Seattle-based company introduces first foreign-owned assisted-living facility to China’s one-child generation
- By: Angelina Chapin
- From: Business without Borders
- Date: Monday November 21st, 2011
Serena Xie remembers the earliest sign of her grandmother’s Alzheimer’s: a blank stare. She was visiting China in 2005 after hearing from her family that her grandmother was becoming forgetful. “I didn’t really know if she recognized me or not,” says Xie on the phone from Shanghai. “That was very sad.”
Modern China may not be able to accommodate traditional ways, such as elder care being a familial responsibility Photo: Justin Guariglia
The 36-year-old worked at Emeritus Corp., a senior care facilities company based in Seattle, and encouraged her mother in China to seek professional care. Her family looked at nursing homes but found the Chinese options disheartening. Most were cramped, consisting of four to six people living in a 300-400 square foot room with a ratio of one caretaker to every 20 seniors. There were other problems: “When you go in there it’s not clean,” says Xie. “These places are very institutional looking. It’s just horrible.”
So her family resigned themselves — like most Chinese families do — to taking care of their grandmother (she passed away in 2007). Luckily for Xie’s mother, she has four siblings who shared the responsibility, but Xie couldn’t help thinking of her own situation as an only child who lives in the United States. How would she care for her parents in the same situation?
The question is on the mind of an entire generation of young people born after 1979, the year the Chinese government instituted the one-child only policy. Culturally, caring for seniors is a familial obligation, but the realities of modern China make this difficult. The conundrum presents an opportunity that one company is taking advantage of. Next May, Emeritus will open Cascade Healthcare in Shanghai, a 100-bed assisted living facility that will help seniors with the day-to-day such as bathing and taking medication, as well as providing care for dementia conditions such as Alzheimer’s. The venture is a partnership with Seattle-based private equity firm Columbia Pacific Advisors and will be the first foreign-owned senior’s home in China. Columbia Pacific has been building and operating hospitals in Asia under a related company, Columbia Asia, since 1994.
Emeritus, which runs 485 assisted living communities across 44 states, and Columbia Pacific are pouring $5 million into renovating a hotel in Shanghai for the facility and is hoping to pioneer a very profitable trend. China’s 65-and-older population is expected to grow to 280 million over the next 10 years. According to Dan Baty, chairman of Emeritus (and a principal investor in Columbia Pacific), Chinese officials have declared the need for about 3.4 million private beds for seniors during the next five years.
Though there are nursing homes in China, they differ drastically from their Western counterparts. In Shanghai alone, Xie says there are 300 facilities, most of which are government subsidized not-for-profits (there are only a handful of privately owned homes in China, many of which do not offer any eldercare services). Until recently, there has been little impetus to pour resources into eldercare facilities, but the norm of three generations living under one roof is becoming less common culturally, making room for third-party care. Plus, people’s incomes are growing because of a healthy economy, enabling them to pay for services they may not be able to manage on their own while working.
In June 2010, Emeritus sent Xie, who was working as a financial analyst for the company, to Beijing to do market research. She visited over 30 facilities in the span of a month and what she found confirmed her parents’ experience and then some. “To be honest, Chinese people are terrible at providing service,” she says. “I would say there is no quality of care, and no standard of care in these facilities.” This was shocking for Xie, coming from a company that takes quality very seriously. The average ratio at Emeritus is one caregiver for every eight residents.
Cascade Healthcare plans to charge $2,000 to $3,000 per month for seniors, even though the annual average income in China last year was $7,600. Xie, who is managing director of Cascade, isn’t concerned about the fee. She says they are targeting the upper class in a city with a high cost of living, and have customized the facility to reflect Chinese culture. Though she says certain Western elements are very appealing — English names, design, and hospitality— some cultural elements can’t be compromised. Food, for example. Turkey sandwiches will be replaced by Wonton soup. Traditional Chinese medicine will be offered. “We couldn’t just bring the Emeritus model without adjustments,” she says. “We needed to change things based on the habits of Chinese seniors.”
A team of three — Xie included — are in Shanghai heading up the operation. Xie says the fact that she and the CEO of Cascade are Chinese has made the process easier, although even she found the licensing process confusing. Her advice for companies looking to expand into China is to respect the culture, hire someone who speaks Chinese and be patient with regulatory documents, which are often in need of updating. “To keep up with how fast China’s grown in the last 10 years, everything needs to catch up. It will get there,” she says.
Xie is being patient herself about filling the rooms of the new facility. There is currently nobody signed up, but she has no doubt families will be willing to pay once they see the facility and learn what it has to offer. “My grandmother on my dad’s side is 94 years old,” she says. “We’re already talking amongst family that maybe she’ll be our first customer.”