The NIC MAP® Data Service recently released national monthly data through September 2019 for actual rates and leasing velocity. The NIC Actual Rates initiative is driven by the need to continually increase transparency in the seniors housing sector and achieve greater parity to data that is available in other real estate asset types. Having access to accurate data on the monthly rates that a seniors housing resident pays as compared to asking rates helps NIC achieve this goal.

Key takeaways from the 3Q2019 Seniors Housing Actual Rates Report by Property Type include:

• Average initial rates for residents moving in were below average asking rates for both majority independent living and majority assisted living properties, with monthly spreads generally larger for majority assisted living properties dating back to April 2015.
• As of September 2019, initial rates for majority assisted living properties averaged 9.5% below their average asking rate, which equates to an average initial rate discount of 1.1 months on an annualized basis, close to the discount that has existed since July and close to the year-earlier discount.
• Similarly, the average discount for initial rates for majority independent living properties was equivalent to 1.1 months in September. This was as high as it has been since NIC began reporting the data in April 2015 and was also notable because until January 2019, the discount had generally been smaller for majority independent living than majority assisted living for nearly the entire time series. In January of this year and extending for several months, the annualized discount for initial rates was larger for majority independent living. More recently, the annualized discount for initial rates was larger for majority assisted living until September when they were the same.
• Average asking rates for majority independent living properties have exceeded in-place rates since May 2018 and the monthly gap between these rates was 1.8% or $59 in September 2019. For majority assisted living properties, average asking rates have consistently exceeded average in-place rates. The monthly gap between these rates was 3.6% or $181 in September 2019.
• In September 2019, the average majority independent living asking rate was 1.1% above its year-earlier level, the smallest annual increase since February 2018. The annual pace of growth for majority independent living in-place rates was nearly the same at 1.2%. Initial rates fell 1.3% from year-earlier levels, the third decline in the past four months.
• The rate of move-ins has exceeded or equaled the rate of move-outs for seven of the past twelve months for majority assisted living and eight of the past twelve months for majority independent living.

This Seniors Housing Actual Rates Report provides aggregate national data from approximately 300,000 units within more than 2,500 properties across the U.S. operated by 25 to 30 seniors housing providers. The operators included in the current sample tend to be larger, professionally managed, and investment-grade operators as we currently require participating operators to manage 5 or more properties. Note that this monthly time series is comprised of end-of-month data for each respective month.

This quarter, NIC is also providing clients access to the Seniors Housing Actual Rates Report by care segment. Care segment type refers to each part or section of a property that provides a specific level of service, i.e., independent living, assisted living or memory care. In addition, care segment actual rates data is also available for the Atlanta metropolitan market. 

Additional Data Available in 4Q 2019

Beginning in 4Q 2019, NIC is now providing clients access to the Seniors Housing Actual Rates Report by care segment. Care segment type refers to each part or section of a property that provides a specific level of service, i.e., independent living, assisted living or memory care. In addition, care segment actual rates data is also now available for the Atlanta metropolitan market. 

NIC is prioritizing the roll-out of the reported metropolitan markets for the Actual Rates data based on the participation rates of local seniors housing operators, with the Atlanta metropolitan market the first available market.

Additional metropolitan areas will be added in the future as NIC collects additional data and grows the sample size to be large enough to release data at the metropolitan area level. Toward that end, NIC is now partnering with leading software providers including Yardi, PointClickCare and MatrixCare to facilitate data contribution to the Actual Rates initiative for operators. NIC appreciates our partnerships with these software providers and our data contributors and their work in achieving standardized data reporting.

If you are an operator or a software provider interested in how you can contribute to the Actual Rates initiative, please contact Brian Connolly at bconnolly@nic.org.

I recently joined the Outreach team with National Investment Center (NIC) following a career in acute-care hospital and ambulatory operations with a large academic medical center. My previous focus was on patient throughput strategies, EHR optimization, telemedicine implementation, value-based care, and lean deployment throughout our organization. I join NIC in the hope of bringing a perspective on how hospitals and health systems can collaborate with the senior housing and skilled nursing sector to increase value, improve care, and ultimately provide a better patient experience. With the implementation of CMS’ Patient Driven Payment Model (PDPM), I am also able to serve as an expert in industry transition to quality-based reimbursement.

As senior housing becomes further ingrained in the care continuum, I believe that we can meet the needs of all seniors, but to do so will require skillful cooperation and coordination among all who play a role. I hope to bring a unique viewpoint to our team and share many of the valuable lessons I learned throughout my tenure in hospital administration. It is in that vein that I share my first post, one that focuses on employment retention and workforce engagement strategies.

Retaining an engaged workforce is a cornerstone of long-term business success but doing so is not always an easy task. Generational preferences and rising wages across the country mean managing labor and its associated costs is a growing concern for all businesses. According to NSI Nursing Solutions’ “2019 National Health Care Retention and RN Staffing Report,” the average cost of turnover for a bedside nurse is anywhere from $40,300 to $64,000. It’s also widely recognized that turnover often leads to declines in safety, quality, and experience. Strategies designed to establish consistent labor pipelines and enhance the quality of staff may help mitigate these challenges. While some of the strategies discussed below in this commentary are specific to healthcare, others can be utilized in any setting. As is often the case, these strategies will require an upfront cost, but with a successful implementation, that cost can be recouped over time as employee turnover, recruitment, onboarding, and training costs greatly outweigh the initial investments.

Attract and Develop Talent Using Residencies & Training Programs

Getting new staff in the door is one of the biggest challenges currently facing health systems. With experienced clinicians commanding increasingly high salaries and generous benefit packages, attracting an early-career talent pool which can be trained to the standards and practices of a specific facility is a winning strategy. Traditional physician residencies have been around for more than a decade, but increasingly residencies and training programs are being made available for a wide variety of clinicians, including Nurse Practitioners, Physicians Assistants, Registered Nurses, Certified Nursing Assistants, and Clinical Technicians.

Residencies can provide a win-win for both the organizations seeking staffing and the employees looking to grow professionally. Access to training in a real-world care setting, the expertise of physicians, and continuing education opportunities can set up an organization with a pipeline to deliver quality clinicians at a more affordable cost. Graduates of these programs are better trained, and therefore better equipped to find employment, but they also establish roots during training. These roots–relationships, routines, and familiarity–often lead to a high retention rate following graduation from the program. It can be rewarding to train the next generation of quality clinicians, but for employers the ultimate goal is securing access to a deep pool of skilled talent.

Create Growth Opportunities for Long-Term Retention

All employers would like their employees to feel a sense of accomplishment in their work. However, employers often seem to fail their employees when it comes to the intrinsic satisfaction they feel. Senior staff with organization-specific expertise can grow frustrated when their organization adds new staff with the same titles and job descriptions they earned over years of service, for example. Even happy employees look for better opportunities, and often these employees are the ones that organizations most want to retain. Employers cannot overlook giving their employees a reason–beyond a paycheck–to stay with the organization.

Career ladders can both reward senior staff for years of service and allow for recognition of skillsets with additional compensation. Procedural skills, certifications, and the ability to staff various care areas should be built-in prerequisites in an organization’s career ladder. With careful design, the career ladder is a powerful tool, enabling organizations to encourage retention, raise average experience levels, and incentivize ongoing professional development.

Invest in Training for Organizational Success

Another often overlooked retention incentive is to invest in training and ongoing development. This strategy requires upfront investment, but can yield improved billing and reimbursement, as well as improved patient care. Take the recent implementation of CMS’ Patient Driven Payment Model (PDPM) and the impact it has on mental health treatment as an example. Only about 5% of nursing home residents have a diagnosis of depression, but academic studies indicate the prevalence is closer to 40%. The disconnect in depression identification in this population can partly be attributed to the differences between overburdened frontline caregivers with multiple pressing demands and the highly-focused nurse teams that conduct studies specifically for academia. Another contributing factor is that the methodology of identifying depression, the Patient Health Questionnaire (PHQ-9), relies on self-reporting that can be distorted by the respondent’s perception of the situation.

With PDPM, however, operators are rewarded for treating each resident’s specific needs, with payments increasing in line with patient acuity. This incentivizes depression identification and documentation, as payment boosts can bring in additional reimbursement income. Offering frontline staff training and education on how to identify and treat depression yields benefits in terms of staff satisfaction–and also improves resident outcomes, and a facility’s bottom line.

Avoid Single-Site Employment Models

Absences and call-outs are a reality facing any organization. Those absences are typically resolved using on-call staff or bringing in an unscheduled employee at a premium rate of pay. For employers with multiple sites in a specific region, creating an employment vehicle that allows for flexibility with regards to daily work location can be a strategy to avoid costly premium wages that are often used to fill holes in schedules. Additional incentive payments made to employees willing to work at multiple sites can be recovered by avoiding the costly alternative of overtime or on-call pay. Navigating Human Resources’ hurdles is the most challenging aspect of this strategy, as titles, benefits, and job responsibilities often vary slightly from one site to another. Usually, developing a separate employment intermediary that houses these flex-staff can resolve those challenges.

Amidst accelerating wage growth, persistent workforce shortages, and other labor-related challenges, the pressure to implement creative, evidence-based solutions to prevent shortfalls both in daily staffing and longer-term leadership roles is intensifying. Employing some–or all–of the strategies mentioned here will help organizations better position themselves for greater long-term success.

The Labor Department reported that there were 266,000 jobs added in November.  This beat the consensus estimate of 187,000 and marked the 110^th consecutive month of job gains.  The return of 41,000 striking workers to their jobs at General Motors helped boost this month’s gains. Even excluding the effect of the strike, payrolls were still up by a strong 225,000 in November.

Revisions also added a significant number of new jobs to the prior two months.  The change in total non-farm payroll employment for September was revised up by 13,000 from 180,000 to 193,000 and the change for October was revised up by 28,000 from 128,000 to 156,000.  Combined, an additional 41,000 jobs were added to 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.  After revisions, job gains have averaged 205,000 over the last three months, below the average monthly gain of 223,000 in 2018 (note that this will likely be revised down based on the recent preliminary benchmark revision estimate which indicates that private payrolls were over-counted by 43,000 per month in the twelve months ending in March 2019).  Health care added 45,000 jobs, and has added 414,000 jobs in the last 12 months.

The November unemployment rate slipped back to 3.5% in November, returning to a 50-year low from 3.6% in October.  Average hourly earnings for all employees on private nonfarm payrolls rose in November by seven cents to $28.29. Over the past 12 months, average hourly earnings have increased by 3.1%.  For 2018, the year over year pace was 3.0% and in 2017 it was 2.6%.  Reasons why wages are not growing faster include the retirement of highly paid baby boomers and relatively weak productivity growth.

The labor force participation rate, which is a measure of the share of working age people who are employed or looking for work was 63.2% in November, down from 63.3% which was the highest since August 2013. The overall rate has recently been supported by the return of nearly 1.7 million workers to the labor force over the past year. 

The November employment report will support the Fed’s “on hold” stance, at least for the time being.  In late October, the Federal Reserve lowered interest rates by 25 basis points to a range between 1.50% to 1.75%.  This was the third cut in as many months.  But Chairman Powell indicated that it may be the last cut, at least in the short term, creating the “on hold” stance viewed by many in the market.  In recent comments, the Chairman has emphasized that the baseline outlook for the economy remains positive, helped by the recent cuts in interest rates.  He has also said that the Fed “will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate.”   This suggests that the Fed will not cut rates further at its next FOMC meeting in December. 

As providers grapple with how to best care for frail elders, a new model of collaboration is being launched that could serve as a national template for the integration of housing and healthcare.

Ten senior living and care organizations in the Twin Cities will offer a new Medicare Advantage plan to their residents effective January 1, 2020. It is thought to be the largest roll-out of such a plan to date.

The plan is an institutional special needs plan (I-SNP). These Medicare Advantage plans are designed to meet the often complex needs of adults living in long-term care, assisted living and memory care settings. Enrollment is restricted to eligible individuals who, for 90 days or longer, are expected to need the level of services provided by a long-term care facility.

Medica Advantage Solution PartnerCare is the name of the plan being offered through a unique collaboration  between Genevive, a geriatric medical and care management organization, the nonprofit health plan Medica, and the senior living providers. They operate 78 Twin Cities-area long-term care and assisted living communities.

The senior living communities are operated by Benedictine Health System; Cassia (Augustana Care/ELIM Care affiliation); Catholic Eldercare; Episcopal Homes of Minnesota; Goodman Group; North Cities Health Care, Saint Therese; Volunteers of America; Walker Methodist; and Presbyterian Homes & Services (PHS).

“The goal is to provide an integrated care delivery system for the residents we serve,” said Dan Lindh, president of PHS, the largest senior living provider in the PartnerCare plan. “We believe this model of care will improve quality outcomes.”

Enrolled residents will receive a holistic model of care delivered by Genevive through a multidisciplinary team with expertise in providing care to people with complex conditions. The team includes physicians, nurse practitioners, care coordinator, specialists, a pharmacy consultant, anticoagulation team and ancillary service providers, all connected to care teams at the individuals’ long-term care or assisted living facility.

A new model of health insurance and housing

The broader I-SNP program is based on both a clinical and financial model. The clinical focus is on delivering the right care at the right time, and where the resident lives. Early intervention and care coordination are important components, along with strong referral networks to appropriate healthcare providers and the use of electronic medical records so all providers have the most accurate and up-to-date information on the individual. This approach can produce better health outcomes and reduce costs. The I-SNP, which is paid a set amount each month to care for an individual, takes on the financial risk of insuring the resident.

Lindh expects 600 individuals to sign up for PartnerCare in the first year. In two years, he projects an enrollment of 3,000.

Though I-SNPs represent a small part of the Medicare Advantage market, they are growing in popularity. Overall enrollment in I-SNPs grew from 74,000 in 2018 to 87,000 in 2019, according to the Medicare Payment Advisory Commission (MedPAC). The number of plans rose from 97 to 125.

PHS, which serves 27,000 seniors annually, has taken a step-by-step approach into the world of managed care and I-SNPs. Last year, PHS bought a 50% interest in Genevive, a mobile primary care practice which it co-owns with Allina Health.

A believer in treating residents where they live, Lindh said his organization already had doctors and nurse practitioners on staff to treat residents before the I-SNP was formed. The partnership with Genevive expanded the pool of doctors and nurse practitioners available to residents. “You have to scale up,” said Lindh, remarking on the ingredients needed to create a successful I-SNP.

Geography plays a role too. I-SNPs work best in a tight geographic area, said Lindh. The organizations in the PartnerCare program have big footprints in the Twin Cities area. That way medical practitioners can visit and treat patients effectively and efficiently without wasting hours traveling to locations outside of the primary service area.

Lindh does not expect to expand PartnerCare beyond the Twin Cities.

Buy or build expertise?

Though launching an I-SNP such as PartnerCare is a complex undertaking, Lindh noted that it helps to have previous managed care experience.

Last year, PHS introduced a special Medicare Advantage plan (D-SNP) in partnership with Medica. Genevive was already operating D-SNP plans in partnership with Medica, UCare and Blue Cross Blue Shield. These plans are targeted to individuals dually eligible for Medicaid and Medicare at 14 PHS communities. About 3,500 individuals are covered in these D-SNP plans.

The D-SNP has given PHS experience in risk sharing—an important concept in the evolution of managed care where providers receive a fixed amount to provide healthcare for an individual. The D-SNP receives an average of $3,500 a month for the treatment of each individual in the plan.

“It’s working well,” said Lindh. While the margins move up and down, he estimates they will average about 5%-8% annually. Margin, however, is less important than improving overall quality of care.

PartnerCare payments will be about $2,000 per member, per month. That number is based on what the average adult with the same diagnosis would pay on their own in the wider community. Care coordination and management of services creates the dynamics that make risk sharing work, noted Lindh. Also, Reinsurance covers the cost of catastrophic claims.

What’s the best approach for providers new to the world of managed care and I-SNPs? The choice is to slowly build expertise internally, or to purchase the expertise from outside experts. “The magic is in collaboration,” said Lindh.

As we age, where will we want to live?  And as importantly, how will we want to live? It’s a decision that faces many of us today, either directly for ourselves or indirectly for our elderly parents.

In a recent front-page Wall Street Journal article, Peter Grant drew attention to and rightfully addressed this question, as nearly 13 million older Americans face this decision today and as the massive wave of 72 million baby boomers born between 1946 and 1964 gradually approach the time where post-retirement lifestyle choices will once again need to be made.Many baby boomers will prefer to age at home, with technology helping to enable this choice. But many will also prefer to age in community with opportunities for companionship, friendship, engagement, involvement, socialization and easy-to-access meals, healthcare, assistance with day-to-day living activities, safety and security. Cognitive impairment, mobility limitations, multiple chronic conditions and functional restrictions may also cause older households to leave their homes for additional care. 

Today there are an estimated 1.6 million units of seniors housing in the United States—which equates to roughly 18% of households over the age of 80. Our recent analysis suggests that by 2030, 2.5 million units will be needed if that penetration and utilization rate of 18% of households over age 80 remains steady in the coming years. For seniors housing operators, this suggests that hundreds of thousands of new units will be needed to satisfy this demand. Even if the utilization rate were to fall below today’s 18%, additional inventory will be needed.

It’s evident that the baby boomers have never acted like their parents and always pave a new way forward. And, it’s likely that new forms of living patterns will emerge. Many of America’s elders will remain in their family homes, many will live in traditional seniors living properties, some will live in an evolving form of seniors living housing that is still emerging, some will live in co-operative living arrangements similar to how they lived during the 1960s, some will live intergenerationally with younger individuals who can help defray costs or help with household chores and maintenance, and some will live in choice-based group homes with their friends like the Golden Girls sitcom. The truth is that the sheer size of this burgeoning cohort will support many living preferences—home or in community. 

The ability for elderly baby boomers to remain at home and continue with support from family will be less likely than today as another recent NIC study showed that 48% of individuals age 75 and over will be divorced in 2029 compared with 39% today. Either due to widowhood or divorce, many will simply not have partners/spouses to care for them. Moreover, the sheer demographics of America are quickly changing the caregiver support ratio which will fall from seven adult children aged 45 to 64 to care for one parent over 80 years old today to four-to-one in 2030 and three-to-one in 2050. Additionally, fewer adult children will live in proximity to their parents.

Hence, the desire to live at home may not always be matched by the ability to do so. At the same time, the desire to live in a group setting may not always be matched by the financial ability to do so. As we consider the aging of our population, we need to think about what America’s elders can afford in terms of their care and housing choices. For example, NIC’s study on the Forgotten Middle, published in May 2019 in the public policy journal Health Affairs, showed that 46% of 75-plus middle-income households will not have sufficient financial resources to live in today’s senior housing.

With a spotlight now shining on the issues of choice, desire and affordability of care and housing options, we can collectively consider what public and private sector solutions exist today and what needs to be re-imagined, designed and created. It’s an opportunity for public/private partnerships, as well as for private sector solutions and innovative and creative public policies.