SEATTLE--(BUSINESS WIRE)--Seattle-based Cascade Healthcare, a joint venture between Columbia Pacific Advisors and Emeritus Corp., has received approval from the Shanghai government to open the first foreign-owned, for-profit senior care facility in China. The action is the first step in opening a major new market for senior care facilities.
Construction will begin in October on the 100-bed facility, which is scheduled to open in May 2012.
“The need for senior care in China is staggering,” said Dan Baty, a principal investor in Columbia Pacific Advisors and Chairman of Emeritus (NYSE:ESC). “Over the next 10 years China’s senior population will grow to 280 million people according to its census, and there are virtually no senior care facilities. It has long been a tradition in China that the family cared for the elderly in the home, but the rapidly expanding economy dictates that people now need more help to provide for the elderly.”
Baty said Cascade Healthcare has been authorized to develop a prototype care facility in Shanghai in an existing building that the company is leasing. Cascade intends to spend nearly $5 million to remodel the building and create a skilled and rehab senior care facility similar to what Emeritus operates in the United States.
“This first project is a prototype in the truest sense of the word,” Baty said. “It will allow us to refine our facility design and staffing to meet the specific desires of the population that we are going to serve.”
Costs for seniors will be similar to those in the U.S. and will be based on the level of care needed. Payment will primarily come from family members rather than government programs or insurance.
While several other foreign-owned senior living companies have been exploring the Chinese market, the breakthrough to the first approval came in part because the Chinese government recognized Baty’s longstanding expertise in senior care and the quality of Cascade’s team on the ground.
Though Cascade Healthcare is a joint venture, Columbia Pacific will play a key role in developing the senior care facilities in China. Columbia Pacific has been building and operating hospitals in Asia under a related company, Columbia Asia, since 1994. This previous experience in the Asia healthcare market was critical in moving the project forward.
The development effort in China for the joint venture is headed by Serena Xie. Xie is a native of Shanghai who worked for Emeritus beginning in 2005 after graduating from the University of Illinois. When Baty began considering China, he turned to Xie for her local knowledge. She no longer works at Emeritus and now serves as Managing Director of Cascade Healthcare.
“Serena is a very bright young woman who still has her family in Shanghai,” Baty said. “In fact it was her family’s personal experience seeking senior care that convinced me that there is a market and a demand for our services.”
“My grandmother developed Alzheimer’s disease late in life and it became difficult for her children to provide adequate care for her in the home,” Xie said. “We searched the city to try to find a care option, but the government facilities didn’t provide an acceptable level of care. Seniors often have to wait for years to get into a senior living facility. There are many families like mine that need a quality care option.”
Currently, seniors who need additional care crowd into Shanghai’s tertiary hospitals, and those with money and government connections often stay in VIP wards, Xie said. But the volume of people who need care is straining the ability of government-run hospitals to adequately serve the elderly.
“Western-style senior living facilities can help relieve pressure on the overcrowded hospitals and provide a better living situation for the elderly who need care,” Xie said. “We expect to work very closely with the hospitals to identify our first residents.”
Xie said the need for facilities has accelerated in recent years as the economy has strengthened and as a result of the government policy of having only a single child.
“It used to be that big families could take care of their elderly members, but with fewer children who are expected to work harder, there often is not enough time. Our care center will provide families a better option,” she said.
The company has partnered with a prominent local real estate development firm and built a team in addition to Xie that includes:
- Christopher Alberti: Experienced in investing in China, Alberti previously worked for Colony Capital supervising its business in China and was a managing director at Morgan Stanley. A graduate of Williams College and Columbia Law School, he is Chairman of the Board of Western Academy of Beijing.
- Tony Zhan: Zhan has over 10 years of management experience in the health care and senior care industries and previously served as CEO at Beijing Intech Rehabilitation Hospital and Senior Housing. Zhan finished his clinical education in China and his MBA at Simon Fraser University in British Columbia, Canada.
“We have a great team, a clear idea of our product and an understanding of our market,” Baty said. “Our full attention is on bringing our service to market in China.”
Xie said that while she is confident there is demand for senior care and people who can afford it, staffing the centers with skilled staff will be a significant challenge.
“It takes a special person to provide care for the elderly,” Xie said. “We want to hire people who are well trained and committed to providing seniors a better life.”
About Columbia Pacific Advisors
Columbia Pacific Advisors, LLC is a registered investment advisor that along with its affiliates manages assets of approximately $1 billion in a variety of alternative investment strategies. Columbia Pacific Advisors LLC is headquartered in Seattle, Wash.
Emeritus Corp. is a national provider of senior living services. Emeritus is one of the largest and most experienced operators of freestanding assisted living communities located throughout the United States. These communities provide a residential housing alternative for senior citizens who need assistance with the activities of daily living, with an emphasis on personal care services, which provides support to the residents in the aging process. Emeritus currently operates 484 communities in 44 states representing capacity for approximately 43,200 units and approximately 50,400 residents. Our common stock is traded on the New York Stock Exchange under the symbol ESC, and our home page can be found on the Internet at www.emeritus.com.