Riding the Silver Tsunami: A Journey Through Japan’s Elderly Care Evolution [Japan Pulse #5]

Japan stands as one of the most aged nations in the world, a rapidly growing demographic trend that has significant implications for the country’s economy and society. As of 2021, individuals aged 65 and older comprised 28.9% of the population, a figure expected to rise to a third of the population by 2030.

In response to this aging phenomenon, the elderly care and nursing home sectors have become increasingly vital in supporting the health and well-being of Japan’s senior citizens. However, these sectors not only fulfill a social responsibility and necessity but also offer attractive investment opportunities for global investors.

In this article, we will delve into the past, present, and future of elderly care and nursing homes in Japan, exploring their potential for growth and innovation. We will also introduce key areas, companies, and technologies that investors should be paying attention to as they consider this promising market. With a rapidly aging population and an increased demand for specialized care, Japan’s elderly care sector presents a unique opportunity for investment and expansion, which can yield significant returns for those who recognize its potential.

Population pyramid of Japan from 2020 to 2100.gif
Population pyramid of Japan from 2020 to projections up to 2100 from Wikipedia, “Aging of Japan”

The Evolution of Elderly Care and Nursing Facilities in Japan

The inception of elderly care homes in Japan dates back to 1895, when Elizabeth Thornton, a British Anglican missionary, established the pioneering “Sei-Hilda Yoro-in” in Tokyo’s Minato Ward, as per historical accounts. Initially referred to as “Yoro-in,” these facilities were designed to provide refuge for individuals unable to sustain their livelihoods due to advanced age, illness, or destitution, catering exclusively to elderly women at the time.

Subsequently, what were previously privately-run or religiously-affiliated institutions offering eldercare found formal recognition within the national framework, coinciding with the implementation of the Welfare Law in 1950, which prompted a transition from “Yoro-in” to the appellation of “Yoro-shisetsu” or elderly care facilities.

During the post-war era in Japan, these care homes emerged as gathering places for impoverished individuals lacking gainful employment and a dependable income. In the absence of a well-established social insurance system akin to contemporary arrangements, the majority of elderly care facility residents found themselves classified as recipients of meager welfare provisions, denoting their marginalized status as socially and economically disadvantaged individuals. The emergence of such facilities was widely viewed as a remedial measure to address concerns regarding vulnerable elderly individuals bereft of familial caregivers and financial resources.

Furthermore, the evolution of elderly care homes in Japan witnessed a definitive phase in 1963 with the enactment of the “Act on the Welfare of the Elderly,” coinciding with the gradual development of the country’s social insurance system. This legislation sought to commemorate the contributions of senior citizens to societal progress, while simultaneously affirming their deserving stature as revered individuals endowed with extensive knowledge and experience. Notably, it aimed to ensure the provision of a meaningful, wholesome, and serene existence, fostering the preservation of physical and mental well-being among the elderly. Thus, the fundamental principles embedded within the “Act on Social Welfare of the Elderly” emphasized not only the sustenance of elderly individuals’ health but also their active participation in social endeavors, instilling a sense of purpose in their lives.

To translate this vision into reality, elderly care facilities were subsequently divided into distinct classifications, signifying a nuanced approach to eldercare. The ensuing categorizations include the “Tokubetsu Yogo Rōjin Home” (special nursing home for the elderly), “Yogo Rōjin Home” (nursing home for the elderly), and “Keihi Rōjin Home” (low-cost elderly care home). This refined differentiation enables customized care and support, tailored to the specific needs and preferences of elderly residents, fostering a sense of community and belonging within these establishments.

The evolutionary trajectory of elderly care homes in Japan showcases a profound commitment to the well-being and dignity of the aging population. From its humble origins spearheaded by a devoted missionary to the establishment of an elaborate network of facilities, the country’s eldercare landscape has undoubtedly undergone a metamorphosis, reflecting its resolve to uphold the noble principles outlined in the “Act on the Welfare of the Elderly” and exemplifying a resilient societal commitment to its elderly citizens.

The Current State of Elderly Care and Nursing Facilities in Japan

Japan has one of the fastest-aging populations in the world, making elderly care and nursing facilities an essential aspect of its social welfare system. The country has made significant progress in providing care for its elderly population, but it still faces various challenges and opportunities to improve the quality and accessibility of its services. For example, Japan needs to address the gap between life and healthy life expectancy, reduce the high costs of living in assisted living facilities, increase the human and financial resources for care, and make the system more user-friendly and responsive to the diverse needs of older people.

One key aspect of Japan’s elderly care system is the long-term care insurance program. Launched in 2000, the program is available to all citizens aged 40 and above and provides a range of services to individuals aged 65 and older who require care or support. The program emphasizes both home-based services, such as home-visit care and day-care services, and facility-based services, including special nursing homes and private nursing homes.

Long-term Care Insurance System of Japan, MHLW

Currently, home-based services account for the majority of elderly care in Japan, reflecting the government’s focus on promoting in-home care. However, these services face several challenges, including a shortage of services that adequately address the diverse needs of elderly individuals, difficulties in matching users with appropriate care staff, and the increased burden on users and their families.

To overcome these challenges, the elderly care sector in Japan is exploring various strategies. One such approach is the implementation and utilization of cutting-edge technology, such as artificial intelligence (AI) and the Internet of Things (IoT). By incorporating these technologies into care services, providers can enhance efficiency, monitor users’ conditions more effectively, and deliver more personalized care. For instance, care robots and sensors can help track users’ needs and ensure the delivery of timely and appropriate assistance.

Another essential aspect of improving elderly care in Japan is the development and utilization of human resources. The sector must focus on enhancing the education and training of care staff, as well as providing better career paths and working conditions. Moreover, actively recruiting diverse talent, such as women, seniors, and foreign workers, and supporting flexible work styles can help address the labor shortage and foster a more inclusive care environment.

Finally, organizational reform and collaboration play a crucial role in enhancing the care services in Japan. By reviewing and improving the structure and operations of care service providers, the sector can bolster its management and field capabilities. Additionally, fostering collaboration between different businesses, local communities, and care providers can help build a more robust and integrated network of care services.

The elderly care sector in Japan is served by various major companies, which come from diverse fields such as medical, welfare, and food, and offer a wide range of services and brands. Some of these prominent service providers include the following:

  1. Benesse Holdings, Inc. (9783): Well-known for its distance learning programs like “Shinken Zemi.” Expanded into the field of elderly care homes, offering a wide range of plans tailored to the needs of seniors, including those who require rehabilitation, individuals with dementia, couples, and even a zero initial payment plan. They operate facilities nationwide and have the largest number of paid elderly care homes.
  2. Kewpie Corp. (2809): Leading producer of mayonnaise and dressings in Japan. Focuses on developing and researching specialized meals for caregiving, catering to individuals with varying oral conditions and jaw strength. Offers a wide variety of dishes, ranging from traditional Japanese cuisine like “ojiya” to Western dishes like meatloaf, ensuring an enjoyable dining experience for seniors in need of caregiving meals.
  3. Zuiko Corp. (6279): Manufacturer of hygiene products, including diapers. Holds the top market share for manufacturing machines for both infant diapers and sanitary napkins. With the increasing aging population, they have expanded into producing machines for adult diapers, establishing themselves as a player in the caregiving industry.
  4. Watami Co., Ltd. (7522): Operates izakaya-style restaurants such as “Watami” domestically and internationally. Leveraging their expertise in managing food establishments, they operate a meal delivery service specifically for seniors. Their daily changing bento boxes, crafted with health considerations, have gained trust and popularity, ensuring seniors receive nutritious meals.
Kewpie “Universal Design Food”

These care service providers in Japan demonstrate the diverse range of services available to cater to the growing elderly population, with each company bringing unique expertise and resources from their respective fields. Integrating this information into the previous response will help provide a more comprehensive understanding of the current state of elderly care and nursing facilities in Japan.

Growth Opportunities in Elderly Care and Nursing Facilities

As the demand for elderly care and nursing facilities continues to grow due to Japan’s aging population and the increasing prevalence of dementia, various growth opportunities have emerged in this sector. In particular, there is a growing demand for home care and community-based care services, which aim to provide comprehensive and multifunctional care that bridges the gap between home-based and facility-based services. These innovative services have gained significant attention as they cater to the changing needs of the aging population.

Moreover, there is an increasing demand for care that respects the dignity and individuality of the elderly, emphasizing life-centered and empowering care models. Practices like unit care and person-centered care have been gaining traction, as they require specialized knowledge and skills in areas such as facility service planning and care management. This has made education and human resource development essential areas of focus in the elderly care sector.

Technological innovations, such as robotics and the Internet of Things (IoT), and new care models are shaping the future of elderly care. Digital technologies like robots and IoT can not only assist the elderly with daily activities, health management, and communication but also help reduce the burden on caregivers and improve efficiency. Additionally, data analysis techniques using artificial intelligence (AI) and big data can help better understand the needs and preferences of the elderly and provide optimal care plans and services.

New care models like cohort-based nursing facilities aim to improve the sense of belonging and self-esteem among the elderly by allowing them to live with peers who share similar interests and values. Another innovative model is the sharing economy, which encourages the elderly to share their possessions and skills with others, providing them with opportunities for income and social engagement.

Investors and startups should focus on areas such as dementia care and home care services, which are gaining importance due to the aging population and the social responsibilities associated with addressing these issues. Dementia care includes not only facility operations such as group homes and day services but also technology development and service provision for dementia prevention, diagnosis, treatment, and support. Examples of this include AI and IoT-based dementia prevention, detection, and management systems, as well as communication tools that connect dementia patients with their families and caregivers.

With the increasing demand for home care services due to the COVID-19 pandemic, there is a need for technology development and service provision that supports this area. This includes telemedicine and telehealth systems that facilitate medical and caregiving collaboration, as well as wearable devices and sensors that help manage the health and well-being of the elderly.

Finally, addressing the severe labor shortage in the caregiving industry is crucial. This involves not only recruiting, educating, and retaining caregiving staff but also developing technologies and services that reduce the workload and improve efficiency for caregivers. Examples include AI and robotics-assisted caregiving support, such as strength-enhancing suits and wheelchair robots that assist with the physical aspects of caregiving, and AI-powered caregiving apps that help manage and analyze data related to the health and well-being of the elderly.

Navigating the Aging Wave

In summary, the escalating aging population in Japan presents lucrative opportunities for expansion and innovation in sectors dedicated to elderly care and nursing homes. The rise in the senior populace propels a mounting demand for specialized support and care, crafting an attractive marketplace for investors. The progress in the development of elderly care facilities in Japan manifests a profound commitment to the health and dignity of the senior citizens, mirroring a robust societal pledge to its aging population.

Despite Japan’s strides in catering to its elderly population’s needs, there exist hurdles as well as prospects to augment the quality and reach of these services. The sector is currently contemplating strategies such as the integration of pioneering technology like AI and IoT, amplification of human resources via education and training, and promoting cooperation between various businesses and care providers. These initiatives are designed to boost efficiency, customize care, and establish a stronger and more cohesive network of care services.

Investors and emerging businesses should focus on growth possibilities in domains like dementia care and home care services. Technological advancements, encompassing robotics, IoT, AI, and big data analytics, are shaping the future landscape of elderly care, promising optimal care plans and services. Furthermore, the emergence of new care models prioritizing individuality and dignity, such as cohort-based nursing facilities and the sharing economy, are steadily gaining momentum.

By acknowledging and seizing the potential inherent in Japan’s elderly care sector, investors can make a substantial impact on the wellness of the aging population while also reaping significant financial benefits. The amalgamation of a swiftly aging populace, an escalating demand for specialized care, and the incorporation of innovative technologies positions Japan’s elderly care sector as a distinctive investment opportunity, offering enduring prospects for growth and prosperity.


Japan Directory of Elderly-Care Companies by JETRO

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