Three Industry Experts Reflect on Challenges in China’s Senior Housing Market

The conference planners from the upcoming Ageing Asia Investment Forum 2012 in Singapore graciously connected me to three leading experts on global senior care issues who each will be participating in the conference.  Ageing Asia will feature some 250 of the “top decision makers in the business of ageing in Asia” and is designed to be a critical event for those active as investors and operators in Asia’s housing and healthcare for the region’s seniors.  As part of my preparation to attend the event, I was thankful to be connected with , the Director of Community Geriatrics at Changi General Hospital in Singapore, Dave Carlson the Administrator and CEO of Galeon in the United States, and Mabel Chau, the Vice Chairman at the Institute of Social Service Development and CEO of Mabel Chau Consultancy in Hong Kong.

The first question I asked each was the following:  what are the key lessons senior care operators who want to explore China can take away from other successful eldercare models currently operating in other parts of Asia?  Each of the three pointed back to what Dr. Lien called “preventative health measures.”  He expanded on this by adding that such a strategy would “include the development of good basic health care that can facilitate the early identification of chronic diseases.”  How does he think that can happen?  By developing “strategies to improve health literacy, patient engagement and personal responsibility.”

As a successful American operator, Carlson sees how even in the developed West, the relationship between education and prevention needs to further improve.  As he shared, not being as successful in this area as we will ultimately in the United States “has resulted in near crisis conditions nationally as we strive to meet the needs of more and more people with fewer public resources.”  Carlson believes the right approach for China will emphasize “empowering wellness and prevention services.”  I see this as one of the more obvious, yet potentially easily overlooked, areas as China’s government gets involved in senior care.  Thus far, if we look at China’s recent round of healthcare reforms, many of them have been very top-heavy, high profile and very tangible deliverables (number of new hospitals built, number of new people now covered by expanded insurance, expansion of drugs on the EDL, etc.).  The challenge that managing senior care costs presents for China is a more intangible, education based set of reforms and policy priorities that emphasize as Dr. Lien says, “a multi-disciplinary [approach that is] engaged with community and lay partners.”  Dr. Lien went on to acknowledge that how to pay for this sort of proactive, education based solution is part of the larger questions about how to fund China’s healthcare needs:  “There is ongoing debate as to whether this should be delivered in a fee for a service model or a more capitated risk pooled model (covered by insurance or government funding.”

My second question focused on what steps the Chinese government needs to take to ensure the eldercare market expands with as few problems as necessary.  Mabel Chau noted that there would be a new group of policies announced at the 11^th meeting of the NCPA, which will undoubtedly address this question.  Dr. Lien emphasized that the government’s policies need to focus on eldercare that is “economically viable, affordable, cost-effective and sustainable.”  If you think that’s another way of saying, “it’s all about not getting swept away in the aging tsunami China is about to face”, then you are not alone!  I found his additional comments on this worth quoting at length:

            “Most investors try to cash in on high-end high-yield investments that are expected to produce a good return of investment in a short time.  However, many of these investments require expensive capital outlay for infrastructure and are very heavily dependent on manpower and training that can deliver something that is of value and affordable.  Facilities that are mostly hospitality-based may be easier to configure as there are more industry benchmarks, though the concern is that many properties seem to target high net worth individuals whose personal assets may be highly leveraged in this current volatile economic climate.”

For obvious reasons, early entrants to China’s eldercare market have focused on the high end of the market:  it is agnostic as to the role of China’s government for reimbursement, land is expensive so an acceptable ROI requires high-end build-outs and clientele, it is an easy niche to identify and market to, and success with wealthy Chinese has traditionally served as a foundation for companies in other sectors to move down-stream.  Yet, for all of these reasons, the question remains whether a model perfected here can adequately inform and rationalize the necessary build-out to address the middle-class need for acceptable senior care solutions for their parents and grandparents.

My third question revolved around the ongoing challenge operators have identifying trained staff for their facilities and services.  Dr. Lien acknowledged that this remains an area of concern and areas for improvement included “atypical presentation of disease in older people and of geriatric syndromes such as immobility, impaired cognition, incontinence, impaired nutrition and frailty.”   Chau added that “collaboration with nursing schools and local vocational training bodies would be helpful.”  For operators early into their training programs, Chau added, “Incentive programs are a big part of human resource management in China and an effective appraisal as well as incentive program can help to retain good personnel.”

One of my last questions was what, if any role, China’s hospitals would need to play as connectors between elderly patients and potential care givers.  Carlson brought up how this works in America as one way that it might also work in China:  “in the U.S., hospital social workers are also known as ‘Discharge Planners.’  They are very knowledgeable about the various home and community-based services available to older adults as they transition from hospital to post-acute settings.”  In China, something similar like this already exists in an informal state.  Most hospitals have non-staff nurses and attendants who the family of an ill family member pays to stay with their loved one during rehabilitation or hospital care.  These people are not hospital employees, but they circulate within the hospital and are paid directly by the family.  Successful western eldercare operators – especially ones like Right At Home, Home Instead and Pinetree, will need to tap into the informal networking potential of educating and developing working relationships with these people.

My thanks go out to the three people who participated in this interview as well as the planners of the Ageing Asia Investment Forum 2012.  Registration information on the conference can be found here.  I hope to see you there!