Living and care for the elderly: What the Netherlands can learn from other countries

Key takeaways:

1. The Netherlands has high healthcare expenditures for long-term care compared to the ageing population and other countries. Despite efforts to allow older people to live at home longer, costs continue to rise. Reforms and efficiency improvements are needed to alleviate the financial pressure and improve the quality of life for older people.
2. The Netherlands is lagging behind in healthcare investments and can learn from Finland by appealing to the private sector to invest in assisted and senior living, possibly with a more compelling approach for healthcare organisations to sell real estate that is not part of the crucial core capacity.
3. The Netherlands needs to shift the focus from care to well-being, with self-reliance and a suitable home and environment at the centre. This can reduce the need for later relocations for health reasons and improve the quality of life for the elderly.
4. It is crucial to invest more in preventive measures. This can improve overall health and reduce healthcare costs in the long run, which requires a joint effort from individuals, government and the private sector.

Healthcare expenditure and ageing in the Netherlands: from policy to practice

Looking at elderly care expenditure in an international perspective provides valuable insights into the efficiency of a country’s healthcare system. In doing so, it is crucial to highlight three key aspects. First, ageing versus long-term care costs, which examines the impact of an ageing population on total long-term care expenditure. Second, the share of long-term care expenditure on home care versus residential care, which provides insight into the distribution of healthcare expenditure between home care and nursing home care.

Dutch healthcare expenditure high in relation to the ageing

As people age, especially from the age of 75, the need for long-term and intensive care increases. This group needs suitable and accessible housing that contributes to independence and where receiving care is available. In general, the more suitable and accessible people live and the more the living environment invites a community, the less (quickly) formal care is needed. This can not only improve the quality of life, but also reduce the (financial) pressure on healthcare organisations. If healthcare expenditure is compared to the ageing population — the number of people aged 75 and over compared to the younger population — it appears the Netherlands stands out in terms of healthcare expenditure.

Figure 1: Ageing population and healthcare expenditure long-term care 2020 and 2050

Note: 2050 projections are based on expected growth in long-term care spending and population aging. Figures may vary due to future economic and demographic changes.

Source: World Health Organization, Global Health Expenditure Database; Eurostat , edited by CBRE Research

A relatively large part of the gross domestic product (GDP) is already spent on long-term care when compared to other European countries. This gives food for thought about future healthcare expenditure, knowing that the Netherlands currently has a relatively mild ageing population, while this will shift to a very strong ageing population in the coming decades, if nothing is done about the expenditure pattern.

With this score, the Netherlands is in the most risky part of the quadrant: mild ageing with high health care expenditure. A striking conclusion is that many countries, in contrast to the Netherlands, have low healthcare expenditure while they are already confronted with a much higher ageing population, such as Finland and Italy.

Cost-saving policies in Europe: living at home as standard, but not yet successful everywhere

Like the Netherlands, all the countries mentioned are strongly committed to encouraging the elderly to continue living independently at their homes for as long as possible. This policy focuses on the well-being of the elderly on the one hand and on cost savings on the other, since home care is generally cheaper than nursing home care. Part of the policy essentially focuses on shifting real estate financing from the government to the resident.

Despite the Netherlands' focus on living at home longer, the Netherlands has by far the highest long-term care costs, at 3.24% of GDP. An increase of 23% compared to 2016. The Netherlands also spends remarkably little on home care: only 19% of long-term care expenditure (0.6% of GDP).

Home care expenditures increased by only 7%, while expenditures on inpatient care increased by 28%. Ideally, there would be an increase in home care expenditures and a larger decrease in inpatient care expenditures, in line with government targets. In short, the increase in healthcare expenditures points out that current measures are not yet sufficient to significantly reduce expenditure per elderly person. This underlines the need for further reforms and efficiency improvements in long-term care.

Finland, which currently has a stronger ageing population than the Netherlands, spends relatively little on long-term care. As much as 84% of that expenditure goes to home care (1.39% of GDP). Finland saw a 7% increase in home care costs and a 34% decrease in intramural care costs. As a result, total long-term care costs fell by 3% in four years, despite the increasing ageing of the country. This cost shifting therefore seems to be effective in Finland, unlike the Netherlands and most other countries mentioned. However, it is important to emphasise that long-term care at home cannot stand alone, but must be an integral part of the healthcare system and social system. It is therefore interesting to see how Finland has organised its healthcare real estate to support this efficient care and what residential care concepts are successful here. This will be discussed in more detail later in the report.

Well-being of older people in Southern Europe: the role of culture and informal care

Southern Europe – Spain and Italy – stand out in both analyses. The countries also have particularly striking outliers in terms of life expectancy. Life expectancy can be an indication of well-being. The Mediterranean diet, milder climate and a more active and social outdoor life promote well-being here, despite lower government spending. The strong social networks and the involvement of family members also play a crucial role in the (informal) care for the elderly in both countries.

To take Italy as an example, there are around 8.5 million 'family carers' who care for sick or dependent family members, in addition almost 1.3 million badanti , often immigrants, provide home care. Badanti usually work 54 hours per week, while family carers provide care on average 41 hours per week. In Italy, the ratio of informal caregivers to elderly people (75+) is 1 to 1.3. In the Netherlands, older people receive less care from informal caregivers on average, with only 13 hours per week, and the ratio of informal caregivers to older people is much lower than in Italy, namely 1 in 3.5.

Cultural differences between countries make it difficult to compare healthcare systems. It is therefore necessary to look at the local context and the specific culture. Increasing the level of informal care in the Netherlands seems difficult to implement. More informal caregivers and more care hours by informal caregivers is not feasible. What the Netherlands can learn from, however, is a stronger sense of community that prevails in Southern Europe: creating living environments and living concepts where people look out for each other more and stronger social networks emerge. In this, we must pay attention to a mix of target groups. Too often, living concepts are created in the Netherlands that only cluster people in need of care, while the strength lies in combining different residents. This not only improves cohesion, it also contributes to potentially more efficient and informal care and can significantly combat loneliness.

Finland's answer to ageing: from government to private

The living environment in Finland is largely determined by the timely realisation of new construction, which now contributes to the efficient organisation of care. Finland is the only country in the sample that has the demand and supply in the residential care market in balance.

The Netherlands, on the other hand, is lagging worryingly behind in healthcare investments

The Rutte II cabinet decided to reduce elderly care. This led to the closure of government-funded nursing homes for elderly people with light care needs and to encourage people to live at home longer. The requirements for admission to a nursing home became stricter, which meant that the 'intermediate product' disappeared and was not sufficiently replaced by alternative forms of housing. As a result, the required capacity for elderly people with light care needs has decreased instead of being replaced, and care has become fragmented, while clustering and efficiently organizing care is only becoming more important in these times of increasing scarcity.

A similar shift has taken place in Finland, but with a different approach. Since the early 2010s, municipalities and cities have been actively selling their nursing homes to the private sector. This has led to significant growth in the senior living and assisted living market . Unlike the Netherlands, Finland has effectively focused on divesting real estate to private parties, which is reflected in the increase in healthcare real estate investments per inhabitant aged 65+. This has grown significantly faster in Finland than in the Netherlands over the years.

This strategy has brought several advantages. Firstly, it has reduced the pressure on the public sector, allowing government resources to be used more efficiently. In addition, the involvement of private parties has led to an increase in new construction, more innovation and a more diverse range of healthcare real estate. Private investors have introduced new concepts that contribute to more efficient care and a higher quality of life for the elderly.

In view of the sharp ageing of the population that is yet to come, it is worrying that the Netherlands is lagging behind the trend that we see in Finland. While Finland has proactively prepared for the increasing demand for care by involving the private sector, the Netherlands is lagging behind in developing sufficient and appropriate housing for the elderly. In the long term, this could lead to an even greater shortage of suitable residential care facilities and greater pressure on the existing infrastructure. It is crucial that the Netherlands learns from the Finnish approach and takes steps to safeguard the care capacity and care quality for the ageing population. Perhaps even a more compelling approach is needed for care organisations to sell the real estate that is not part of their crucial core capacity.

In addition, Finland has had a strong emphasis on prevention and healthy lifestyle in its government policy since the 1980s. The North Karelia Project from the 1970s and 1980s, which received worldwide recognition, shows the effectiveness of large-scale preventive measures. Significant improvements in public health were achieved through education, dietary changes and the promotion of healthy lifestyles. Local preventive campaigns contribute to cost savings and a more sustainable health care system. The Netherlands would benefit from a more proactive role in prevention to save costs in the long term and improve the overall health of the population.

Focus on housing and well-being, then care

In the Netherlands, there is a growing need to shift the focus from just 'care' to 'well-being'. Self-reliance, personal control over health and a suitable environment are central to this. Moving to a suitable home in time is increasingly becoming a lifestyle choice that contributes to this. Older people choose to live in a future- and care-proof concept with attention to well-being, facilities and services. In Finland, people are increasingly opting for assisted living for care itself, when they start needing it. The new housing concepts in Finland focus on sustainability, location next to facilities and shared spaces and activities. However, the healthcare real estate supply in Finland fits less well in the Dutch environment. For example, complexes in Finland are, compared to the Dutch standard, small-scale and somewhat less 'luxurious', which means that the concepts are less in line with the wishes of the Dutch wealthy elderly, who make up a large part of the ageing group of potential ‘movers’ (see Figure 4).

Seniors in UK consider moving thanks to innovative housing concepts

Despite the shift in focus, the suitable supply in the Netherlands is lagging behind and the willingness to move among older people is relatively low, with only 43% of 55-65 year olds and 17% of 75+ year olds wanting to move at some point. This is in contrast to the UK, where around 62% of older people are willing to move to housing concepts such as Integrated Retirement Communities (IRC), especially if they offer a strong sense of community, safety and healthcare options. Although IRCs have been around in the UK for some time, it is only recently that they have started to attract the attention of the public and investors. As a result, supply has accelerated in recent years, which has in turn driven up demand. This is now clearly visible in the number of new developments. Between 50% and 60% of annual new-build senior housing deliveries in the UK consist of these IRCs.

The Netherlands can learn from this approach by also focusing on creating a strong sense of community in alternative housing for the elderly. This helps to get the flow on the housing market going. In the United Kingdom, an estimated 18% of the owner-occupied housing market is in the hands of elderly people could potentially be freed up if they decide to move to alternative housing. In the Netherlands, this percentage is similar, namely 16%.

Figure 4: Care concepts United Kingdom and Finland

Source: CBRE Research

Lessons from abroad: collaboration and prevention as the key to sustainable elderly care

There are some important lessons to be learned from the experiences of other countries. First, cooperation with market parties is essential to effectively address the challenges of an ageing population and the increasing demand for care homes. By following the experiences of Finland, where municipalities and cities have actively transferred their care homes to the private sector, the Netherlands can benefit from a growing market for assisted living. Market players can contribute to the development of innovative and accessible living environments that meet the needs of the elderly.

In addition, we can learn from Southern Europe, where there is a stronger sense of community. This sense of community contributes to a higher quality of life for the elderly. This can inspire the Netherlands to invest more in social cohesion and community-oriented housing concepts that tie in with this. We see these concepts, where a sense of community is central, increasingly occurring in the United Kingdom, which culturally fits in well with the Netherlands. The group of 'stayers' here are more often becoming ‘choosers’ due to the appropriate housing concepts, which can also get the housing market going.

In addition, it is crucial to significantly increase the focus on preventive measures, as in Finland. Investing in prevention can improve overall health and reduce healthcare costs in the long term. However, this requires a joint effort from both the government and the private sector. It is essential that they invest together in future-proof healthcare real estate solutions to address the challenges of an ageing population and ensure a sustainable healthcare infrastructure, rather than holding on to the current situation until it is no longer sustainable.