This is made doubly challenging because there are fewer potential caregivers to care for more dependent people, while at the same time a decreasing working population has to finance higher public expenditures on long-term care, the report says.

The study, entitled "Long Term Care Policies for Older Populations in New EU Member States and Croatia: Challenges and Opportunities", was presented in the Bulgarian capital Sofia this past week.

The study, covering Bulgaria, Croatia, Latvia and Poland, examines who provides the care and who pays for it.

"In looking at how other countries have approached this problem, it became clear to us that there really is no 'one size fits all' solution," explained Johannes Koettl, economist in the World Bank's Europe and Central Asia Human Development Sector.

The study suggests that lessons learned from OECD countries might be the most useful for the new EU member states and Croatia. One of the main findings of the report is that the financing and provision of long-term care services straddles the health and social sectors.

The study suggests that the care for elderly people should be redirected from the health system, in particular hospitals, to social services because care provided by the health sector may be inadequate and not cost-efficient.

The care should also be redirected from institutions to the community, which might provide assisted living services and home-based care.

Also recommended is coordination of the health and social services for the purpose of joint assessment of patients' needs.

In conclusion, the study suggests that the public sector should define its core competencies and buy those long-term care services from the private sector that are suitable for private sector production.