Last week provided watchers of China’s senior home healthcare industry a treat. As part of Nebraska Governor Dave Heineman’s trade mission to China, Right at Home announced its China operations were expanding into four new cities: Chengdu, Wuhan, Hangzhou, and Changchun. Headed by Right at Home’s master franchise out of Beijing, Ms. Yao Li represents one of the industry’s early pioneers who has found a way to couple China’s massive social need for improved senior care with a scalable and profitable business. What is exciting about this announcement is, among other things, what it suggests Right at Home has been able to identify and implement in terms of best practices unique to their business model in China.
, Right at Home’s Vice President of International Operations, shared with me, “In China, we have gained a lot of confidence in our general business model and getting our labor model streamlined. Our corporate staff has been working closely over the last several months to train the China team on expansion alternatives and how to continue to adapt our models to China.” For those who may remember past discussions with Blake that have been published here, you will likely be impressed at how quickly the process is unfolding for Right at Home.
On this point, Blake added “this has been a very deliberate process … we anticipate formally opening in late summer or mid-fall. They have already implemented training plans.” Given Right at Home utilizes a franchise model, the Beijing master franchise is rounding out work on best practices, training caregivers, and overall execution of the business plan so franchisees can quickly get to scale. Their model relies on a combination of individual franchisees who have ownership interests, but who are supported by people in the Beijing office.
While exploring their expansion plans, I asked Blake what had been the biggest surprise. He added, “the support [for home healthcare] by the Chinese government – they clearly get it – they want to diversify the options available to seniors and have been very supportive of Yao Li and her team. The government wants to see this sort of model expand to all of China.” As we discussed last week, the home healthcare business model offers China’s government a compelling solution set: the government gets to allocate scarce capital to the most needy (the bottom 20%), while allowing market actors to deliver healthcare in the home’s of the middle-class elderly. Ultimately, this care will likely be augmented through a combination of public and private insurance reimbursement. Overall its emphasis is perceived by the Chinese government as more cost effective and more acceptable to elderly Chinese than business models revolving around real estate, many of which the Chinese government understands are not driven from the point of view of resolving long-term socially destabilizing forces related to aging. As Blake put it, “The Chinese government seems to be convinced that home healthcare will be an important part of the best way forward.”
As the home healthcare business in China continues to open, I see a handful of issues to watch. First is undoubtedly a market risk: seeing how the Ministry of Health views these models and whether it elects to develop analog service models. This is always a risk in China, but it could be particularly acute in a situation where the Central Government feels it has to act comprehensively to deal with burgeoning lack of access across the middle class (or, to the elderly parents of the country’s middle class). Second is a market opportunity: these early entrants are figuring out how to take their existing senior care model and deploy it into China. In figuring this out, they are also learning how to enter a Chinese family’s home, deliver care, and measure patient satisfaction. That is important to build their existing model out across the country. It also offers critical insights to home healthcare in general that could be deployed in the primary care space (as just one example). Regardless, a big CONGRATS to Right at Home for their announced expansion plans. Good news for them, the industry, and the families who will benefit from having access to these services.
Benjamin Shobert
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