If you’ve been a long time reader you will know that I am particularly focused on helping western senior care companies globalize their businesses. For the better part of the last 6 years, this has meant a heavy emphasis on opportunities in China, Hong Kong, Singapore and India; however, given the scope of the world’s aging challenges, these markets are not the only places senior care operators should be looking. Nearly a year ago I wrote over at Forbes,
“In each of the BRIC economies, a set of factors are coming together to create the opportunity for privately run senior living and home healthcare businesses: aging populations, an emerging middle class, lack of public sector solutions, and in a handful of cases government incentives designed to facilitate private investment. These factors are most developed in China, which since 2009 has been aggressively working to develop a senior living industry; however, countries such as Brazil, India, Malaysia, Mexico, the Philippines and Thailand are developing early care models that suggest how western care models might be localized for overseas markets. Most interesting are the handful of countries that are also pushing forward on key reforms designed to attract foreign direct investment (FDI) into senior care.”
This point was reinforced for me last week when I spent time in Mexico City visiting a couple of senior living platforms that are great examples of the opportunity in foreign markets for western operators that choose to be bullish and prioritize overseas expansion. I was particularly happy to see what Belmont Senior Living is up to in Mexico City. Their first foreign project will not be in China; rather, it will be in Mexico City and will be connected to a beautiful large private hospital Centro Médico ABC. Why Mexico? Yes, some of this is because Belmont’s Founder and CEO, Patricia Will, has deep family connections to Mexico City; however, their are other great reasons to be bullish about senior living in Mexico.
As Marco Alvarez with Salus Holdings shared with me in Mexico City, “Mexico is aging eight times faster than in the United States … we will take 20 years what it took Europe 200 years.” In addition, Mexico has very little in the way of regulatory challenges specific to senior living and so far at least, this has not been an impediment to investment. As Belmont shared with me last week, those regulations that do exist are more around general commercial real estate development and are not unique to healthcare or senior care in any way. Belmont’s first project features over 130 units spread across 10 floors. In addition, the building will feature 9 floors for a Hyatt hotel, likely to serve families who are staying in the area while a loved one is either in the attached hospital or staying at Belmont. The Belmont project also has a separate tower next to the assisted living facility that will feature medical specialist offices. The Belmont facility and the hospital are attached at the fourth level via a walkway, that connects specifically to the hospital’s neurology (stroke) unit. This is ideal from both a patient care and referral source point of view. The Belmont project is focused on domestic Mexicans, upper middle class (not wealthy necessarily from a price point of view). This is unique given most of the past investment and operator experience in Mexico has been focused on Americans and Canadians who move to Mexico during retirement and, most of the time, when they are still healthy and very active.
I am intentionally keeping my overall notes and impressions short for now, but suffice it to say that the Belmont project is an impressive first step into Mexico. What I remain convinced of, having seen senior living projects in nearly every major market in the world, is that the operational know-how to help foreign companies expand internationally is more essential than ever. As I wrote in Forbes,
“Four internal issues need to be addressed for these western providers to execute on the globalization of senior living. First, the management team needs the bandwidth and expertise to navigate within foreign markets. This is a new skillset for most western providers, and as such, many companies dual task an existing executive who has other responsibilities to also investigate international opportunities. This rarely leads to the type of robust in-depth analysis required to make a sound strategic decision, let alone build an executable plan.
Second, the company needs to honestly evaluate their risk tolerance for going overseas. Several American senior living companies, most notably Sunrise in Germany, have struggled to be successful overseas. This lesson has not been lost on other operators who wonder if others have not been successful, can they be?
Third, western senior living companies need to get beyond the short-to-mid term opportunities in their domestic markets. The American Baby Boomers represent another ten to fifteen years of growth for senior living companies, but after this, those groups that have built a real international strategy will be fundamentally more sound and able to deliver growth and profit to shareholders than their competitors who stayed purely focused on domestic opportunities.
Fourth, senior living companies need to carefully weigh the real trigger for senior living overseas; specifically whether lifestyle or needs-based solutions are what will open the door. In foreign markets, with relatively un-developed long term care insurance vehicles, inadequate public or private pensions, and newly minted middle classes, pure lifestyle solutions may not have the initial traction they had in western markets where these factors were more developed.”
Can you take your platform into a foreign market? Yes. How should you? That is where a serious strategic assessment of your company, your particular care and commercial model, and the realities of specific foreign markets, needs to be worked through.