Educational session at 2020 NIC Fall Conference highlights onsite service.

Key Takeaways 

• Seniors housing is emerging as a key part of the healthcare continuum. 
• Keeping residents out of the hospital is a major objective. 
• Seniors housing providers are managing healthcare risk onsite for their residents—both for infection and for social isolation/loneliness. 
• Health and healthcare must become an essential focus for seniors housing providers—but they don’t have to be the provider of the healthcare.  

The COVID-19 outbreak has accelerated emerging trends. Consumers are making more purchases online. Virtual meetings are now routine. Telehealth has gone mainstream in a matter of months.   

Likewise, the pandemic is fast-tracking the link between seniors housing and healthcare. Residents not only want a hospitality-type experience but also expect to be protected from infection. Many want access to onsite care, no matter the setting.   

Different approaches are emerging.  

One example of how to partner with a healthcare provider was presented during  Education Week at the 2020 NIC Fall Conference during a session  titled: “What Does Senior Living Look Like in the COVID Era: The New Role of Health and Healthcare Onsite.”    

Separately, a peer-to-peer discussion on the topic was held during the conference Connections Week. Participants shared their experiences with onsite healthcare. 

The educational session was led by Bob Kramer, NIC founder and strategic advisor, and president at Nexus Insights. Participants included Michael Grust, founder and CEO at San Diego-based senior living provider SRG; and Jim Lydiard, staff vice president at CareMore Health, a division of insurer Anthem.    

SRG collaborates with CareMore to offer onsite healthcare services, a partnership that has deepened during the COVID-19 crisis.  

Kramer provided context, noting that older adults have become more fearful about visits to traditional healthcare settings, such as doctors’ offices and clinics. At the same time, new models of care are emerging, including the use of telemedicine. 

“We are at a nexus point as an industry,” said Grust. He explained that the ability to protect the health of residents while creating environments where they can thrive will make a big difference in their decision to leave their homes and move into senior living communities. “We are focused on quality of life,” said Grust. 

CareMore’s insurance program—called Touch—provides a full range of medical services to residents who enroll. Many of the CareMore visits by healthcare providers are proactive, which helps contribute to the overall health of residents and improve their quality of life.  

The program is meant to compliment the work of SRG’s hospitality and wellness teams. CareMore does not offer dining services or help with the activities of daily living.  

Kramer noted the distinction between health and healthcare services. Health is related to prevention and wellness. SRG’s ZEST program, for example, keeps residents healthy and engaged. CareMore provides the actual medical services. “Health and healthcare have to be an essential focus, but you don’t have to do it all yourself,” said Kramer. “Partnerships can deliver benefits.” 

Teamwork Succeeds 

CareMore works together with the wellness team onsite. They can communicate with CareMore via text, video and phone. “Residents can get help right way,” said Lydiard, which helps keep them out of the hospital.  

Residents voluntarily sign up for the CareMore program. Enrollees receive a health assessment and a customized care plan. Regular visits from healthcare practitioners are provided as well as telehealth sessions. Mini clinics, operating three to five days a week, are created on campuses with a sizable number of enrollees.  

SRG does not pay a fee to CareMore. The patient’s insurance pays for the service under Medicare, Medicare Advantage or Medicaid. “This does not cost the operator more money,” said Lydiard. He added that the arrangement can help reduce the operator’s costs by eliminating unnecessary healthcare expenses that the operator might incur. Also, residents who enroll in the CareMore  Medicare Advantage plan may save as much as $200-$300 a month.  

Another plus: The partnership aligns the interests of the insurer and the operator. SRG keeps its residents healthier, often resulting in a longer length of stay. CareMore is motivated to keep residents healthy because it is paid through a capitation contract or risk-sharing model.   

Scale matters, however. The ability of CareMore to greatly impact resident outcomes depends on enrolling a critical mass of residents in the program. Membership grows virally after about 20 percent of residents sign up as CareMore’s presence on campus increases and residents see the value of onsite care. “We have to build membership,” said Lydiard.  

CareMore handles the marketing of the plan. But the staff at the community is educated on the benefits. 

 A hurdle to enrollment has been the reluctance by residents to switch insurance plans. They want to keep their primary care doctors, specialists and healthcare networks. 

But a big change will make it easier for residents to sign up. CMS is expanding its value-based care model to allow groups like CareMore to enroll residents with a traditional Medicare plan. They can keep their providers and still get the wraparound services provided onsite by CareMore. “This is a game changer,” said Grust.  

 The panelists agreed that senior living is now a part of the healthcare continuum. “We need to raise our game,” said Grust, noting “We are not post-COVID.” Senior living providers must continue to protect residents while providing an environment where people can thrive. “We have always been focused on the quality of life,” said Grust. “That is our unique selling proposition.”

Marking the sixth consecutive year, NIC once again partnered with National Real Estate Investor (NREI) on an annual investor sentiment survey in late summer 2020. Conducted from August 5 to August 11, 167 surveys were completed answering questions on topics ranging from attitudes on seniors housing market fundamentals to investment attitudes. The points below highlight some of the key survey findings.

Additionally, NREI hosted a webinar with NIC on September 17 which presented further commentary and analysis on the results of the 2020 survey, as well as a broader discussion on the opportunities and challenges facing seniors housing,

• Most survey respondents indicated that the COVID-19 virus was the biggest factor impacting occupancy rates at seniors housing properties over the past six months. Roughly four of every five respondents said the pandemic has had a very significant impact, while a little more than half of the respondents also reported that the state of the economy is having a significant impact. The state of the economy had not been as large an influencing factor since 2016. Further, more than half of the respondents believe that seniors housing sector itself is in recession or at a trough.
  
  
• About 45% of respondents expect occupancy rates to increase, the fewest since the survey began in 2014 and down from 72% in 2019. On the flip side, 42% expect occupancy rates to decline, the most of any survey ever conducted.
• Partly because of the pandemic and the effect it has had on the seniors housing sector, survey respondents had a less favorable view of seniors housing as an investment property than in any of the past seven surveys. Indeed, for the five-year period from 2015-2019, respondents had ranked seniors housing as the most attractive property type for investment out of six property types (apartments, industrial, office, hotel, and retail). When asked to rate the attractiveness of different property types for investment on a scale of 1 to 10, industrial and apartments rated the highest at 7.4 and 7.1, respectively. All other property types showed a decline in sentiment compared to results from the past five years with seniors housing dropping to 6.3 from 7.2 in 2019 and 2018.

  

  • The coronavirus is taking a toll on net operating incomes. The vast majority of respondents (90%) believe there has been at least some increase in expenses due to the virus between March 1 and August 1, with an estimated mean increase of 9.2%. Operators have seen costs rise for bonuses paid to staff, testing for staff and residents, increases related to PPE and additional cleaning. While not asked in the survey, it’s likely that operators could see additional upward pressure on expenses due to potentially higher property taxes and higher insurance costs.
  • Although uncertainty related to the path of the virus is affecting near-term investment decisions, investors seem to be more positive on their long-term plans to increase investment in the sector. Nearly half of respondents expect no change in seniors housing investment in either the near (47%) or long term (52%). However, views are split on whether investment will increase or decrease in the near term versus long term. Roughly 36% of investors said they plan to invest less in the near term compared to 18% who plan to invest more. Those percentages flip when asked about long-term strategies with 34% who expect to invest more in the long-term and 15% who think they will invest less.
  • A large number of respondents believe both equity and debt will be more difficult to get over the next 12 months and more than half anticipate that it will take longer to close a transaction. Roughly 80% of respondents expect underwriting standards to become tighter.
  • Nearly two of three respondents think seniors housing construction starts will decrease over the next 12 months, while one in five percent believe they will remain the same. That is a notable shift compared to survey results over the past five years where nearly half, if not more, respondents consistently anticipated an increase in starts in what had been a robust construction cycle.

  All in all, the 2020 Investor Sentiment Survey results paint a picture of a more cautious view on the sector. This makes perfect sense given the current state of the economy and the capital markets as we all collectively continue to make our way through the crisis of the COVID-19 global pandemic.

The COVID-19 pandemic has created design challenges for the seniors housing and care sector that need to be articulated, addressed and navigated. Achieving the right balance between social connectivity and coronavirus exposure has now become one of the key trials facing seniors housing operators. And with colder weather approaching, move-in restrictions easing, more visitation being allowed, and communal dining returning (albeit with physical distancing and other precautions being observed), operators need to think about design principles that help minimize risks to their residents. This blog post highlights a number of design principles operators may want to consider.

Creating Resident ‘Cohorts’ or ‘Pods’

Socialization has long been an established value proposition for seniors housing. Since the onset of the pandemic in March 2020, delivering on this goal has become more difficult due to the risk of infection transmission. Some operators have found success by forming small group ‘pods’ of residents, usually formed with resident rooms or apartments that are clustered near one another. Although this strategy is limited to certain building designs, these small cohorts of neighbors – usually between eight and ten units – can offer residents a familiar sense of community in addition to serving as a peer support group.

Within each group, residents dine together and visit with each other but avoid mixing with the entire community. Common amenities like kitchens and living rooms can be shared within each of these clusters to avoid relying on higher risk multi-purpose rooms or large shared dining spaces. This strategy helps maintain a degree of the community lifestyle that residents have grown accustomed to.

For this strategy to be effective, however, a well-thought out staffing plan needs to be implemented. Ideally, staff should be assigned to specific cohorts and avoid going into other parts of the building. To aid with this, PPE donning and doffing areas should be established outside of each resident cohort area and staff should exit directly to the exterior whenever possible. In some cases, early in the pandemic, these cohorts were made even tighter with staff living in on-site RVs or unoccupied units to further restrict exposure to residents and the community. It should be noted, however, that this plan may contribute to additional staffing costs, boosting what is already the largest operating expenses line item. Where regulations allow, adopting universal staffing patterns, where staff take on multiple tasks, can mitigate some of these additional staffing costs.

Improve Air Flow Through Spaces

A CDC study conducted in the early stages of the pandemic indicated that HVAC systems can be responsible for transmission of the virus. As such, certain mechanical considerations may need to be undertaken to prevent the spread of infection. For example, HVAC systems may need to be ‘zoned’ so that air ducts are not serving multiple pods or established resident cohorts. Other considerations include replacing HEPA filters, increasing maintenance frequency, and adding air exchanges to direct more fresh air into buildings.

In the Joint Center for Housing Studies’ webinar, Designing Senior Housing for Safe Interaction in the Age of COVID-19, balconies were referred to as ‘design heroes’ as they allow residents access to fresh air and a space to interact with others from a safe distance. Unfortunately, adding balconies to existing buildings can neither be done quickly or inexpensively, and in most cases is simply not feasible with residents in place. A more near-term solution is the use of fans to help create negative air pressure environments. Putting an outward facing fan in a window can achieve the desired directional flow of air, especially in high-risk locations such as those with a great degree of shared use or where residents are suspected of being ill.

Design Outdoor Space and Programming to Encourage Use

Most scientists agree that access to outdoor air reduces the risk of infection transmission. Designing outdoor spaces in such a way that encourages outdoor activity gives residents increased opportunity to get both fresh air and exercise. Incorporating frequent points of interest – fountains, flower gardens, picnic areas, and gazebos – along walking paths promotes their recurring use. A NIC Talk being presented at the 2020 NIC Fall Conference, How Will Disruptive Forces like COVID-19 Impact the Design of Senior Living, dives deeper into ways to extend the usefulness and comfortability of outdoor space.

Programming is increasingly moving outdoors as well. Prior to the pandemic, outdoor courtyard spaces may have been underutilized. These spaces are now of the utmost importance and can be reactivated for programming opportunities like outdoor exercise classes. Residents with the option to do so can join from their balcony, while others can participate from a safe distance outdoors.

Sequence Flows Through Buildings to Reduce Pressure on High Traffic Areas

To avoid unnecessary mixing between visitors, staff, and service providers, strong way-finding protocols are an option that can be implemented throughout all parts of a property. A basic strategy is to create one-directional hallways, as is often the case now in grocery stores and retail outlets. In the absence of one-way hallways, and especially for hallways less than six feet wide, an option of recessed pause points may be considered. These can create room for residents to pass each other safely and can also double as rest points along longer corridors. Where possible though, best practice dictates that hallways should be widened to allow two individuals to pass each other while maintaining six feet of distance, although this a challenging proposition, especially in older properties.

High traffic spaces like elevators and common areas should be well thought out as well. Encouraging staff to use stairs instead of elevators helps reduce traffic and leave them available for residents. Improving lighting and even adding music to stairwells can make them more pleasant to use. Other considerations for improving safety of elevator use are to set limits on the number of people who can use the elevator at the same time, creating buffer zones where people can safely queue while waiting, and eliminating the use of buttons altogether by using key cards that can select a rider’s destination.

COVID-19 is causing the industry to rethink senior housing and nursing building design and consider innovative ideas to balance social connectivity and infection exposure. Unfortunately, the upcoming winter months, combined with the easing of move-in restrictions and visitation policies, will bring a renewed threat. This will further prod operators, architects and developers to bring another round of thoughtful implementation of design elements. To hear more on this topic, join David Segmiller, FAIA, Principal, Hord Coplan Macht and myself at the 2020 NIC Fall Conference as we discuss how to balance community, safety, and lifestyle needs for the next generation consumer.

Managed Medicare revenue mix increases, first time since start of pandemic

NIC MAP^® Data Service released its latest Skilled Nursing Monthly Report on September 29, 2020, which includes key monthly data points from January 2012 through July 2020.

Here are some key takeaways from the report:

1. Occupancy decreased in July and slipped to 74.6%, 10.1 percentage points below its February rate of 84.7% and 9.4 percentage points below its year-earlier level of 84.0%. The occupancy decline was larger in urban areas, which have seen an 11.4 percentage point decrease in occupancy since February to 74.6%, versus rural areas which have seen a smaller 6.2 percentage point drop to 75.6%. Urban areas had a higher starting occupancy level in February (86.1% versus 81.9%). Looking ahead as the Fall/Winter seasons approach, there is much uncertainty regarding occupancy with the potential of an acceleration in COVID-19 cases and the arrival of flu season.
   
2. Managed Medicare revenue mix increased for the first time since the pandemic started in March. It increased 37 basis points from 7.6% in June to 8.0% in July. Although a smaller portion of revenue than Medicaid and Medicare, the increase in managed Medicare revenue mix suggests admissions may be stabilizing as many states have lifted the suspension of elective surgeries. However, managed Medicare revenue mix is down 187 basis points since March and down 193 basis points from last year in July of 2019. Meanwhile, Managed Medicare revenue per patient day (RPPD) decreased 0.23% from $451.87 to $450.82 in July. Managed Medicare RPPD has increased during the pandemic, albeit slightly, suggesting the significant pressure of declining reimbursement rates have eased, at least during this crisis period. It is up 0.32% since March. However, the pressure on reimbursement has been evident within the data series as RPPD has declined $78 since January 2012, representing a 14.7% decline during that time.
3. Medicare revenue per patient day (RPPD) decreased for the first time since the pandemic started in March. It fell 0.75% from $556.26 in June to $552.08 in July. However, Medicare RPPD is up 1.11% since March when it was $546.01 The increase since March is likely because of additional reimbursement due to COVID-19 positive-tested patients requiring isolation, in addition to the temporary suspension of the 2.0% sequestration cuts by CMS, which are effective from May 1 through December 31, 2020. Medicare RPPD is up 4.8% since last year in July of 2019. Meanwhile, Medicare revenue mix continues to be relatively steady as it increased 26 basis points from June to 20.8% in July. Since March, it is only down 63 basis points compared to Medicaid revenue mix which is down 180 basis points and managed Medicare which is down 187 basis points.
   
4. Medicaid revenue mix increased 28 basis points from 48.6% in June to 48.9% in July. It is down 180 basis points from 50.7% in March. Total Medicaid patient days likely decreased since March, due to lower overall admissions and some Medicaid patients who may have converted to Medicare due to the waiver of the 3-Day Rule during this crisis period. Meanwhile, Medicaid RPPD held steady at $233 from June to July, but has increased 2.5% since March as states embraced measures to help skilled nursing properties such as increasing reimbursement related to the number of COVD-19 cases at properties. However, current Medicaid RPPD does not cover the actual cost of care in most states.

To access more trends from the latest data, download the Skilled Nursing Monthly Report.

The report provides aggregate data at the national level from a sampling of skilled nursing operators with multiple properties in the United States. NIC continues to grow its database of participating operators in order to provide data at localized levels in the future. Operators who are interested in participating can complete a participation form  here. NIC maintains strict confidentiality of all data it receives.

The Labor Department reported that nonfarm payrolls rose by 661,000 in September and that the unemployment rate fell to 7.9% from 8.4%. This suggests that the employment recovery from the unprecedented COVID-related drop in March and April continues. Roughly 11.4 million jobs have now been recovered during the May to September period. Nonetheless, the level of payrolls remains about 10.8 million below where it was in February (7.0% below). 

The September jobs report is the last such report before the November 3^rd presidential election and has thus taken on additional political significance. Despite the employment gain in September, jobs remain well below their pre-pandemic levels in February. Many economists continue to urge Congress and the White House to implement further fiscal stimulus to keep the recovery on track. Some anticipate that without a fiscal stimulus package the recession will deepen further. Moreover, uncertainty about the path of the COVID-19 virus as we enter the fall and winter months as well as the lack of a vaccine continue to weigh on business owners hiring decisions. Finally, the announcement that President Trump has tested positive for COVID-19 has added more uncertainty and may further complicate hiring patterns.

The 661,000 job gain in August was much smaller than in the prior three months. Market expectations had been for a gain of 859,000.  

Health care added 53,000 jobs in September, with gains in offices of physician, dentists, hospitals, and home health care services.  

The 0.5 percentage point drop in the September unemployment rate to 7.9% was good news but is still well above the pre-pandemic level of 3.5% seen in February. Jobless rates fell for adult men (7.4%), adult women (7.7%), Whites (7.0%) and Asians (8.9%). The jobless rates for teenagers (15.9%), Blacks (12.1%) and Hispanics (10.3%) showed little change over the months. The number of unemployed persons fell by 1.0 million to 12.6 million.  

The number of long-term unemployed (those jobless for 27 weeks or more) increased by 781,000 to 2.4 million, a figure that suggests that it continues to be a very challenging time for a number of Americans. Moreover, a separate report issued yesterday on unemployment insurance claims showed that more than 26 million workers remain on government assistance in the week ended September 12.  

The underemployment rate or the U-6 jobless rate fell to 12.8% in September from 14.2% in August. This figure includes those who have quit looking for a job because they are discouraged about their prospects and people working part-time but desiring a full work week. In the previous 2008/2009 recession, this rate peaked at 17.2%.  

Average hourly earnings for all employees on private nonfarm payrolls rose by $0.02 in September to $29.47, a gain of 4.7% from a year earlier. The large employment fluctuations over the past several months, especially in industries with lower-paid workers—complicate the analysis of recent trends in average hourly earnings. 

The labor force participation rate, which is a measure of the share of working age people who are employed or looking for work decreased 0.3 percentage point in September to 61.4% and is 2.0 percentage points lower than in February.  

The change in total nonfarm payroll employment for July was revised up by 27,000 from 1,734,000 to 1,761,000 and the change for August was revised up by 118,000 from 1,371,000 to 1,489,000. Combined, 145,000 jobs were added to the original estimates. Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.

While the September improvement is welcome news, the labor market continues to be strained and the recent spike in the virus across many states could hamper further gains. Indeed, some states are backtracking plans to reopen as coronavirus infections are rising again.