China’s need for seniors housing comes down to a very simple equation: Take the massive country’s “one-child policy” and multiply that by its current population of people older than 60, which is believed to be more than 194 million. Swallow that number, then think about the country’s 60-and-older population hitting about 300 million by 2030 (the current total U.S. population), and rising to about 430 million by 2050.
Until just last year, two issues have held off theof U.S.-style seniors facilities in China to just a handful: First, Chinese residents have long believed it is proper to care for their parents and grandparents in the home. Second, Chinese hospitals tend toward extremely long stays for patients, as opposed to U.S. facilities, which discharge patients as soon as they are deemed well enough to leave. Both ideals basically discourage the need for special housing.
Now, however, statistics are hitting up against reality with the growing “4-2-1 Problem” in China, meaning that one child is frequently left to take care of two adult parents and four grandparents. Also, the growing middle class has better income ability to afford seniors facilities, where trusted care can be provided. Thus, the Chinese government has lifted restrictions on foreign companies looking to build seniors housing in its country, and has openly encouraged firms with meeting and conferences to provide education to create a new seniors housing industry.
Paul Gordon, an attorney with Hanson Bridgett, has helped create these links between China and U.S. seniors housing firms. He says the seniors housing industry in China matches about where the U.S. industry was back in 1985, when it was emerging from the era of strictly nursing homes. “All of a sudden, like there was then [in the U.S. in seniors housing], there’s now this huge interest in seniors in China,” he says. “I think people are very eager to get projects started.”
Companies such as Seattle-based Cascade Healthcare are leading the way. Cascade, the first foreign firm to be fully licensed in China, has already opened its first property, the 50,000-sq.-ft., 100-bed Shanghai Kaijan Huazhan Senior Care Service center in the Xuhui district of Shanghai. And through its affiliate Columbia Pacific, Cascade also recently partnered with Chinese developer Sino-Ocean Land to build another 110-bed facility in the Yizhuang area of Beijing.
Nate McLemore, the managing director of Columbia Pacific, says Cascade has a strong pipeline of more than $100 million in new seniors housing projects in China. “We’re a pretty enthusiastic investor in China,” he says. “We’re going at a measured pace trying to assess the best product mix for the market.”
Therein lies the rub: People in China aren’t used to the quality of seniors care promoted by the large U.S. firms, says Mark Spitalnik, president and CEO of China Senior Care. He’s been living in China as a healthcare consultant for more than a decade and heads up a seniors housing management firm, Cypress Garden, as well as the development of a 64-unit facility in Hangzhou with Andrew Oksner through a subsidiary firm, Global Senior Living Properties Ltd.
“When I started with seniors housing in China in 2007, most residents would not even consider it,” Spitalnik says. “Now I’ve heard that eight out of the top 10 seniors housing firms in the U.S. are working on different timeframes of projects in China.”
He says if the industry can get going in China, it will mimic the hotel industry there. Residents will trust the high-end U.S. brands that build five-star facilities, and Chinese firms will build the three-star facilities. “However, at this point the residents don’t know what the top brands are yet. Even the terminology is different, as the regulatory-set differences between assisted living, skilled nursing and independent living that exist in the States don’t exist in China,” he says.
Not only are the regulations different, but so are the skill-sets, and Spitalnik says it will be hard for U.S. firms to find workers. “In the States, they can easily go out and get registered nurses and pharmacists, but a Chinese RN is different than a U.S.-taught RN,” he says.
In general, says Gordon, the formation of a seniors industry in China will go slower than some firms U.S. like, and a few will drop out. “It can be frustrating. If you need anything to happen really fast, it won’t. It takes a long time to gain trust and understand local systems. It will be difficult to get to the finish line with” he says. “But nevertheless, it’s a tremendous market, even if we could just get 5 percent of the aging, income-qualified people to accept this product.”
Gordon notes that the first properties, like soldiers on the battlefield leading a charge, may bog down before the industry can take hold. McLemore admits that Cascade’s existing facility, now open about seven months, still isn’t full. “We are pleased with the growth in occupancy,” he says, without divulging the exact numbers of beds filled.
“I think the biggest challenge is that this is still a novelty, but we’re quickly seeing attitudes adjust,” McLemore says. “We welcome competitors to the country because it will help educate the market, and there’s room for a lot of capacity. We’re trying to put forth the attitude that this is one way to really honor an elderly relative with the right kind of care in the right kind of facility.”