If you had an empty plot of land on which to envision your senior living dream—no rules, no regulations, seemingly unlimited resources—what would you create?
Welcome to the Chinese senior housing market, where the staggering business potential is matched only by the society’s emerging middle class; where adult children have abandoned their villages in pursuit of metropolitan wealth and commerce, and must now save face by purchasing high quality care for the aging parents they left behind. And make no mistake, that’s high-end care.
“We’re going for perfection,” says David Green, director of conceptual planning and development for China Senior Care, a developer and operator based in Hangzhou, China. Green, who is also the retired CEO of Evergreen Retirement Community and pioneer of the household neighborhood concept for long-term care in the United States, says China knows it is behind on innovations with its limited LTC industry, despite a mushrooming population of seniors projected to reach 450 million by 2050. (Seniors are considered those 60 and older in China.)
This is why last December, the Chinese government announced a target of adding 3.4 million senior housing beds by 2015, and has been inviting foreign investors and operators into the market to leverage their unparalleled expertise. Likewise, large Chinese institutional investors want to pump billions of dollars into the retirement sector, but require partnerships with experienced operators to successfully execute the business.
“To the credit of China’s leadership, they’ve recognized this is coming on quickly, and that they need to create and broadly analyze what kind of options there may be to solve it,” says Bill Pettit, president and COO of the Seattle-based assisted living company Merrill Gardens, one of the foreign operators invited by China. “There’s no shortage of capital that I think China has access to in solving and creating solutions to senior housing. What there is a shortage of is probably experience, and that comes from the generational change of having seniors cared for in villages and by families.”
Sharing that expertise should come naturally to foreign operators, at least in these early stages, as the regulatory environment is nowhere near as comprehensive and binding as in the United States. This is why companies like Merrill Gardens and China Senior Care are reaching for the stars, planning projects that combine the best of what the West has to offer with the freedom of no rules to hold them back.
“The fact that there are no regulations doesn’t mean we’re trying to get around the intent of the regulations,” Green says, “because we want to do what the regulations in the United States expect to be done. Quality. Safety. But what happens with regulations is they’re interpreted differently in different judiciaries, and sometimes the way they’re written casts a net that is wider than necessary.”
As Green stresses, this could realistically be an incomparable learning experience for the United States, if a long-term view is employed—beyond the current and coming strife in Washington, beyond the cutbacks in Medicare and Medicaid. To truly change Western thinking and approaches to senior housing, “[China] can be the exact kind of opportunity that we need in the United States to do the extreme planning that’s necessary,” Green says.
CREATING THE MOLD
A lack of Chinese senior housing regulations today does not mean there will be this much freedom in the decades to come. The standards will eventually be set after operators succeed or fail, says Serena Xie, managing director of Emeritus Senior Living’s venture in China, Cascade Healthcare, which opens the country's first foreign-owned, for-profit senior care facility in Shanghai this spring. “It’s exciting, in a way, that hopefully we can help influence the regulators in this industry to design a system that incorporates the best practices from abroad,” Xie says.
But what should the delivered services look like? Xie says there is the opportunity to provide more medical care in China’s senior living communities, as opposed to the strict divide between U.S. assisted living and skilled nursing facilities.
Actually, such arbitrary designations should be meaningless in China, Green forecasts. “The line between [assisted living and skilled nursing] is inconsequential,” he says.