This is a followup to “Will the Nation Go Broke Paying for Senior Housing & Long-Term Care?” as part of a series of articles about senior housing and care options, alternatives, and opportunities.
It’s becoming increasingly apparent that the nation will need to come up with some innovative solutions to weather the impending “silver tsunami” as the Baby Boomer generation heads into old age, and public funding for senior care may emerge as an option.
Government benefits programs for the aged and needy are already stretched to their limit, with signs pointing toward further overextension as the elderly demographic continues to grow.
The number of those who are unable to meet their long-term care needs independently is expected to rise, and the government might need to get creative and enlist the help—or pockets—of the general public.
Using Private Capital for Public Initiatives
One solution is to create a social innovation financing program that sells “Social Impact Bonds” to raise private investment capital that goes toward funding interventions and care alternatives that can simultaneously meet seniors’ needs and save the government money.
The concept comes from British organization, Social Finance, Ltd., which launched a Social Impact Bond program in the United Kingdom in 2010. This pilot program was meant to improve social outcomes through reducing the number of criminals returning to the prison system.
The idea crossed the pond to the U.S., and in January 2011, sister organization Social Finance, Inc. was born. The organization collaborates with the government, investors, nonprofits, and thought leaders on “how Social Impact Bonds might realign incentives for delivering social outcomes and augment public funding and philanthropy to support our collective efforts to improve the lives of individuals and communities in need,” according to Tracy Palandjian, Social Finance’s CEO, in a written foreword to an overview of the project.
Here’s how it works:
Social Impact Bonds (SIBs) raise private investment capital to fund prevention and early intervention programs that reduce the need for expensive crisis responses and safety-net services. The government repays investors only if the interventions improve social outcomes, such as reducing homelessness or the number of repeat offenders in the criminal justice system. If improved outcomes are not achieved, the government is not required to repay the investors, thereby transferring the risk of funding prevention services to the private sector and ensuring accountability for taxpayer money.
The best candidates for SIBs, according to the overview of the project, are nonprofits with a proven track record of improving outcomes for well-defined target populations, which can translate into government savings that are large enough to cover the program’s cost and give a “reasonable” return to investors.
Social Impact Bonds and Senior Care
While the program seems to be targeted mainly at ending chronic homelessness and lowering re-offending rates of juvenile and adult offenders, it can also be used to help low-income seniors.
The overview points to the growing senior demographic, which is expected to account for 20% of the overall population by 2050.
“When they can no longer live independently, many seniors must enter costly nursing facilities, even if they need acute care only for a short time,” says the report. “Low-income seniors who move into these facilities and who are eligible for both Medicaid and Medicare impose significant costs on the government. Yet numerous alternative services can provide the extra care seniors need at much lower costs than nursing homes while allowing seniors to remain in their own homes or communities.”
Finding ways to provide senior care outside of expensive nursing homes is deemed as an “aging-in-place intervention” by Social Finances, as it facilitates healthy outcomes while generating government savings.
Potential Risks in Implementing the Program
There are many risks presented in the Social Impact Bond program, in areas that include execution, finances, and reputation. Positive outcomes are crucial for the program to be beneficial not just to target populations, but also to investors, so the organizations in charge of preventions and interventions must have a well-defined game plan. Because of the pay-for-performance model, investors bear 100% of the financial risk in SIBs.
“SIBs signify a new paradigm of public-private partnerships in the wake of the financial crisis, one that privatizes the risks and shares the gains,” says the overview.
“A New Tool for Scaling Impact: How Social Impact Bonds can Mobilize Private Capital to Advance Social Good” gives a more detailed look into the aspects of this initiative. It can be viewed here.
Written by Alyssa Gerace
Ventas, Inc. (NYSE:VTR) announced on Feb. 23 that it’s looking for new tenants for 64 healthcare assets that are currently leased to Kindred Healthcare, Inc. (NYSE:KND) under four master leases, after the healthcare services company opted not to renew the majority of its leases with the REIT.
“We believe these assets will be attractive to a wide variety of respected and quality healthcare providers,” said Ventas Chairman and CEO Debra A. Cafaro in a statement. “We are eager to begin the marketing process, which will improve our diversification and broaden our tenant base.”
The leases comprise $77 million of current annual cash rent, and while Ventas will continue to receive rent from Kindred through these four leases, they expire on April 30, 2013, giving the REIT approximately one year to find new tenants. The leases that Kindred does not intend to renew represent approximately 5.5% of Ventas’ current annualized net operating income.
Kindred’s troubled fourth quarter, which featured a net loss of nearly $71.9 million, may contribute to this decision. The net loss includes a $72.9 million loss from continuing operations. For the full year, Kindred experienced a net loss of nearly $53.5 million, as opposed to the previous year’s net income of $56.5 million.
These net losses come despite an overall gain in revenues, both for the fourth quarter, a 34% increase to $1.5 billion, and for the year, at more than $5.5 billion, compared to the previous year’s $4.4 billion.
Kindred’s president and CEO Paul Diaz said the company experienced a “very difficult fourth quarter” that was brought on by significant Medicare cuts which impacted its skilled nursing and rehabilitation therapy businesses.
In its fourth quarter earnings report, Kindred stated its intentions to renew three lease “bundles” containing 19 nursing and rehabilitation centers and six LTAC hospitals, but to not renew seven other bundles containing 54 nursing and rehab centers and 10 LTAC hospitals, which Ventas now intends to market.
The leases that are set to expire without plans for renewal don’t satisfy Kindred’s targeted investment returns or fit in with its strategic operating plan, said Diaz, especially as the majority of the nursing and rehab assets within the leases are predominantly chronic care and Medicaid-dependent, which aren’t well-suited for Kindred’s higher acuity, transitional care strategy.
“Under our operating model, these facilities also have limited growth opportunities and our expected earnings from these operations do not support the allocation of capital, risk or management time over the renewal period,” Diaz said. “Given the current reimbursement environment, particularly around nursing centers, we believe that our capital investments and management efforts are best focused in other areas of growth including home health, acute rehabilitation units, newer owned LTAC and inpatient rehabilitation hospitals, as well as investments in new integrated care models.”
Kindred had somewhat delayed announcing its intentions for renewal, a topic that came up during Ventas’ fourth quarter earnings call.
“With respect to April 30, there’s a lot going on in the reimbursement world and so on, we’ve got mitigation and so on,” said Ventas’ Cafaro. “So I don’t criticize Kindred basically for waiting until they have the most possible information until they decide whether they’re going to renew or not.”
The 25 healthcare assets that Kindred is renewing comprise $46 million a year of current annual rent, with the renewal lease term beginning on May 1, 2013, and going through April 30, 2018.
Written by Alyssa Gerace
Odyssey Hospice, part of Gentiva Health Services, Inc. (NASDAQ:GTIV), announced on Feb. 17 that it has entered a settlement agreement with the Department of Justice, and a five-year Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services, following an investigation of Odyssey HealthCare, Inc.’s continuous care services.
The DOJ’s investigation was launched prior to Gentiva Health Services, Inc.’s acquisition of the company in August 2010, and involved Odyssey’s provision of continuous care services from Jan. 1, 2006 through Jan. 22, 2009.
The settlement agreement includes a one-time cash payment of $25 million, special education for employees, and audits of the company’s Hospice Division throughout a five-year period.
“Gentiva cooperated fully with this investigation, which covered a period prior to our acquisition of Odyssey, and the settlement is consistent with our efforts to instill Gentiva’s culture of compliance throughout the company,” said John Camperlengo, Gentiva General Counsel and Chief Compliance Officer.
Written by Alyssa Gerace
On Wednesday, Feb. 22, the Department of Health and Human Services unveiled the first draft of a national action plan to combat Alzheimer’s disease, but the Wall Street Journal wonders if obstacles such as funding and lack of coordination might become a roadblock to the plan’s success.
The Draft National Plan to Address Alzheimer’s Disease includes goals of improving care, expanding support for caregivers, and heightening public awareness, along with strategies to discover better methods of researching the disease, training healthcare professionals, and coordinating collaboration between private and public stakeholders, says WSJ.
However the devil is in the details—and how they play out, some experts say.
“For me, it’s about implementation,” Eric Hall, a plan advisory council member and chief executive of the Alzheimer’s Foundation of America, an advocacy group, tells the Health Blog.
One major obstacle is funding. Earlier this month, the administration announced $80 million in new funding for Alzheimer’s research in fiscal year 2013, but how much additional money is needed to carry out the plan remains to be seen.
It could also be tough to minimize redundancy among other health agencies working toward the same goals, the article says.
The National Institute on Aging, a division of the National Institutes of Health at the Department of Health and Human Services, released its 2010 Progress Report on Alzheimer’s Disease, which summarizes recent Alzheimer’s research, on the heels of the first draft’s unveiling.
Written by Alyssa Gerace
As assisted living regulations evolve and tighten, Medicare and Medicaid reimbursements fluctuate, and healthcare reform begins to take effect, many states are facing their own challenges as they continue to develop, operate, and implement new rules. Here is a collection of long-term care related stories from across the nation.
From Asbury Park Press: Monmouth County Won’t Sell the Montgomery Nursing Home in Freehold Township
“After months of discussion about whether to close and sell one of its two nursing homes, the Monmouth County Board of Freeholders has decided to keep it open,” reports Asbury Park Press. “Officials cited several reasons for continuing to run the John L. Montgomery Care Center in Freehold Township: concern over its residents and staff, the weak real estate market, givebacks from staff, and the county itself making a go of the money-losing nursing home.” Read more…
“Of the 125 nursing homes NBC-17 investigated within a 100-mile radius of the City of Raleigh, more than 30 had “much below average” inspection ratings,” NBC reports. Watch the video here.
From the Washington Post: D.C. Class-Action Nursing Home Lawsuit to Go Forward
“The District has lost an effort to have a federal judge throw out a class-action suit brought on behalf of nearly 3,000 nursing home residents,” reports the Washington Post. “Judge Ellen Huvelle on Tuesday rejected the city’s contention that it has complied with the American with Disabilities Act by providing services to nursing home residents to provide services to people with disabilities in the most integrated setting possible.” Read more…
“Aging Services of California announced today that it will sponsor AB 1698 (Portantino, D-Pasadena), a bill that will allow continuing care retirement communities (CCRCs) to provide services in a private residence without that residence having to become licensed as a care facility. Under current law, providing services from a CCRC may require a senior’s home to be licensed as a residential care facility for the elderly (RCFE),” according to an Aging Services press release. “This interpretation has prevented nonprofit providers from offering “Continuing Care at Home” programs in California; a model of providing services in a one-stop shopping approach that brings the continuum of care and services provided at a retirement community to a senior’s private residence.” Read more…
**Update** From Westport News: Westport Nursing Home Could Shut Down in Showdown with Workers
“The management of five area nursing homes—including one in Westport—has informed the union representing employees it is considering filing applications with state officials to close the facilities,” reports Westport News. “Employees at West River have been locked out since last Dec. 13, while about 200 patients are cared for by replacement workers. Workers at the other four facilities continue to work under the expired contract.” Read more…
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.
The Supreme Court decided last Wednesday to forego a ruling on a years-long legal battle between California and healthcare providers protesting cuts in reimbursement rates to the state’s Medicaid program.
Like many states, California is seeking to make major budget cuts, and the state government began implementing cuts to its Medi-Cal program before they were approved by the Centers for Medicare & Medicaid Services (CMS). Healthcare providers began suing the state to block the cuts under the Constitution’s Supremacy Clause, and the case ended up being heard before the Supreme Court Justices in Douglas, et al., v. Independent Living Center.
Then, CMS retroactively approved the cuts, causing the Justices to decide that because the case had changed so drastically since it originally came before them, they would not rule on it and instead send the case back to the Ninth Circuit.
In the meantime, can providers keep suing to block cuts to Medicaid reimbursements? Maybe, but maybe not, says Dianne De La Mare, the vice president of Legal Affairs at the American Healthcare Association (AHCA).
“Basically, the Supreme Court just punted this case,” she told SHN.
Providers argued the Supremacy Clause gave them the right to sue in order to ensure that California lives up to its obligations under the federal Medicaid program to provide adequate reimbursements so providers are willing to give care to the needy, according to Lyle Denniston’s SCOTUS Blog.
The five Justices concluded that “while the Supremacy Clause was at best a doubtful source for a lawsuit, the patients and providers may yet have a right to proceed now that final federal agency approval had been completed, by suing under the Administrative Procedure Act. The majority did not decide finally, however, whether the change in circumstances meant that there could be no Supremacy Clause challenge; that was the issue left to the Ninth Circuit to decide in the first instance,” says Denniston.
The eventual ruling on the case could potentially be huge, as it will set a precedent for the nation, De La Mare says.
With many states facing budget problems of epic proportions, often leading to cuts across multiple programs, people throughout the country are keeping an eye on the proceedings to see how it could impact budget decisions in their own state.
Written by Alyssa Gerace
Construction for seniors housing is still very low, according to the National Investment Center for the Seniors Housing & Care Industry, but if the most recent round of quarterly earnings calls are any indication, it looks like some real estate investment trusts (REITs) are cautiously beginning to finance some development projects.
HCP, Inc.: Partnering with Brookdale for Senior Housing Development
Despite a primary focus on healthcare real estate acquisitions, HCP, Inc. realizes that now is a good time to also dip its toe into seniors housing development, considering current supply-demand metrics.
“From a senior housing standpoint, you’ve got some favorable tailwinds,” said Jay Flaherty, HCP’s chairman and CEO, during the REIT’s fourth quarter earnings call. “Those obviously include the aging baby boomer and the lack of new supply. It’s that point that our development platform is specifically targeted at.”
HCP is also delving into development from the perspective that “the worst is behind the skilled operators,” Flaherty continued.
The REIT has made a $100 million commitment for five projects, all of which will be managed by Brookdale Senior Living, but don’t expect development to replace acquisitions for the REIT, which had $7 billion of investments in 2011.
“[The development is] to supplement acquisitions of our senior housing projects,” said Paul Gallagher, executive vice president and chief investment officer.
He said the deals range in size from 75 to 100 units, and they’ll be primarily assisted living or Alzheimer’s. The five-year term loan was structured for up to 85% of the costs, with the borrower putting in the first 15% in cash.
“Our loans per unit is less than $200,000, and the interest—we receive interest payments, we participate in the value creation and we expect low, mid-teens types of returns on these,” said Gallagher.
That means that HCP is currently getting interest income from the loans, as opposed to a “drag from development” were it to have put the development on its balance sheet and ultimately done a sale-leaseback with Brookdale, according to Timothy Schoen, executive vice president and CFO.
And Brookdale, for now, is the chosen operator for these types of projects, as HCP said it’s not looking to build new relationships with operators.
“We’re concentrating– the five that we’ve got up and running, we’re concentrating with Brookdale,” said Flaherty. “We want to concentrate with partners, whether that’s in the acute care hospital space, the post-acute space, senior housing space– with operators that have quality outcomes, have efficient operations and have critical mass.”
Although HCP will have a purchase option after the development is completed, Gallagher said that right now the REIT is “just purely a debt investor.”
“It’s about an 18-month construction process,” he said. “We have the ability to purchase upon stabilization, for the outset after the fourth anniversary of the start of the project. And we also have a first right of refusal if they look to sell the properties. So we kind of cover ourselves on both sides.”
The program could be used as a way to expand the REIT’s RIDEA platform.
“We would look at that [possibility of the RIDEA structure] upon stabilization, and we’d make the same way we look at all these opportunities, triple net versus RIDEA,” said Flaherty. “If there’s a sufficient premium for a RIDEA structure, we would certainly give that serious consideration.”
Senior Housing Properties Trust: Expansion a Possibility
Another REIT, Senior Housing Properties Trust (NYSE:SNH), said in its earnings call that it does not plan to get into the development business in the foreseeable future, although expansion remains a possibility.
“We do have situations where I expect our funding will ramp up more on adding additional wings or units to buildings; we do know that there have been blueprints here and there of like an assisted living facility that would be built on the grounds of the campuses that we currently own,” said David Hegarty, president and chief operating officer of SNH. “So I think that I do see some opportunity there, but we are not going to it significantly in the near term.”
Ventas: Financing Development with Operator Partners
Ventas, Inc. (NYSE:VTR) has been involved with redevelopment, especially with operating partner Atria Senior Living, and it’s helped push up rates.
“As we do redevelopments, we’re adding reprogramming for Alzheimer’s and other high acuity space into some of the Atria buildings which could continue to push those rates up,” said Ray Lewis, president of Ventas. “And as we redevelop the independent living and assisted living buildings in the higher quality markets, we’re also seeing rate increases.”
The REIT’s CEO, Debra Cafaro, also said they’ve done some development that been “consistent with a structure that’s commonly used by health care REITs,” and again, the projects are done through existing operator relationships.
“We do those in the REIT itself as opposed to taxable REIT subsidiary where we’re kind of financing a ground up development for one of our operator partners who has a good track record,” said Cafaro. “And then that converts into a triple-net lease, but I’m almost sure that occurs within the REIT itself.”
Health Care REIT: Room for Development with Existing Operators
Health Care REIT (NYSE:HCN) started $150 million of development projects in the fourth quarter, according to its executive vice president of investments, and expressed an interest in ramping up development again, although it plans to be “careful.”
“On senior housing, there has been surprisingly little development and we would do some development of high-end facilities with our existing operators, with whom we have master leases and a great deal of confidence,” said president, CEO, and chairman George Chapman during the REIT’s earnings call.
Written by Alyssa Gerace
EdenHill Begins Expansion Project at Texas Senior Living Complex
Not-for-profit senior living organization EdenHill recently broke ground on what will be a four-story, 103-unit CCRC located on its New Braunfels, Tex. senior living complex. The Pinnacle at EdenHill is almost 80% presold, according to the organization, and the expansion project is expected to take two years and cost $42 million.
Tarantino Co. Proposes $38 Million Health Care Complex in Milwaukee, Wisc.
Developer Tarantino Co. has proposed a $38 million corporate headquarters and healthcare complex on the site of a former factory in Milwaukee, Wisc., reports the Journal Sentinel. The development includes four buildings with a total of 200,000 square feet, and the proposal includes a nursing home, community-based residential care center, and an assisted living center. A rendering of the project indicates Community Care, Inc., a local nonprofit healthcare provider, will be the development’s tenant. The buildings would be partially financed through federal New Markets Tax Credits,and a city affiliate would $20 million of tax credits to generate about $4.5 million through sale to investors, reports the Journal Sentinel.
Bronzeville Associates Propose $18.2 Million Project to Rehab Senior Housing Units
Bronzeville Associates Senior Apartments LP will undertake an $18.2 million project to rehabilitate 97 units of senior housing in Chicago, Ill. The city’s mayor, Rahm Emanuel, introduced a proposal to the City Council for Chicago to provide up to $10 million in Housing Revenue Bonds, and up to $2.7 million in TIF assistance for the project, which would include new plumbing, mechanical systems, HVAC systems, and upgrades to kitchens and bathrooms. Other rehab work includes a new roof, windows, building entrances, and repair of parking surfaces. Chicago will provide additional support in the form of $603,461 in Low Income Housing Tax Credits that will generate approximately $5.5 million in equity for the project.
Lumberton, N.C. to Build $9.5 Million Senior Housing Project with HUD Funding
The Department of Housing and Urban Development is funding a senior housing project in Lumberton, N.C. The 48-unit, gated development, Azalea Gardens, will be built on about 3.5 acres of property and will be “mixed financial senior housing,” reports the Hattiesburg American. It will feature 25 senior units and 23 public housing units, and has an estimated cost of $9,545,386. Mississippi Regional Housing Authority VIII will oversee the project, and the HUD funding is expected to be made available in the next couple of weeks.
Morningside Management of Virginia, BROM Builders of Norwich Approved to Build Senior Living Center
Plans for a 245-unit assisted living complex have been approved by the Stonington Planning and Zoning Commission, allowing Morningside Management of Virgin and BROM Builders of Norwich to move forward with their senior living project. The plan is to build Mystic Preserve Senior Living on 18 acres of Coogan Farm, which will feature dementia, assisted living, and independent living apartments that will range from a 402-square-foot studio to a 1,222-square-foot two-bedroom apartment, according to The Westerly Sun.
Michigan Nursing Care Facility Reopens After $5 Million Renovation
Ciena Healthcare, a senior care services provider, reopened its skilled nursing center in February after a $5 million expansion and renovation project, reports AnnArbor.com.
The Regency at Bluffs Parks, located in Ann Arbor, Mich., had been closed since Fall 2008. The facility now has a second floor and a new wing, and it’s been shifted from a long-term care facility to a short-term rehabilitation center. The renovation reflects changing trends of patients in need of short-term stays on their way from the hospital back to their homes, according to Ciena Healthcare’s CEO.
The building was expanded to 37,169 square feet—more than 60% bigger than the original facility. It has 33 private rooms and 19 doubles. The Regency at Bluffs Parks only has a few residents so far, but its administrator told AnnArbor.com he expects it will be at fully capacity by late summer or early fall.
Many senior living companies were recognized during the National Association of Home Builders’ (NAHB) annual International Builders’ Show, which was held this year in Las Vegas, Nev. at the end of January.
Here are just a few winners of the “2012 Best of 50+ Housing Awards“:
Traditions of America, for Home Designs, Marketing, and Active Adult Communities
Traditions of America, based in Radnor, Pa., pulled in more awards than any other developer in the U.S. at this year’s ceremony, winning a total of seven awards for home designs and active adult communities.
The company received two gold and five silver “Best of 50+ Housing Awards” for the following categories: Best Print Ad (Gold); Best Sales/Marketing Event(s) (Gold); Home Design: Best Attached Home, up to 1,800 Sq. Ft. (Silver); Home Design: Best Attached Home, more than 1,800 Sq. Ft. (Silver); Home Design: Best Detached Home, up to 2,100 Sq. Ft. (Silver); Community Development: Best For-Sale Community, more than 200 Homes (Silver); and Marketing: Best Website (silver).
Willow Valley Retirement Communities, for Amenities, Programs, and Remodeling
Willow Valley Retirement Communities, located in Lancaster, Pa., received four awards: Best Outdoor Amenity (Silver); Best Remodeled Project (Silver); Best Lifestyle Program (Gold); and Best Dining or Cafe Experience (Gold).
KTGY Group, Inc., Architecture + Planning, for Home Design
KTGY Group, Inc. was recognized for its design of Foursquare Senior Living, a new $29 million, 132-unit mixed-use senior housing community in the Portland, Ore. area. The community received a Gold award in the category of Best Market Rate Rental—On the Boards, along with a special Innovation award and another award in different competition.
Wesley Palms Retirement Community, for Innovative Interior Design
Wesley Palms, a full-service retirement community located in Pacific Beach, Calif., received a Gold award for the innovative design of its recently remodeled lobby, in the category of Best Remodeled Project. The design was by CastleRock Design Group of Newport Beach, Calif.
Studio One Eleven, for Affordable Rental Project Plan
Studio One Eleven’s design of Senior Art Colony, an innovative mixed-used senior housing center, won gold in the Best Affordable Rental on the Boards category. The project is in the first of a two-phase transit-oriented development that includes mixed-income, multi-generational housing.
Other categories include: Best Assisted Living/Special Needs, Best Detached Home, Best Indoor Common Use Space, Best “Green” Community, Best Integration of Technology, and Best Universal Home Design.
In addition to Traditions of America and Willow Valley Retirement Communities, big winners include Mather LifeWays, who won top honors in six different categories, and Meadow Ranch and Vivante on the Coast, each with three awards.
View the complete list of categories and winners here.
The ability for seniors to age in place stems partially from the use of senior care technology, and just like the aging-in-place movement, senior living providers have the opportunity to take advantage of technological advances within their facilities rather than view them as a threat.
“Technology is both a threat to our industry and an opportunity,” says Andrew Carle, a former senior living administrator who is the founder of George Mason University’s senior housing administration program. But here’s the thing: “You can’t do anything about the threat—you can’t control that. That means you only have one decision to make as a senior housing industry: that you either will, or will not, address the opportunity.”
The opportunities afforded by technology allow administrators to provide services in senior housing that can’t be done in peoples’ homes, says Carle, and it can make providers more productive and efficient in the way they conduct business.
Impending Labor Shortage
The need for senior care workers is exploding as the population ages, but estimates show that there won’t be enough people trained to do the necessary work, according to a study published in the Journal of the American College of Surgeons.
The demand for nurses will grow exponentially, projects the Bureau for Labor Statistics, and registered nursing will experience the largest increase of all occupations between 2010 and 2020.
“In not too many years, you’re going to be competing with everybody in your market for employees,” says Carle. “How is the industry supposed to triple when we already don’t have enough nurses and nurse’s aides?”
The obvious answer, he says, is technology.
“There’s a tremendous opportunity for us to be able to staff our buildings with technology,” Carle told SHN. “We need technology that will make one nurse’s aide, in the future, as productive as three, today, which is how you’ll get the equivalent of six million workers [the estimated number that will be necessary] out of two million people.”
How to make labor more productive, he says, is where the industry should be focusing technology.
“We’ve done it before with Henry Ford and his assembly line model,” says Carle. “We just have to do it ourselves [this time].”
Reduce Injuries and Lost Time Through Technology
When considering where it’s most important to implement technology, take a look at production capabilities and where workers spend most of their time, or where they’re getting the most injuries, says Carle.
Back injuries, for example, are the number one cause of healthcare workers’ comp, and Carle says that providers should use technology to do heavy lifting and thus nearly eliminate danger of injury to employees, as well as limit the hassle of needing to find replacement workers.
“Japan has already been developing robots that do lifting,” he says. “If you could eliminate back injuries, how big a difference with that make?”
Another area that could be made more time- and cost-efficient is medication administration, he says.
Many of those within an assisted living facility, for example, don’t really need help taking their medicine, Carle points out. If they don’t have trouble swallowing, the most important thing is for them to take the appropriate medication, and to be reminded to do so.
This could effectively be done with a robotic medication dispenser, he says. An individual’s specific medications are placed in pill cups on a carousel that can be pre-programmed to remind the person to take his/her pills at a certain time each day.
“Facilities right now make money charging for that medication administration,” Carle says. “They don’t want to give up those revenues, since most of their profit margin is in ancillary revenues. But the reality is, people will pay for that until there’s a better option; if people can get this machine at home, they’re going to do that.”
And, he says, the medication dispenser he described is already on the market and available to consumers.
Documentation is another area where many senior living employees spend a considerable amount of time. What needs to be developed, says Carle, is a better electronic health record system.
Some providers are already using PDAs or iPads and recording information electronically, he says, but it needs to get even more efficient, to the point where a nurse can speak into a device rather than have to manually enter information.
“Administrators know where their staff is losing time,” he says. “Strategically, think about how technology can save you time.”
He estimates that implementing technology in these three areas could at least double productivity.
It’s OK that Technology Helps Some Age in Place at Home
There is a flip side, says Carle, in the threat that better senior care technology means people can stay at home and not need assisted living.
But that’s not necessarily a bad thing. Some people should stay home, if they don’t actually need assisted living. And projections show the industry will be short of staff, Carle points out, so there’s a possibility that it will actually need some seniors to stay at home.
At the same time, though, Carle believes the downside of technology is its ability to sometimes keep seniors as “prisoners in their own homes” without human interaction.
Carle’s advice, ultimately, is for senior living administrators to take advantage of situations over which they have control and to implement technology where it can save labor, time, and money.
Written by Alyssa Gerace
Walgreens (NYSE:WAG) and Greystone Healthcare Management, which manages 27 skilled rehab facilities in three states, recently launched a collaborative therapy management pilot program at the Lady Lake Specialty Center in Lady Lake, Fla., aimed at reducing hospital readmission rates for patients in post-acute care settings.
Through the program, Walgreens community pharmacists deliver medication and counseling directly to patients prior to discharge from the 145-bed skilled nursing facility. Following discharge, patients will receive a follow-up call from a Walgreens Pharmacist within 72 hours to help them understand and comply with their medication therapies.
Studies have shown high percentages of rehospitalizations of patients after discharge to a skilled nursing facility, and this can stem from a lack of proper communication regarding post-acute care, including medication. Readmissions of Medicare patients to hospitals within 30 days of discharge cost the program about $17 billion annually.
“Experts suggest that care during the hospital discharge and early post-hospital period may be critical in preventing at least a portion of these rehospitalizations,” said Amy Kind, lead author of the report, “Provider Characteristics, Clinical-Work Processes and Their Relationship to Discharge Summary Quality for Sub-Acute Care Patients.”
Not complying with medication therapy results in $290 billion of unnecessary healthcare costs each year, according to the New England Healthcare Institute’s research, while patients who follow medication treatment programs are shown to have lower rehospitalization rates.
It’s “extremely important” to have the proper medications and the proper follow through upon discharge, because it helps prevent readmissions and makes it easier for patients to transition from the hospital setting to the home, said Marlin Hutchens, Market Vice President of Walgreens in Central Florida, and Scott Dyen, the Director of Transition Care Services for Walgreen in the Orlando, Fla. area.
Non-compliance with medication practices is one of the biggest reasons for readmission, and almost half of patients that leave the hospital don’t necessarily fill their prescription, said Hutchens and Dyen.
This program reduces that possibility by delivering medication and counseling along with a follow-up.
“This is the very beginning of something that will probably grow, especially as we go towards health care reform in 2014,” they said. “A lot of emphasis is put on keeping patients out of hospitals, and getting them more accustomed to being in the home setting to recover better. This [program] offers the ability to do that.”
“Discharge from a hospital or post-acute care setting can be a hectic time for patients and their families, and sometimes it’s difficult to make a trip to the pharmacy or to understand a new medication regimen,” said Scott Clark, vice president of strategy & implementation for Greystone Healthcare Management, in a statement. “Having a clinically-trained pharmacist deliver prescriptions and information directly to a patient’s bedside makes compliance easier, and an ongoing dialogue with the pharmacist helps patients and caretakers transition to a new setting.”
The results of the pilot program will determine whether or not Greystone will expand the Walgreens medication therapy management program to additional settings within its framework of skilled rehabilitation facilities.
Written by Alyssa Gerace