Why China Needs What Philly HasJANUARY 11, 2017 Jane M. Von Bergen
In the United States, it's common for people with hip or knee replacements to move from a hospital to a rehab center or get therapy at home. Not so in China, which is why Genesis HealthCare Inc., in Kennett Square sees Mainland China as its new frontier. Genesis operates 500 nursing home and rehabilitation facilities in the U.S. and runs a rehabilitation services business, contracting to provide 21,000 full and part-time therapists at 1,700 sites.
"We're the first post-acute rehab company in Mainland China," said George V. Hager, Jr., the chief executive of Genesis, which employs 800 at its headquarters in Kennett Square and 90,000 around the nation. Genesis now operates about a dozen facilities in China.
"We were asked by a company based here in Philadelphia -- Orchestrall, led by Ian Hau," Hager said, during our Executive Q&A interview in Sunday's Philadelphia Inquirer. "They are trying to facilitate U.S. engagement in China." (Orchestrall is based in Conshohocken.)
Genesis' board was stunned by the idea, at first, but decided to take its PowerBack format to Asia. PowerBack centers are strictly rehab, with most of the patients coming from hospitals and leaving in less than 24 days.
"Over there it's called Spring of Power and the facility was built by the government," he said. "We just operate it."
"We operate a concept that is a vitality center, which is a combination of an outpatient clinic and a wellness center. And then, we also in a joint venture with a company, BangEr Orthopedic Hospital Group, operating the therapy units in their hospitals."
Von Bergen: It's unusual for Genesis to come in as an operator rather than an owner.
Hager: It's so difficult to own anything, especially any kind of bricks and mortar in China.
Von Bergen: Do they have a government payment system like Medicare or Medicaid?
Hager: They have a government payment system. The interesting thing about China is there is a growing middle class, so there is a lot more access to a true private pay. Also, there is a growing health insurance infrastructure in the country as well as the middle class grows. Government payment and private pay.
Von Bergen: What's the big difference in how they take care of people?
Hager: In China, the existence of this type of asset is very, very limited. Virtually all of their health care is in the hospital. They will have two and three- week lengths of stay and then, once the patient is discharged, very little supporting infrastructure back in the community. What we are trying to do is accelerate a way to create this type of infrastructure because their demographic issues are worse than ours. There are a lot more people and there's a lot less support.
Von Bergen: Other differences?
Hager: The scale is unbelievable. A big hospital here would be 400 or 500 beds. Hospitals there are 1,000 or 2,000 beds. Population density in these major cities is hard to comprehend. The issue is that everything happens in the hospital, and the concept of rehab is really not necessarily yet embraced. But I think the country is understanding the value of getting people out of the hospital back into the community with the right infrastructure.
I think there is a real opportunity for us to spread the intellectual property around health care that we have developed over our 30 years in business into a country that really is in desperate need for what we have here and they are embracing it.
Von Bergen: How so?
Hager: They've so embraced our idea to build their infrastructure that things aren't mired in bureaucratic and regulatory. Once the government supports you -- you need that, it's a foundational requirement -- but once they support you, you have much greater ability to build.