, in most countries the dependency ratio will sharply increase from 2020 to 2050. It is becoming more important that we create new ways to care for this aging population that is cost effective and dignified. The U.S. has the highest per capita health care expenditure in the world with a per capita cost per individual of $6,714. Japan, on the other hand, has the lowest health expenditure with a per capita expenditure of $2,581, half of that of the U.S. Most of the expenditure in Japan is paid by the government.

During the Ashoka Summit held this month we were able to discuss with other Fellows challenges facing their countries. Masue Katayama, a Fellow from Japan, has worked for the past twenty years in providing services to the older population in Japan. She came to learn how our firm has been able to change how we care for this older population. We believe that the global financial crisis is pushing us to make due with less and to learn how to use government funding more efficiently. Our firm has a proven track record of being able to service three times as many seniors with the funding the government spends on one. Japan, along with many European countries, has older people and lower health care spending than the U.S. They do this by fixing prices and manipulating prices to keep costs down. Every two years the price of each treatment, test and medication is examined to see if excess profits are leading to overuse and if so the price is cut. This is not done in the U.S. because those who profit from high prices are so powerful. This rationing and price cutting impacts the ability to control chronic illnesses at an early stage. Instead of rationing, Japan should look at ways to improve people’s lives by systematically changing lifestyles through better diets, exercise, medication management and supervision. This is something that Japan and other European countries can learn from the U.S.

Masue and I sat down to establish a collaborative effort that will enable us to learn from each other. She visited one of our affordable assisted living facilities and was impressed with the home atmosphere and the improvement in the physical and cognitive health of our residents. We agreed to formalize this collaboration by her sending a group of her operators to the U.S. for a month to live and learn at one of our facilities. Mia will do the same as we know that there are lessons to be learned from Japan as they tackle the common challenges of global aging.