One fact predominates the nursing home industry in Santiago, Chile: There's not much competition.
Santiago's 6 million residents, about half the country's population, have access to only about 80 small nursing homes. Many are mom-and-pop ventures operating 10 to 20 beds in converted homes. Only a handful have more than 50 residents.
That amounts to about one nursing home bed for every 3,000 people, compared with one bed for every 153 people in the U.S.
Like many Latin Americans, Chileans generally care for the elderly in their homes, with the upper class hiring help. The dearth of facilities in Santiago reflects that culture of eldercare.
But the culture is changing. Chile's aging population and relatively high life expectancy make it a prime country to develop long-term-care facilities.
With a growing population of elderly and fewer young people to care for them, "I'm convinced that there will be the need for the same kinds of infrastructure we have (in the U.S.). We think that the time is right for (facility-based care) to catch on," says entrepreneur Alan Solomont, who, with his partner, Susan Bailis, is joining a small contingent of U.S. long-term-care developers venturing overseas.
Solomont and Bailis formed a company, Newton, Mass.-based SolomontBailis Ventures, to develop eldercare services in untapped markets last year. The Chilean venture is the company's first.
The entrepreneurs previously developed 60 nursing homes in the Northeast, which were acquired by Hackensack, N.J.-based Multicare Cos. in 1996. Kennett Square, Pa.-based Genesis Health Ventures took over operations in 1997.
Their project in the Chilean market will be a combination nursing home and assisted-living facility, with approximately 80 skilled beds and 30 assisted-living units. The project is estimated to cost $7 million to $8 million. So far, the pair has conducted two market studies, identified a likely parcel of land and found a local financial partner.
Other funding, they say, will come from their own pockets and an unnamed Chilean investor. They also will seek financing from the World Bank and private U.S. investors.
The estimated completion date is the first half of 2001, at the earliest.
"We want to export our experience and expertise to developing countries, at the same time Latinizing it to suit that culture and environment," Solomont says. If the venture is successful, he hopes to duplicate it elsewhere in Chile and in other Latin American countries.
Americans went abroad to crib ideas on eldercare from Scandinavia and other countries with more advanced systems, Solomont says. But now the maturing U.S. eldercare industry is in a position to export its knowledge.
A few U.S.-based long-term-care companies have made incursions into international territory, with varying success. Albuquerque-based Sun Healthcare Group claims the largest international portfolio, which includes 153 nursing homes in the U.K., 18 in Germany and 12 in Spain, as well as investments in 14 acute-care hospitals in Australia.
Emeritus Assisted Living, an assisted-living company based in Seattle, plans to open a facility in Japan in December.
Most U.S. long-term-care companies, however, have concentrated on domestic expansion only. With profits declining under the new Medicare reimbursement system for skilled-nursing facilities, it is unlikely that many U.S. nursing home companies will have the cash or the inclination to delve into international markets in the near future.
One reason for Solomont's optimism is the experience of his Chilean partner in the venture, politician-turned-businessman Jorge Schaulsohn. Schaulsohn was president of Chile's Congress, a position analogous to speaker of the House in the U.S.
Schaulsohn's father had Alzheimer's disease, and the family wanted to place him in a facility. Unable to find one with adequate equipment, design or staffing at an affordable price, the family instead decided to care for him at home.
Schaulsohn, who met Solomont through a mutual acquaintance, is convinced that his family is not alone.
Chile's nursing homes do not have the technology or equipment to provide the kind of rehabilitation and care that the frail elderly need, Solomont says. Rehabilitation equipment and practices standard at most U.S. nursing homes, for instance, are almost nonexistent in Chile.
And unlike the U.S., Chile does not fund nursing home services; facilities rely on private payers.
Though the lack of bureaucracy may seem attractive to regulation-burdened nursing home administrators in the U.S., that absence is not necessarily all positive, says Solomont.
"It's a mixed bag," he says. "I think it's a good thing for the public sector to be involved in this."