Senior Home Healthcare in China

Pioneers in China’s senior home healthcare industry include American companies Home Instead and Right at Home, along with homegrown PineTree.  Each offers the Chinese market a compelling value proposition:  the cost-effective delivery of senior care in the homes of elderly Chinese.  Each of these players has a similar business model, with varying degrees of care.  This can range from companionship to high acuity care.  All agree that home-based solutions offer more cost effective care that is preferred by the elderly.  Recently, I connected with about his Shanghai start-up CCX Homecare.  Leong’s company offers “professional rehab therapy, nursing, and mental health services to clients in their own home.”

CCX could be considered the newest foreign entrant to China’s homecare market.  They completed registration in February of 2012, and currently employ three full time health workers, with another two coming on line next month.  The primary thrust of their business is home-based healthcare; however, like what with Right at Home mentioned in a previous discussion, CCX is also open to partnering with established senior housing operators who need trained healthcare workers in their new facilities.  CCX is also focused on partnering with community centers in Shanghai where senior care during the day augments other non-healthcare services available to participants.

Leong mentioned that thus far, their labor pool has suffered because of an inability to compete with hospital wages; consequently, he has found new graduates and retired nursing professionals to be a good source of potential employees.  As he put it, “We are quite happy to concentrate on building our team using a mixture of experienced retired professionals who believe in our mission and methods, and a group of young professionals who ha[ve] an open attitude towards learning and developing themselves.”

CCX is building on Leong’s experience in Australia.  He sees the model in China being roughly 80% similar to what worked there, with the balance needing to be localized.  The biggest challenge?  Culture.  Leong shared, “In China, in spite of the changes brought about by social, economic and political upheavals in the last half century, there is still a high prevalence of co-residence between family members and the sharing of care roles.  An elder within a family who is in need of care is at the same time also providing care … That is why a domestic maid fits better as a solution, because the maid can switch between multiple roles, preserving respect for the position of each family member.”

I was curious if Leong saw the live-in as a partner or competitor for his business?  One of the issues that has presented itself in Singapore’s in-home care model is that families try to get their live-ins to learn from home healthcare nurses.  The process is started when a doctor tells the family they must get a trained medical nurse, which the family reluctantly does because of the costs.  The medical condition that brought the nurse into the home is usually resolved, during which time the live-in is shadowing the nurse, trying to learn what the nurse does.  Once the patient stabilizes, the family will term the in-home nurse’s care, and ask the live-in to step in and provide the same care.  Inevitably, the patient’s care suffers, the doctor is called back in, and the process starts over.  Is something like this possible in China as well?

Leong offered, “I do believe having home live-in helpers who are untrained in the needs of elderly make matters worse.  It entrenches unhealthy habits, brings on physical and mental health issues that shouldn’t occur, and leads to high incidents of hospital stays or the need to move to nursing homes.  It is up to services like mine to put out the message that better solutions exist.”  What I found interesting was that CCX’s business model anticipates having to somehow partner with live-ins, and that Leong is entertaining ways to profit from this dynamic:  “that’s not to say people who commonly work as domestic workers can’t be trained with basic relevant skills to make a positive contribution to the situation.  We do believe in the positive role domestic workers because they are an integral part of the social structure.  We are working with NGOs here to develop training programs much more suited to the workers and prospective clients.”

In past discussions about home healthcare in China, some American and European experts I have spoken with have pushed back against the idea that the model will be successful in China.  Their criticism is that the home healthcare model in developed economies largely came about due to changes in reimbursement from private and public payers.  This dynamic does not yet exist in China, and as such, the home healthcare ecosystem will not evolve in China as it has in America and Western Europe.  I find that explanation unsatisfactory in large part because the reason why the home healthcare market may have been triggered by changes in payers, but it was sustained because the delivery of healthcare in the home is more cost effective, regardless of who is paying.

Leong added some additional color and context to this that I appreciated:  “In Australia, senior home care developed out of institutional health services expanding into homes.  So our home care workforce is very much aligned to assistants-in-nursing (AINs) in hospitals and aged care facilities.  This ‘outside-in’ development I believe will be turned on its head in China.  Senior home care will emerge out of domestic household (jiazheng) service rather than health … China will reach the same end-point as the West of having a skilled senior home care service workforce and industry, but from a ‘inside-out’ direction.  The challenge for Western companies will be how to position and immerse itself in this ‘inside-out’ flow as the market matures.”

I remain extremely bullish on home healthcare companies in China, and believe that their success will point towards several essential truths about how China will deal with its aging challenges.  First, it is a more cost effective solution that is deployed in people’s homes.  Second, the senior housing model in China will remain a niche market for some time, which while still being a large enough niche to be commercially exciting, will not deliver services to the bulk of China’s middle class.  Third, home healthcare in China will likely find it uses similar service models, enabling technologies and products, as does the country’s exploding primary care market.  This will mean that home healthcare companies in China that begin delivering senior care will, in time, be able to tap into other sources of revenue related to primary care.  Cumulatively, I believe as investors look for scale and profit, the home healthcare industry in China remains one of the most exciting ways to access the country’s senior care market.

Benjamin A. Shobert

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