In early February, Senior Housing News connected with Granger Cobb, the president and chief executive officer of Seattle, Wash.-based Emeritus Senior Living. Prior to joining the company, Cobb was the president, CEO, and director of Summerville Senior Living, which was acquired by Emeritus in 2007. He assumed his current roles in January 2011 and has more than 20 years of senior management experience in the senior housing & care industry.
During this exclusive interview, Cobb talked about his company’s joint venture with Columbia Pacific Advisors to build a senior care facility in China, as well as the impact healthcare reform might play in the senior care industry and the possibility of partnering with home health and rehabilitation services in the future.
Senior Housing News: Last September, Emeritus announced that Cascade, its joint venture with Columbia Pacific Advisors, had obtained permission to open a senior care facility in China. Could you give an update as to how that venture is going?
Granger Cobb: It’s going really well. I think– it really is going to be, as far as we’re aware, the first-of-its-kind community in China. We’re going to be covering some new territory. It’s a 60-unit community of what in this country would fall between assisted living and skilled nursing. We’ve received the licenses, and Cascade leased a building that was originally built to house dignitaries for the Shanghai expo a few years ago, and is spending about $5 million to renovate it for assisted living. It’s expected to open in May of this year.
We’ve already hired the executive director, the directors of nursing and marketing, and a lot of the key positions already. The construction is well underway.
Emeritus is basically a consultant with Cascade, and we’re helping with policies, procedures, and training, and setting up their systems for managing the property. It’s a very exciting venture. In some respects, it’s going to be interesting to see who exactly shows up. We’re kind of thinking that it’s going to be a little bit of a hybrid between assisted living and skilled nursing.
SHN: In the United States, there are a lot of options in terms of assisted and independent living, retirement communities, and skilled nursing, but it seems that in China there’s basically one category: senior care. Do you think that will change?
GC: A lot of people have different opinions in terms of what’s the right product for China. We think this residential care kind of nursing service product is going to be one that really matches up with public demand.
It seems like labor is fairly inexpensive in China, so people will hire a caregiver to come in and help Mom or Dad if they just need some basic help, and they can do that in their own home, or do that in a separate apartment or something like that. But when they reach a level where they need a little more medical supervision, there really is nothing. There’s the hospital system, but it’s short-term, it’s not a long-term option. There really is nothing for that senior that needs a little more than just basic assistance. We think that where the niche ends up is the medical care component, together with a residential setting.
SHN: What are some of the challenges you’re facing expanding into China?
GC: Things have gone very well. Cascade received its license, and China is trying to figure it out, too, so it’s pretty flexible in terms of what you can do with this license.The construction is proceeding on time, we’ve been able to hire some of the key management positions, we’ve been getting great cooperating with licensing and the local hospitals. It really is a credit to Columbia that they’re wiling to take the risk and put up the development costs to try this out. We’re a 15% partner in the joint venture, so the majority of the venture is owned by Columbia Pacific.
SHN: Do you see your company looking to do similar ventures in other countries?
No. We have no plans now, so this is kind of our only far-flung adventure right now. Otherwise, we’re focused domestically.
SHN: Even if you’re not planning on any other projects right now, how large a role will foreign expansion play in your company in the next 10 years or so, and what’s the growth potential?
GC: I wouldn’t even hazard a guess. A lot of it depends on how well this first project goes and what we learn as we become a little more familiar with the market and the culture and the tendencies of the consumers. We could commit additional resources, but at this point in time, we’re really focused on just this single project, kind of as a pilot to see how well it goes and then we’ll evaluate and go from there.
SHN: Emeritus offers a lot of different elder care services, from assisted living to independent living to memory care to skilled nursing to rehab. Going forward, to you intend to continue this diverse product offering, and are you focusing on any particular sector?
GC: We’re going to continue to offer all of the products. I think the consumer likes the ability to transition between different settings as seamlessly as possible, so I think that will be important for the consumer as we go forward to have all of those offerings available, so we can meet their needs in whatever setting they choose.
Also, it’s going to become important as part of healthcare reform where hospital systems are looking to partner up to a greater extent with post-acute services like skilled nursing, assisted living, home care, rehab– the environment is changing to outcome-based in terms of reimbursement. They want to make sure their patients, when they’re discharged, stay healthy and aren’t readmitted for the same diagnoses a couple weeks later. Having the ability to provide all of those different service offerings, and provide options for the seniors in terms of which setting is most appropriate and which they prefer in terms of meeting their needs—that’s important.
SHN: A couple years ago, Emeritus began offering complimentary home visits. Are you planning on expanding your services to include at home care? What would this look like?
GC: We launched our home visit program as part of our “safely somewhere” philosophy. We have a commitment to making sure local seniors in and around our communities find the services and resources that they need in order to live comfortably, whether in an Emeritus community or not.
We’ll send one of our nurses, and they’ll do an assessment of the senior and oftentimes identify needs that were not being met. We then attempt to connect the senior and their family with resources to meet those needs. Sometimes it’s home health care, sometimes it’s equipment they could purchase that would help their daily life, or [sometimes it’s] setting them up with a meal service.
What we found is that oftentimes, becase we’ve made that contact, and we’ll follow up with these seniors every couple years, a significant portion of them decide to make a move into one of our communities. It’s a service that really benefits both parties: we establish a connection and a contact and a relationship that often pays off down the road when a senior is ready to make a move, and in the meantime, we usually help them coordinate local resources in a way that their needs can be met.
[On partnering with home health care] It makes a lot of sense to kind of marry the two. We’re still looking at both rehab and home health as opportunities, but the problem has been, there’s been some uncertainty lately around Medicare reimbursement in those areas, so we’ve slowed down how aggressively we’ve gone after trying to acquire those companies until we can see what the changing reimbursement does to the business model. We’re big believers that that has to be a part of our business going forward.
If we have a licensed home health agency that can fit in nicely with our home visit program, it probably offers even more options in terms of how we can benefit seniors at home. Generally [home health care is] more affordable to a senior—to a point, when they have someone come in for a few hours a day. But when it reaches a point where it’s eight or 10 hours a day, usually assisted living is a more affordable option.
SHN: The markets and cities in the U.S. are diverse and present their own challenges; are there any particular states or regions that appear more attractive other than the typical states such as California and Florida with high senior demographics?
GC: Usually those states with the high senior demographics are the places to be. We’re in 44 states, so we’re spread pretty much across the country. Our concentrations really mirror the concentrations of seniors. The states that tend to have a higher or growing senior demographic tend to be the ones that we’re in the most. Certainly if we want to be in a position to offer a range of services, such as independent living, assisted living, memory care, and skilled nursing, it’s easier to do that in areas where there’s enough of a senior market to be able to offer all those different services. If it’s too rural of a market, it won’t always work.
SHN: Are you still seeing challenges with seniors selling their homes to move into facilities? Do you expect the housing market to improve in 2012, and will it affect occupancy?
GC: I don’t think the housing market is going to get a lot better this year. There’s nothing that I’ve seen that indicates home prices are coming back any time soon. What may happen, though, is that the velocity of sales may increase a little bit as people kind of come to a new reality about the value of their house.
When housing prices first took the big drop, everyone kind of hunkered down and held onto their home because they thought it would come bouncing back in a year or two, but people have come to the realization that it may take a bit longer than that. People have readjusted their sights on what their home is worth, and that certainly will help. I really think for our business, though, probably the event that’s going to help trigger a real movement on occupancy is going to be consumer confidence. Seniors, when they’re uncertain or fearful about the future, in particular about their finances, tend to hunker down and do nothing. When they’re feeling a little more comfortable about that, and the outlook as improved, then they tend to be a little more wiling to make a move.
It’s very understandable if you think of our typical customer. They’ve seen the value of their home shrink, they’ve probably seen their portfolio shrink a little bit, most of their investments are not earning the kind of interest they did in the past. They’re fearful: ‘Am I gonna run out of money? Is it gonna keep going down? Is it gonna bounce back?’ I think when that consumer confidence picks up a little, and they start feeling better about the future, we’re gonna see stronger movement in occupancy. I don’t know if that will be this year or next year, but it will happen at some point; the supply-demand imbalance is building.
SHN: How does Emeritus’s new development pipeline on communities look? Anything you can share?
GC: We have one joint venture deal that we’re doing in NY, and maybe another in Ohio as well. But really, there’s still very little on the new development front. We’re kind of being cautious about that; so far we haven’t really geared up any significant development opportunities.