Less than 20 per cent of nursing homes in China's major cities are profitable, and homes for middle-income seniors fall far short of what is needed, according to a report released on Thursday by the China Research Center on Aging.
The report, which looked at the development of nursing homes, was based on information collected last year from civil affairs authorities and questionnaires submitted by 257 nursing homes in 12 major cities, including Tianjin and Chongqing.
The number of beds provided by various types of nursing homes in China exceeded 5.5 million at the end of last year. That's 26 beds for every 1,000 people 60 years old or above, the report said.
China's population of older people, generally defined as those age 60 and above, has increased rapidly in recent years. The number reached 212 million by the end of last year, encouraging development of elder-care industries.
More government subsidies are needed to encourage the development of nursing homes, said Kong Wei, an official at the China National Committee on Aging.
Of the nursing homes surveyed, 19.4 per cent said their business turned a profit. About a third said they had been losing money, while nearly half said their books were balanced.
"In general, it takes longer for investment in nursing homes to see gains, and profit margins in the industry are lower than for many other industries," the report said.
Most nursing homes in China are either low-end－providing only basic food and living necessities, and lacking medical or entertainment facilities－or expensive high-end ones that are well equipped and provide a high standard of service.
Many nursing homes built in recent years are aimed at the high-end market, because they charge more, recover their investment sooner and generate profits more quickly, Kong said.
"Such nursing homes are beyond the financial capacity of most seniors," she said.
Many nursing homes are built far from urban centres, resulting in a high number of empty beds, she said.
The number of beds provided by homes in China is expected to increase to 6.6 million by the end of this year and will reach close to the level of developed countries, said Wu Yushao, director of the China Research Center on Aging.