China Beckons to US Skilled Nursing, Long-Term Care Operators

Amid difficult trends at home, a handful of U.S. long-term care operators have looked to Asia as their next potential frontier – and while their strategies differ, they all believe in the region’s potential.

“We really like the demographic trends for senior living in Asia,” Nate McLemore, managing director for international health care at developer and operator Columbia Pacific Management, told Skilled Nursing News.

The Seattle-based firm first entered the marketplace with hospitals before opening three senior living facilities in China — two in Shanghai and one in Beijing — in the beginning of the decade. Columbia Pacific’s model sits somewhere between assisted living and skilled nursing, with around-the-clock nursing care and between 85 to 110 beds.

Despite the pressing need for senior care services in China, with 149 million people aged 65 and older in 2017 and similar demographic trends as in the U.S., the model didn’t quite catch on at first.

“People are used to paying for real estate or hard goods or luxury goods,” McLemore said. “Getting people to pay a premium price for services takes some education for what the value of that is. We deliberately kept our price point high because we wanted to make sure we have the right level of care for the seniors that we’re seeking to move into our buildings.”

Columbia Pacific tweaked its marketing message to focus on that value and generally explain the concept of senior living to Chinese consumers. The operator also got a boost from general rising awareness of the senior housing industry among the general public, and McLemore reports that the buildings are currently at least 90% full.

“I think the market understanding of what senior living is has really changed drastically in that period of time,” he said. “Like many things in China, when something changes, it changes very fast.”

Genesis’s hospital model

National skilled nursing chain Genesis Healthcare (NYSE: GEN) took a different tack when expanding into the Asia market earlier this year.

Three years after the Kennett Square, Pa.-based firm opened its first “Vitality Center” in Zengcheng, Genesis sold 51% of its Chinese subsidiary to a local operator in order to more easily navigate the local regulatory process as it prepares to expand. Riswein Health Industry Investment, Genesis’s Chinese partner, will invest $30 million in the new joint venture to start building a network of health “ecosystems” — acute care rehab hospitals that work with other local providers to create a kind of home-brewed care continuum.

Like McLemore, Genesis CEO George Hager framed his company’s Asia push as a response to irresistible demographic trends.

“Even a small percentage of that, [with] a growing middle class, is a significant opportunity, supplemented with a developing private health insurance market that supplements the government system,” Hager told SNN back in May.

But Genesis deliberately chose the hospital model over American-style senior housing and care in to more closely match the kinds of settings that average Chinese citizens recognize.

“Today we’re looking at developing proof of concept around those two ecosystems, and that will be the basis for generating or procuring the capital we will need to more aggressively expand the model,” he said.

The dominance of acute-care hospitals created problems for Columbia Pacific when hiring and training new staffers, who were far more accustomed to a faster-paced, more transactional health care experience.

“They’re all about processing volumes of patients, and you take that same nurse and transport him or her into a 100-bed senior living facility, where it’s really about having a bedside manner, thinking critically and diagnosing a patient, what their needs might be — it’s a really different way of working,” McLemore said. “So we’ve had to spend a lot of time and resources in also hiring the right people and putting in training programs to kind of bring them up to a standard of care that we’re comfortable with providing.”

India ahead

After taking a multi-year break from more development in China, Columbia Pacific plans to open three new facilities in the country by the end of 2019, essentially doubling its size. The company also has its sights set on rapid growth in India after buying the four-building Serene Senior Care portfolio in March 2017. At the time, Columbia Pacific projected that it would boost Serene’s unit count from 735 to 5,000 by 2022 through the construction of new communities.

The company’s India model consists largely of independent living units “touching on assisted,” according to McLemore. As in China, the company’s strategy was designed to tap into local cultural trends: Because the current generation of Indian seniors saw their wealth grow through the ownership of real estate, Columbia Pacific will experiment with a buy-in continuing care retirement community (CCRC) model going forward.

“It’s intellectually interesting to say: What are the best elements that we can take from the United States, but then modify them to meet the specific needs and interests of these different countries?” McLemore said.

Written by Alex Spanko