Business Opportunities for India in Elder and Nursing Home Care

1
Business Opportunities forIndia in Elder and
Nursing Home Care

• Som Karamchetty, PHD, PE
• 10816 Terrier Court
• Columbia, MD 21044
• 410-740-5170, somk_at_comcast.net
• 2 May, 2002 to 9 February, 2003

2
First Word
This is not a business plan. I am not planning a
business. I am not seeking financing. I am
identifying a business opportunity. I am
interested in a dialogue and discussion.
3
Synopsis

• High costs in Americas elder care can provide
  India with a good economic opportunity.
• US elders can be cared for in India.
• Example (Potential) Market
• Age 65 and older 10,000 in 2005 to 100,000 in
  2015
• (0.03 of US market in 2005)
• Business potential 200m (2005) 10,000 _at_
  20,000/year
• Age 85 and older 1,000 in 2005 to 1,500 in 2015
• (0.025 of US market in 2005)
• Business potential 25m (2005)1,000 _at_
  25,000/year
• Total Business potential 225m (in 2005)
• Projected to 2.0B (in 2015)

4
Outline

• Problem and Opportunity
• Market Potential Competition
• Costs and Investment
• List of Characteristics
• Indian Strengths and Business Prospects
• References

5
Problem Opportunity
Americas elder care is expensive and getting
beyond the reach of the average citizen and the
governments are looking for cheaper
alternatives. This situation provides an
opportunity for low cost countries like India to
provide these services consistent with the
expected quality.
6
Problem Magnitude and Opportunity (Continued)
Age 65 and older 25.5 million in 1980 to 31
million in 1990 Age 85 and older 2.2 million in
1980 to 3.0 million in 1990 Long term care in
1993 54.7 billion for nursing home care 20.8
billion for home care 75.5 billion total 33.5
billion is out of pocket spending 26 billion by
Medicaid it is expected that consumers may
search for less costly better quality care
alternatives ...
Source http//books.nap.edu/books/0309056330/html
/5.htmlpagetop
7
Problem Opportunity (Linear Projections 1)
Age 65 and older 38 million in 2005 Age 85 and
older 4.2 million in 2005 60 billion for
nursing home care in 2005 Capture opportunity
(maximum/potential) for India Age 65 and older
100,000 in 2005 Age 85 and older 10,000 in 2005
1.3 billion for nursing home care in 2005
1 Projections by Som Karamchetty of data from
http//books.nap.edu/books/0309056330/html/5.html
pagetop
8
Assisted Living and Nursing Home Care

• Definitions
• Assisted living services such as meals, health
  monitoring, and help with daily activities,
  provided in a special residential setting other
  than ones own home, and
• Care in a nursing home.

9
The Service Market
Average nursing home cost in the USA is 60,000
to 80,000 annually. Average nursing home stay is
2.5 years.
Another estimate Costs range from less than
1,800 a month to 3,200 or more a month.
(Source 12. http//www.aahsa.org/public/al.htm)
10
Market Segmentation
Not in any Market
Potential Market for India
Affordable Fraction
US Based Market
0
50
25
100
Affordability (K per year)
11
High Costs in the US Present Alternative Business
Opportunities
Nursing home care is expensive. The average cost
is more than 50,000 a year. (could be
60K-80K) Medicare covers only short periods of
skilled nursing home care after a hospital
stay A few have private long-term care
insurance. Almost a third pay all the costs out
of their own pockets. Almost 70 percent receive
help from Medicaid, the government health care
safety net program for lower-income people or
those impoverished by high medical expenses
If Indian facilities charge 20,000 per year,
there will be a four to fivefold advantage.
Source http//www.aarp.org/confacts/health/med
icaidnurse.html
12
Ingredients of a Successful Elder Care Industry
13
Ingredients of a Successful Elder Care Industry

• Good Nursing Care
• Good Food and Nutrition
• Comfortable Bed and Living
• Proper Medical Care
• Cordial Reception and Attention
• Adequate Recreation, and Activities
• Appropriate Leisure Activities
• Comfortable and Assuring Environment
• Excellent Sanitation
• Relevant Reading and Entertainment Facilities
• Adequate Safety, and Security
• Periodic Access to Relatives and Friends
• Communications

14
Competitors 1

• Caribbean Nations
• Southeast Asian nations
• Southern European Nations
• South American Nations

1 US is not considered a competitor as this
discussion is about that slice of the US market,
which the US industry does not cater to.
15
Market Advantages for India

• Good Nursing Care ?
• Good Food and Nutrition ?
• Comfortable Bed and Living ?
• Proper Medical Care ?
• Cordial Reception and Attention ?
• Adequate Recreation, and Activities ?
• Appropriate Leisure Activities ?
• Comfortable and Assuring Environment ?
• Excellent Sanitation ?
• Relevant Reading and Entertainment Facilities
  ?
• Adequate Safety, and Security ?
• Periodic Access to Relatives and Friends ?
• Communications ?
• ? Highly likely ? Need to be developed ?
  disadvantage

16
Greatest Barrier(Show Stopper)
Culture. General US population has no comfort
feeling in a facility in India or other
developing country. India and other countries are
not known for elder care and nursing facilities.
The psychological gap is huge.
The success of this proposal depends on steps to
overcoming that psychological gap.
A big challenge!
17
Analogy with Information Technology Business in
India
India took advantage of its low cost labor in the
early days of the IT business. In the 1990s,
Indian IT businesses focused on Quality IT
services, while keeping the costs low. A similar
analogy could apply to the Elder care
sector. Build a quality elder care infrastructure
and provide competitive service. Medical,
healthcare, and pharmaceutical professionals
of Indian origin in the US already provide
quality services.
18
Typical Capital Costs of Nursing Home
Building costs for 1,000 units are 10 million in
the USA Building costs for similar units in India
are 5 million.
Source http//research.aarp.org/il/fs62r_assisted
.html
19
Typical Locations for Nursing Homes with Market
Appeal
Beach Resorts (e.g. Goa, Kerala, Orissa,
Andhra) Hill Stations (e.g. Simla, Darjeeling,
Himachal, Kodaikanal)
Source http//research.aarp.org/il/fs62r_assisted
.html
20
Let us list quality features

• Health Care
• Nursing care
• Individual Personal Care
• Quality Professionals
• Environment
• Good meals
• Comfort
• Safety
• Security
• Sanitation
• Activities
• Recreation
• Happy living
• Entertainment

• Special Care
• Good facilities
• Transportation
• Emergencies
• Visitors
• Communications
• Socializing
• Religious facilities
• Accessibility
• Choice
• Standards Licensing
• Certification Regulations
• Testimonials
• Costs Contracts

21
Health Care
Failing health is the most important obstacle to
self care Appropriate attention to health care
issues of elders should be the main
focus. Suffering resulting from illness and
injury should be eliminated or reduced to a
minimum.
22
Nursing Care
The elderly will require appropriate nursing care
so that their health and well being are
assured. Illness, sickness, and feeling of pain
should be attended to immediately and all the
time as the need arises.
23
Individual Personal Care
Elderly should get individual care and attention
7x24x365 They should be free to lead a chosen
life style with no unnecessary interference from
care-givers.
24
Quality Professionals

• Highly competent and caring professionals needed
• Doctors
• Psychologists
• Nurses
• Therapists
• Dietitians
• Chapels
• Cooks
• Sanitation workers
• Companions
• Activity coordinators
• Attendants

25
Environment
A healthy, and serene living environment is
key. The surroundings should be pleasant and
enjoyable. All aspects of the environment should
be balanced. The environment should be appealing
to all the senses. Temperature both indoors and
outdoors should be comfortable. The area should
be free of pollution. Annoyance from nonresidents
should be absent.
26
Meals
Appropriate, fresh, tasty, and nutritious meals
are essential to a healthy living for
elders. Cultural considerations are paramount in
meals service. Preparation and presentation of
meals is equally important.
27
Comfort
Comfort consists of physical, environmental,
mental, and spiritual well being.
28
Safety
Safety of the elderly is important in all
activities.
29
Security
Physical, financial, and mental security is
critical. Protection from unscrupulous people is
a requirement.
30
Sanitation
High level of sanitation in the living areas,
kitchen, dining, and surrounding environment is
essential. The absence of mosquitoes, flies,
bugs, and other insects is a must. Cleanliness is
the focus.
31
Activities
Elders look for an active life consistent with
their health and physical and mental
capabilities. Proper activities should be planned
and provided. Adequate supervision and assistance
should be provided. Safety of the people is an
important consideration.
32
Recreation

• A variety of recreational facilities should be
  available
• Athletics
• Games
• Indoor and outdoor activities
• The arts
• Library, music, theatre, movies, TV
• News and information

33
Happy living
Elders should be happy during their stay in these
facilities.
34
Entertainment
Appropriate and a variety entertainment options
should be available.
35
Special Care Units

• Elderly might have the need for special care some
  or all of
• the time.
• Special care should be available
• Medical
• Nursing
• Diet
• Physical therapy
• Mental therapy
• Spiritual caring

36
Transportation

• Mobility is essential to fulfilling a good
  living.
• Hence adequate and safe transportation is
  necessary.
• In the home
• Within the living complex
• Around the region where the elders live.

37
Emergencies

• Medical and fire and accident emergencies should
  be attended to urgently and professionally.
• Facilities should be available within or adjacent
  to the complex
• Fire station
• Ambulance
• Emergency hospital rooms
• Geriatric care hospitals.

38
Visitors (1 of 2)
Visits by family and friends is a key to the
success of this concept and model.

• There should be guest quarters for temporary
  visitors.
• Separate but within the same complex.
• Free guest accommodations for US relatives for
• temporary periods will be an attractive feature.

39
Visitors (2 of 2)
Innovative features should be tried. E.g. 1.
Families, and friends of residents should be
offered free annual board and lodging at the
guest houses. E.g. 2. Cooperative arrangements
with other Indian tourist resorts are likely to
make it attractive for the relatives to
visit their elderly relatives in the nursing
homes, while they themselves enjoy their annual
vacation (a win-win bonus).
40
Communications
Constant communications with friends, relatives,
and family back in the US is essential.

• Information technology can play an important role
  here.
• Internet
• Web
• email
• Telephone
• Post office

Optional continual webcam and web pages with the
elders and his/her familys welfare can be very
attractive features.
41
Remote Monitoring or Connecting Families
Network web, cam, internet, ...
42
Socializing
Opportunities for social interaction and
friendship are essential.
43
Religious facilities
The facilities should provide for religious
services of their chosen faith.
44
Accessibility
Elderly are likely to be physically
challenged. Facility and equipment design should
accommodate for accessibility. Elderly should be
able to choose to participate in any and all
activities.
45
Choice
There should be choices available so that the
elderly can have options from which they can
select what they wish to do. The facility should
not be run like an institution. The elderly
should not feel confined and subject to
discipline. A code of conduct should be set only
to avoid mutual interference.
46
Standards Licensing
Indian federal and state governments should
prescribe standards and make arrangements for
licensing facilities. Standards should be
strictly enforced. Guidance from the US
facilities will be very beneficial.
Just as Capability Maturity Models (CMM) in the
IT industry have set metrics and improved
quality, elder care maturity models and standards
should be developed and adhered to.
47
Certification and Regulation
Using the standards and metrics, facilities,
operators, and elder care professionals should be
certified and their professions regulated. Strict
implementation of regulations will be good for
the quality of the industry.
48
Testimonials
Awards and testimonials should be bestowed on
high quality elder care facilities, and
professionals.
49
Pricing and Costs

• Costs should be reasonable, affordable, and
  assured.
• The very rich can afford to pay the high costs
  in the US
• They are not the target for this concept
• The very poor are dependent on the US Federal and
  State
• governments
• They are not the target of this concept
• There is a large middle class who have modest
  savings
• and (perhaps a little) long term insurance.
• These people form the target market for this
  concept.
• Their dollars can give them more and longer
  care
• in this concept.
• They can lead a comfortable and restive life
  with this
• proposal.
• They can leave some property to their beloved
  by
• saving on long term health care costs.

50
Contracts

• A contract will assure the elderly
• Quality care service
• For a guaranteed duration (or life time)
• At a predefined cost and cost changes

51
Partnership with US Operators
It is advantageous and perhaps essential to
develop the elder care industry in partnership
with high quality US operators. See a list of
references later.
GE Capital Assurance Long Term Care Insurance
Plan can be a US partner. Facilities can be
developed in India with GE as a
partner. Marriott has many Assisted Living
facilities in the US. Marriott can be a guiding
partner in India. Such partnerships will help
establish high standards of service and ensure
business growth.
52
Now, we will look at Indian Strengths and
Business Prospects
53
Indian Strengths

• Quality and quantity of
• Medical professionals
• Nursing professionals
• Physical therapists
• Hospitality professionals
• Cooks
• Personal care service people
• Varied geographic locations
• Leisure activities and places
• IT communications professionals

54
Market Potential

• Age 65 and older 1 million in 2005 to 10
  million in 2015
• Age 85 and older 0.01 million in 2005 to 0.1
  million in 2015
• Indian share
• Age 65 and older 10,000 in 2005 to 100,000 in
  2015
• Age 85 and older 1,000 in 2005 to 1,500 in 2015
• At 20,000 per elder per year, age 65 market
• 200m (in 2005) to 2.0B (in 2015)
• 10 to 100 facilities
• At 25,000 per elder per year, age 85 market
  share
• 25m (in 2005) to 40m (in 2015)
• 1 or 2 2 or 3 facilities
• Total 225m (in 2005) 2.04B (in 2015)

Linear projection of elderly population assumed
from historic data.
55
Impact on Indian Economy

• Quality jobs created
• 50,000 (in 2005) to 400,000 (in 2015)
• Investment required
• 100m (for 2005) to 1B (for 2015)

56
Benefits

• Jobs
• Dollars
• Goodwill

57
Recommendations

• Study the market
• Understand the business and its demands
• Make joint development agreements
• Work with US governments and insurance industry
• Obtain Indian governmental sponsorship

58
Partnerships

• Develop US partnerships with
• Nursing and elder care industry
• Regulators
• Political groups
• Elder groups (AARP)
• Health care professionals
• Banking and investment groups
• Long term care insurance industry

59
Risks and Protections

• Risks are consistent with rewards
• Elder care is a delicate industry
• It deals with vulnerable people
• Care and ethical principles critical
• Health risk and reputation risk can be ruinous
  to industry
• Dedication of professionals is essential
• Great cultural and psychological challenges

60
Factor in Selecting an Assisted Living Development

• Services offered
• Convenience for family and friends
• Appearance of the residence
• Staff
• Only available choice
• Lower monthly fee
• Family member selected it
• Apartment selection
• Convenience to shopping and services
• Size of apartment
• Referral

Source 25. http//www.wiaffordableassistedliving.
org/operations/marketing.html
61
Final Word
When I mention this concept, peoples first
reaction will be negative. People question
Indias ability to attract US elders to care
facilities in India. People are skeptical about
the environment, and quality of care. Indians
should realize that many attractive business
opportunities will be lost unless these key
issues are addressed.
62
Reference Web sites (1 of 4)
1. http//www. Elderhostel.org 2.
http//www.assistedlivinginfo.com/ 3.
http//www.ccal.org/ 4. http//www.alfa.org/ 5.
http//www.ncal.org/ 6. http//www.assistedlivingo
nline.com/ 7. http//www.sunriseassistedliving.com
/ 8. http//www.assistedlivingforum.com/ 9.
http//www.atriacom.com/ 10. http//www.globalagor
a.com/AssistedLiving.htm 11. http//www.assistedli
vinggroup.com/ Good info source 12.
http//www.aahsa.org/public/al.htm 13.
http//www.aahsa.org/public/find.htm (search
info) 14. http//www.springstreet.com/seniors/?gat
eshousingpopupon
63
Reference Web sites (2 of 4)
15. http//www.aarp.org/confacts/health/medicaidnu
rse.html 16. http//cms.hhs.gov 17.
http//medicaid.aphsa.org/links.htm 18.
http//benefitscheckup.org 19. www.naela.org/naela
/questions.htm 20. www.hiaa.org/cons/guideltc.html
21. www.unitedseniorshealth.org/html/pubs,html 22
. http//www.medicare.gov/ 23. http//www.seniorre
source.com/finance.htm 24. http//books.nap.edu/bo
oks/0309056330/html/5.htmlpagetop
64
Reference Web sites (3 of 4)
25. http//www.econ.uconn.edu/faculty/ray.htm 26.
http//insurance.about.com/cs/articles2/ 27.
http//seniorhealth.about.com/library/eldercare/bl
retliv.htm 28. http//www.e-hospi.com/PersonalCare
/Managers.asp 29. http//seniorliving.about.com/cs
/nh_paying/ 30. http//www1.aal.org/LifeResources/
caregiving/ 31. http//www.seniorlivingsolutions.c
om/senior_housing_financing.htm 32.
http//www.calpers.ca.gov/whatsnew/press/2001/0710
a.htm 33. http//research.aarp.org/il/fs62r_assist
ed.html 34. http//www.corporate-ir.net/ireye/ir_s
ite.zhtml?tickerSRZscript345
65
Reference Web sites (4 of 4)
25. http//www.wiaffordableassistedliving.org/oper
ations/marketing.html 26. http//www.nic.org/servl
et/LayoutMgr?LAYOUTnicLHome 27.
http//www.sunriseassistedliving.com/corporate/bio
s.asp 28. http//www.business.com/directory/real_e
state_and_construction/finance_and_investments/rea
l_estate_investment_trusts_reits/healthcare/ 29.
http//www.retirement-resort.com/scale.htm 30.
http//www.aplaceformom.com/?SID100 31.
http//www.Alzheimers.org/ 32. http//www.alz.org/
33. http//www.ahaf.org/
66
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