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 AHCA/NCAL President Parkinson Shares Lessons Learned from China Visit

In an exclusive interview, American Health Care Association/National Center for Assisted Living (AHCA/NCAL) President and Chief Executive Officer Mark Parkinson provides his thoughts from a recent four-day trip to China where he saw first-hand the development of new long term and post-acute care (LT/PAC) facilities there and took part in an industry conference.

Parkinson and Michael Wylie, Genesis HealthCare vice president of development, and chair of the AHCA board, spoke at the China Aid conference in Shanghai where some 50,000 attendees learned about the burgeoning seniors and LT/PAC marketplace in China.

Below, Parkinson details how the trip offered valuable lessons for U.S. providers, as well as information on what the prospects are for what amounts to a Chinese market in its infancy when it comes to facility-based care for the frail and elderly.

Provider: What are your impressions of the opportunities in China’s LT/PAC profession?

Parkinson: There is definitely opportunity for long term care providers. This is due to not just the enormity of the population and the aging of the population, but it is also a very challenging market because the vast majority of the people in China do not have the resources to afford private-pay long term care, and there is limited government funding of long term care.

So, there is opportunity there, but it is going to take folks who are very smart and strategic to figure out how to take advantage of it.

Provider: Describe your itinerary during your time in China.

Parkinson: The highlight for me was to tour actual LTC facilities in China. We toured two Genesis facilities that are operating and one Watermark facility that is under construction, and all three were very impressive. That was the primary part of the trip. In addition to that Michael [Wylie] and I both spoke at the China Aid conference in Shanghai. And, there, I was impressed by the intense interest that the Chinese business community has in what is happening in the U.S., and what has worked [in the LT/PAC industry] in the U.S. and what has not worked. 

Provider: What are the hallmarks of the Chinese LT/PAC experience to this point?

Parkinson: They are at their infancy in this sector in China. There are very few facilities anywhere in the country despite the population of 1.4 billion people. So, even topics that we would consider very basic are extremely interesting to them. Like understanding the difference between skilled nursing, assisted living, and independent living. Trying to get a handle on how large buildings should be, how many units they should be, how you staff them, how you finance them. They are basically interested in all of that because they are just getting started. I was told in the entire country there are only 300 of what you would consider to be nursing homes in a country of 1.4 billion people. Contrast that to the U.S. where we have 15,000.

Provider: Where do the elderly live now, if not in facilities?

Parkinson: They are at home, which is true everywhere in the world except in the U.S. and perhaps some of the more developed countries of Western Europe. There aren’t the resources to take care of people and build the facilities in most parts of the world, so they stay at home most of their lives if it works for them or not.

Provider: But this lack of resources is changing in China, right?

Parkinson: I think that there is an element of wealth in China that can afford LTC services, so as poor as most of the country is there are some very high-end communities that are being built and that will succeed. The challenge for developers is they that have to figure out where they can build those properties and succeed, and not get stuck in a bunch of areas where the people do not have the resources to use their buildings.

An example of a company doing well in China is Direct Supply [a top U.S.-based senior living products manufacturer], which has been very successful in tapping into the high-end and the medium-end market because they sell products that everybody needs regardless of how high-end their facilities may be or not.

Provider: What was the biggest surprise from your travel to China?

Parkinson: I thought there would be more development of LTC there than there is. There are fewer facilities under development than I thought there would be, and think this is by virtue of the lack of wealth in the general population, at least as of now, and the lack of commitment from provincial governments to offer funding in the same way we do with Medicare and Medicaid. That just does not exist in China.

Provider: You say there are immense challenges for a U.S. provider looking to China, what are some examples?

Parkinson: Well, you have to have the resources to last during the development phase of a project there. Any project from start to finish, even in the U.S., takes a few years. If you add the element of being in a foreign country and you are talking about China, then you are probably looking to add even more. This does not mean you have to be huge, but I don’t think it is a coincidence that most successful operators over there right now are large companies, like Watermark and Genesis, who have the financial backing to sustain the ramp-up time.

Provider: This is not the first time you have been to China?

Parkinson: It was my fourth time in China. In 1999, my wife and I took our children there because we wanted them to have that experience. I went back in 2007 as lieutenant governor [of Kansas] and then back in 2009 as governor, and then this most recent trip.

Provider: What is your lasting impression from this time versus the previous travels?

Parkinson: The impression all four times has been the same, which is there is just this relentless pace of activity and building that is unlike anything I have seen anywhere else in the world. There are skyscrapers being built everywhere, there are construction towers everywhere, activity everywhere, and it is like it has not stopped for the 20 years I have been going to China. So, it’s very impressive…what they have been able to do. But, it has not been without its costs. The pollution problem continues to get worse. Noticeably worse. It is hard to imagine unless you are there. Many days when in Shanghai and Beijing, you cannot see the tops of tall buildings because of pollution. But, the nonstop activity is astonishing.

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