Telehealth, telemedicine, virtual care, eConsult, store-and-forward…what does this all mean? More importantly, how do you better serve your resident populations — in a global pandemic and onward? Telehealth is a broad term that seems to get caught in a tangled web of policy, compliance, and reimbursement. However, telehealth brings incredible promise to our highest risk populations in this pandemic, and has transformational implications for the way healthcare will be delivered even once the pandemic is behind us.

Imagine an 87-year-old woman living in a senior living community. She falls on her way to the bathroom, hurting her hip and hitting her head. She is able to call for help and the night staff comes to her room. The young man on duty helps her back in bed, but knows she needs medical attention. He types her name into the iPad on the wall and is immediately connected with an ER doctor. The physician introduces herself, asks a few basic questions, and directs the night staff employee through a physical examination. She then directs the night staff employee to take a photo of the resident’s eyes to include in a neurology consult. The physician reassures the woman that everything is fine for now, but that she will need to get an x-ray in the coming days. The physician also explains that she will deliver the news from the neurologist in the morning, but there is nothing to worry about now. The woman is able to fall asleep and wakes up to a message from her ER doctor and a neurologist providing her detailed instructions around her care plan and the next steps — reassuring her she will be alright. She shares the videos with her senior living facility staff, children, and grandchildren.

How was this possible? First, the senior living community had synchronous primary and urgent care telehealth services. The operator of the property had already gathered key health data, emergency contacts, and consent, all of which was integrated into their in-room tablet and HIPAA compliant telehealth portal. The telehealth ER doctor was able to immediately access the key information and pair it with the incident requiring medical attention. Second, the operator and telehealth provider had asynchronous telehealth services for specialty care and video communication. This enabled the ER doctor to access specialists and receive care plan guidance within hours while also communicating key information to the resident in a shareable, repeatable, and personalized video message. This solution is what enabled the woman to have a neurology consult without leaving her room and receive a summary of her experience and next steps to re-watch, show her staff nurses, and share with concerned family.

Effective use of telehealth can result in reductions in ER visits, readmissions, and unnecessary COVID-19 exposures, while empowering front-line staff and improving the resident and family experience altogether. Telehealth has the potential to drive immense value for residents and providers alike within seniors housing. It may feel like this vision is a long way off, but the solutions are ready and available — operators need only understand what their options are and thus what best fits with their priorities.

A Brief History

The history of telehealth goes back several decades. Telehealth was first authorized in Medicare in 1997. Shortly thereafter, the internet boom democratized access to information, accelerating innovation across industries and instigating the rise of consumer choice (“consumerism”). The Affordable Care Act initiated a healthcare course correction toward value-based care, all while consumers were starting to expect the same kind of options, service, and convenience with their healthcare that they were experiencing when buying groceries, booking a plane ticket, or customizing a pair of shoes.

By the beginning of 2020, the majority of healthcare providers and hospital systems had started offering telehealth or at least had it on their strategic roadmap for the coming years, as it demonstrated the potential to not only please healthcare consumers, but also address rising healthcare costs and quality care access inequities. As such, telehealth has been on an upward trajectory for decades, albeit a slow one, until now.

When COVID-19 hit the U.S., cities, counties, and numerous states went under shelter in place policies. For millions of Americans, and thousands of healthcare providers, the need for telehealth options became urgent. CMS used emergency rulemaking to provide Medicare telehealth flexibilities for the duration of the pandemic. This expanded telehealth-eligible services, provided tech mode flexibilities, and expanded the types of practitioners eligible to provide telehealth services. Adoption skyrocketed, both by physicians and their patients, primarily older adults.

COVID-19 has significantly accelerated the proliferation of telehealth as a key element in care delivery. Now, telehealth is in the toolkit of nearly all providers and is an option for nearly all patients, including millions of seniors housing and care residents. According to a study done by McKinsey & Co, by May 2020, 76% of consumers said they are now interested in using telehealth going forward. User adoption coupled with telehealth’s impact potential on triage, coordination, productivity and convenience will ensure its continued presence in healthcare — and seniors housing — as we know it.

Telehealth Today

Telehealth can simply be defined as care delivered via virtual communication between patients and healthcare providers or providers to other providers.

There are many vendors offering a variety of telehealth solutions in today’s market. it is important to understand the defining variables that sit behind the vast array of options.

1. Modality: Telehealth can be delivered through a variety of media — audio, video, or text. It is critical to consider the richness of the media. Video and other virtual media are the closest to in-person, while text may feel impersonal or automated.
2. Timing: Telehealth can be delivered both synchronously and asynchronously. Synchronous refers to live communication such as a phone call. Asynchronous refers to communication that is delivered and then stored until the recipient reviews it — think of a voicemail (this is also referred to as store and forward). The value of synchronous telehealth is that it most closely resembles an in-person appointment. Asynchronous telehealth can also provide significant value to both patients and providers, as it eliminates the need for scheduling and can be referred back to, shared, or re-consumed.
3. Participants: The most common use for telehealth is between patient and healthcare provider. Telehealth also empowers senior living care workers to take an active role in their residents’ care journeys, through three-way visits. The ability to include family or caregivers in the care process leads to better communication and decision-making for the resident. Telehealth also extends to virtual communication for care delivery purposes between two healthcare providers — think of a second opinion, or a consult. This mode of telehealth can collapse the care cycle by empowering frontline providers with specialist expertise — reducing wait times, coordinating care, and reducing medical costs.
4. Provider integration: Many telehealth companies offer hardware or software to facilitate care. Others offer integration with provider networks, and occasionally operate as their own health system. Doctor On Demand, for example, has a network of board-certified primary care physicians, psychiatrists, therapists, and physician-led care teams. Similarly, Sitka is supported by a vast network of specialty providers such as dermatologists, cardiologists, neurologists, etc.

There are a myriad of options, and there is a lot to consider, but this should help set structure around the landscape of offerings.

Telehealth and Senior Care

Senior housing and care providers are uniquely positioned to reap value from telehealth for residents, families, staff, and the senior living communities themselves. Seniors housing has a captive user base around the clock and immediate economies of scale upon adopting a new solution. These communities largely have the power to control access and devices, while the expertise needed for physical examinations is usually available on site, oftentimes eliminating the need for in-person visits to your community. By employing telehealth solutions, operators can significantly decrease the need for in-person trips to the doctor’s office, or the emergency department, which families and residents now prefer to avoid.

The seniors housing population itself has greater need and greater reward for telehealth. The senior population accounts for the highest proportion of medical costs in the US, driven by ER visits and inpatient stays. Many times, conditions are worsened by travel and unnecessary exposures — avoidable with telehealth. Also, the senior population is eligible for value-based care (e.g., capitated Medicare Advantage Plans), which eliminates the incentive for excessive doctor visits or procedures and instead encourages timely and preventive care.

Seniors housing and care communities are home to over three million older adults, most of whom have multiple chronic conditions. The pandemic has brought with it heightened fear by these seniors and their adult children of traditional healthcare delivery settings, such as the hospital, the emergency department, and even the waiting room of the doctor’s office. Seniors increasingly both want and need to have healthcare services brought to their residential communities.

A clear opportunity exists for every type of senior living property, but telehealth is not one size fits all. Each senior living type, brand, and property should be assessed to identify how telehealth can be implemented to solve its most pressing needs.

First, structural elements must be assessed: skilled nursing availability, staff coverage, resident health plan membership mix, technological infrastructure (e.g., wifi, device access). Each of these factors will be key considerations as you balance budgetary constraints and feasibility of the different telehealth offerings.

It’s also important to factor in the intangibles: brand, culture, family involvement, resident investment in community decisions, staff / management relationship. Think about the goals of your proposed telehealth solutions and how they fit into your organization’s identity. While telehealth poses significant value, does the solution you are considering align with your organizational strategy and mission? Consider making small adjustments to better fit with competing priorities.

As you set off on this journey, it will be important to remember the fundamental rule of change management: key stakeholders must be included in the conversation and bought-in at each step. Such stakeholders may change depending on the operator or property type, but consider leadership, staff, residents, and families. Inclusion may entail conducting a pilot with specific residents and staff that have high likelihood to champion the chance, or hosting a marketing event with families early on to communicate the goal for the new telehealth solution. Buy-in will be critical to early stage implementation and to long-term success of telehealth in your organization.

Telehealth is Here to Stay

Change management may be daunting, but telehealth is here to stay. The sooner your telehealth solution is up and running, the better your communities and your residents will be in the long run. Telehealth is a powerful way to offer your residents safe and timely care, and will only become more essential in the future.

In his recent “NIC Talk,” given at the 2020 NIC Fall Conference, Dr. Tim Ferris, CEO of the Mass General Physicians Organization, said that when it comes to the utilization of telehealth to bring services to seniors with chronic conditions, “We are not going back.” Indeed, telehealth offers senior housing providers opportunity for onsite triage and proactive management of residents’ chronic conditions, allowing this high-risk population to stay at home. Pandemic necessitated telehealth will hopefully diminish soon, but continued investment and change management will ensure improved healthcare services, outcomes, and comfort for seniors in years to come.

Sources: McKinsey report — Telehealth: A quarter-trillion-dollar post-COVID-19 reality?

This article was originally posted on Medium by Sitka, Inc.

Budgeting for capital expenditures has taken on a new complexity. Not only are investors changing their assumptions in the COVID-19 era, but the seniors housing stock is aging. A growing number of older properties need costly updates to stay competitive.

Two sessions at the 2020 NIC Fall Conference addressed the best approaches to capital expenditures, or CapEx, in a quickly changing environment.

 “Regaining occupancy is critical,” said speaker Colleen Blumenthal, COO & managing partner at HealthTrust. “Any investment that helps occupancy will be revenue enhancing.”

Blumenthal was joined in the educational session and a separate peer-to-peer exchange by Lukas Hartwich, senior analyst, Green Street Advisors.

Expenses related to COVID-19 are not expected to have a long-term impact on CapEx allocations or underwriting assumptions. according to the panelists. Aging buildings will be a bigger concern going forward.

But investors question whether some COVID-related costs can be classified as capital expenditures vs. unbudgeted expenses. High-cost items might be considered capital expenditures, according to Blumenthal. These might include new technology platforms and HVAC systems. Rooms converted to spaces for employees to change into personal protective gear might qualify as well.

Rising expenses related to the pandemic have caused investors to defer some capital spending. The replacement of carpeting can wait. Resources are being devoted to keeping residents safe.

Building obsolescence is a big issue. The first wave of seniors housing properties is reaching the 25-year-age mark. “Assets need more capital expenditures as they age,” said Hartwich. Boilers break down. Roofs need to be replaced. 

Capital expenditures can fix some age-related problems, but not others. For example, many assisted living buildings from the 1990s include an ice cream parlor, an amenity out of fashion. That space can be repurposed for another use, according to Blumenthal. But units with eight-foot ceilings, or a property with a lot of studio apartments can’t be fixed.

Even newer properties may need an upgrade.

“Assets need more capital expenditures as they age, boilers break down. Roofs need to be replaced.”  -said Hartwich. 

“Competition is a huge factor in spending,” said Blumenthal. Five-year-old buildings may require a complete interior refresh to compete with a new community that opens nearby. She said the competition is especially intense at the high-end of the market which accelerates capital expenditures.

On average, operators spend about 26% of net operating income (NOI) annually on capital expenditures, according to the 2020 State of Seniors Housing report, compiled by HealthTrust.

The State of Seniors Housing report is based on a sample size of 1,748 properties. Among properties built since the year 2000, spending on CapEx totals about $2,500 to $2,600 per unit. Spending on older properties tends to be higher than for newer properties. Older buildings need more repairs and updates.

Other data sources confirm those numbers, according to Greenstreet’s Hartwich. NCREIF, the industry organization that aggregates commercial real estate data for institutional investors, pegs CapEx in the 20-25% range in recent years.

CapEx Factors

Spending varies based on property type and location.

For example, life plan communities tend to spend the most on CapEx, about $7,000 annually per unit. Life plan or continuing care communities rank as among the oldest of senior living properties. These communities often charge entrance fees and tend to have upscale amenities, such as multiple dining venues, that may require regular capital expenditures. “The more the amenities, the higher the expectations of the residents,” said Blumenthal. “High-end communities are fast to replace carpeting and other items.”  

Owners of properties in tertiary markets are slow to reinvest. Consumers often don’t have a lot of choice of where to live. Competition is scarce, so there’s less incentive to invest in properties.

Another major factor driving capital expenditures is a change in ownership. Spending peaks just before or right after a sale. Those are the times when owners are most likely to spend on big ticket items to help boost occupancy.  

In general, capital expenditures are increasing. “We really see an uptick,” said Hartwich. Much of the increase can be attributed to the age of the buildings.

Over the last decade, capital expenditures have increased at a 9% rate compounded annually. In 2011, spending was about $2,500 a unit and now it’s $5,000 a unit. Communities built prior to 1980 spend about 40% of NOI on capital expenditures. Properties built in the 1980s and 1990s spend about 30% on CapEx.

Interestingly, owners say they are spending less on CapEx in 2020 than they did in 2019. Some of the decline could be due to the disruption caused by the COVID-19 outbreak. Workers have not had access to buildings to conduct renovations. Spending is being allocated for items to improve resident safety, such as touchless light switches.

Historical data and comparisons to other asset classes should be used with caution when figuring CapEx reserves. Seniors housing has more amenities than apartments. Hotels get more wear and tear than seniors housing.

There is some overlap between seniors housing and hospitality in terms of the owner-operator dynamic. But historical data for lodging goes back further. “When you are looking at newer assets, CapEx may seem lower which can cause investors to overestimate returns,” said Hartwich. “The sector is aging.”

CapEx tends to be “lumpy,” according to Blumenthal, uneven from year to year. Spending may be high one year and then low the next. The timing of renovations often depends on broader market conditions.

Allocations for CapEx may also depend on how long the investor intends to hold a property, according to Greenstreet’s Hartwich. Short-term investors with a hold period of say five years may set aside less for CapEx compared to investors that plan to hold the property for a longer period.  

Looking ahead, it’s likely that COVID-19 will not have a long-term impact on capital expenditures. Most costs will be allocated to one-time operating expenses. “Investors will adjust,” said Hartwich.

Managed Medicare revenue mix at 8.2%

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

Here are some key takeaways from the report:

1. The trend of declining occupancy rates for skilled nursing continued in the month of August due to the on-going impacts of COVID-19. The downward pressure on occupancy has been significant since the pandemic, with another 81 basis point drop from July to August to a new low of 73.8%. This represents a 9.6 percentage points drop in just the five months since March (83.4%) and a 10.9 percentage point decline since February. On a year-over-year basis, the occupancy rate is down 10.5 percentage points from August 2019. The occupancy trend was consistent across geographies as both urban and rural areas decreased from July to August ending at 73.7% and 75.1%, respectively.
2. Patient day mix across all four payor types, i.e., Medicare, managed Medicare, Medicaid and Private, trended differently as Medicare and managed Medicare increased from July to April but Medicaid and Private decreased. This suggests the weakness in occupancy from July to August may be due to Medicaid admissions and/or patient days.
3. Medicare patient day mix increased 40 basis points from 12.1% in July to 12.5% in August. Since March, it is up 114 basis points and since last year, it is up 125 basis points from 11.2%. In addition, Medicare revenue mix increased 87 basis points from July to August, increasing from 20.8% to 21.6%. The combination of the overall decline in occupancy and the increase in Medicare patient day mix and revenue mix suggests that the waiver of the 3-Day Rule imposed by the Centers for Medicare and Medicaid Services (CMS) is having a positive impact on Medicare days. Meanwhile, Medicare revenue per patient day (RPPD) declined 0.3% from July to August, ending at $549. It has now decreased 1.1% from June after an initial increase during the earlier periods of the pandemic as skilled nursing properties were likely receiving more Medicare RPPD because of additional reimbursement due to COVID-19 positive patients requiring isolation.
4. Managed Medicare admissions have seemingly stabilized after decreasing significantly during the pandemic. Its patient day mix increased 14 basis points from July ending August at 5.9% and up 40 basis points since April. In addition, managed Medicare revenue mix is up 21 basis points from July ending August at 8.2% and up 34 basis points since April. The current stabilization in patient day and revenue mix is at the same time managed Medicare revenue per patient day (RPPD) is decreasing. RPPD decreased from $449 in July to $447 in August and is down 1.1% since February. The latest decrease in August suggests the downtrend in RPPD may be continuing after initial reimbursement stability from insurance companies during the earlier pandemic days. Although some stabilization occurred in August, managed Medicare revenue mix is down 168 basis points since March and down 246 basis points since February when it was 10.7%.
5. Medicaid revenue mix declined 46 basis points from 48.8% in July to 48.4% in August. Medicaid revenue mix has declined 222 basis points since March when the mix was 50.6%. Furthermore, it has decreased 324 basis points from August 2019. Medicaid patient days likely decreased as well, due to lower overall admissions during the pandemic thus far and some Medicaid patients converted to Medicare because of the waiver of the 3-Day Rule. Meanwhile, the increases in Medicaid RPPD seen at the onset of the pandemic have slowed. Medicaid RPPD is up 0.4% since April but has increased 2.5% since March when initial increases in reimbursement from states helped skilled nursing properties related to the number of COVD-19 cases at properties. RPPD was flat from July to August at $233.

   To get more trends from the latest data you can download the Skilled Nursing Monthly Report. There is no charge for this 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 MAP^® Data Service clients attended a webinar in mid-October on key seniors housing data trends during the third quarter of 2020. Findings reflected the impact of COVID-19 across the seniors housing and care sector, led by NIC’s research team. Key takeaways included the following:

Takeaway #1: Seniors Housing Occupancy Fell Sharply Again in 3Q 2020

• The all occupancy rate for seniors housing fell 2.7 percentage points in the third quarter 2020 to 82.1%, the lowest level since NIC began reporting the data in 2005. This drop in occupancy was directly related to the COVID-19 pandemic as demand (as measured by net absorption) fell by more than 13,000 units. Combined with the second quarter, net absorption fell by more than 28,000 units.
• Separately, supply accelerated to 4,900 units, more than 1,000 units higher than in the second quarter.  
• Since 1Q 2020 the occupancy rate has fallen an unprecedented 5.5 percentage points. The deterioration in the third quarter was just a bit less than in the second quarter.
• Stabilized occupancy for all seniors living properties, defined by NIC as properties that have been open for at least two years or, if open for less than two years, have already reached a 95% occupancy level, fell by 2.5 percentage points to 84.4%, also a record low. The gap between all occupancy and stable occupancy was 2.3 percentage points, reaching its record high difference seen in mid-2019.

Takeaway #2: Nursing Care Occupancy Fell Most in Past Two Quarters

• By property type, the pandemic took a toll its greatest toll on nursing care occupancy in the third quarter, with a drop of 4.2 percentage points from the second quarter to 76.0% in the third quarter. Combined with the second quarter drop of 6.5 percentage points, nursing care occupancy has fallen nearly 11 percentage points since the pandemic began. This reflects the fact that the COVID-19 virus has been particularly hard for frail elders and those with multiple chronic conditions and the fact that elective surgeries had been postponed during some of the months following the pandemic.
• Assisted living was next most affected with a 2.9 percentage point decline in occupancy to 79.1%. Combined with the 3.2 percentage point drop in the second quarter, there was a total loss in occupancy of 6.1 percentage points in assisted living since the beginning of the pandemic.
• Independent living saw a 2.4 percent point decline to 84.9% in the third quarter for a total two-quarter drop of 4.9 percentage points. This pushed the occupancy rate for independent living to a new low.
• In general, residents in independent living tend to be healthier than those in assisted living and nursing care, and hence the lesser decline.

Takeaway #3: Construction Starts Slowed Further in 3Q 2020 for Assisted Living and Independent Living

• Construction starts slowed in the third quarter, with 551 units of independent living initiated in the third quarter and 788 units of assisted living. On a four-quarter aggregate basis, independent living starts totaled 5,018 units, the fewest since 2013. As a share of inventory, this amounted to 1.5%. For perspective, at its peak in late 2017, it was 3.7%.
• Like other residential and commercial real estate sectors, starts are also being affected by tighter lending conditions and shortages in lumber and other key building materials.

Takeaway #4: Not-for-Profit Occupancy Decline Less than For-Profit

• The NIC MAP^® Data Service collects data for majority assisted living and independent living property types, as well as community types such as CCRCs and stand-alone memory, and segment care types such as ADL-focused assisted living, memory care and independent living. They also track market fundamentals data by ownership structure such as for-profit and not-for-profit. These slices of data are all accessible through the NIC MAP Data Service on the NIC MAP Portal.
• Not-for-profit properties have consistently had higher occupancy rates than for-profit properties since the Data Service began reporting the data. The gap between the two ownership structures was smallest at 1.1 percentage points in the 2012/2013 period and has been widening ever since. Prior to the pandemic, the gap was a very wide 6.9 percentage points.
• In the third quarter, this gap grew to 8.8 percentage points, with the not-for-profits experiencing an average occupancy rate of 88.2% and the for-profits having an occupancy rate of 79.4%. The record wide discrepancy in the third quarter reflects the fact that occupancy for not-for-profits has held up better since the pandemic, with a 4.1 percentage point decline, while the for-profits saw a 6.0 percentage point decline to 79.4%.
• Part of the explanation is that not-for-profits typically have a larger share of independent living units which have been less impacted by the pandemic and a smaller share of assisted living units which have been more heavily impacted.  

 Takeaway #5: Seniors Housing Occupancy Declines Vary Across the Nation

• This map shows the degree of occupancy loss in seniors housing properties by metro area since the first quarter of 2020. The darker the color, the worse the occupancy rate decline. Since March, Sacramento, Denver, Boston, St. Louis have seen the most loss in occupancy, while Washington D.C., San Antonio, and Las Vegas experienced the least deterioration in occupancy.
  

Takeaway #6: More Operators with Assisted Living Report Acceleration in Move-ins

• Since March, NIC has conducted a bi-weekly survey of owners and C-suite operators and executives of seniors housing and nursing care properties across the country in our Executive Survey Insights, The goal of the survey is to gather accurate, real-time information on current conditions and share these results with the industry. The data represents responses from small, medium, and large operators from both not-for-profit and for-profit providers. The data presented here shows findings from responses collected between March 24 through the week ending October 11^th.
• Now currently in its 14^th wave, this is the longest running survey of operators since the start of the pandemic, and NIC wishes to thank survey respondents for their valuable input and continuing support. The results of our joint efforts to provide timely and informative data to the market in this challenging time have been significant and noteworthy. These near-real time insights on the effects of the pandemic on senior living are being closely watched by the media and are working to help ensure the narrative on the sector is accurate.
• In this specific chart, the pace of move-ins for the assisted living care segment is examined across respondents’ portfolios of properties in the past 30 days. Focusing on the center of the chart—Waves 4 through 7, which included surveys from late April to late May, much of the country was experiencing widespread COVID-19 restrictions in physical distancing to mitigate the spread of the virus. Respondents reported organization-imposed and government-imposed moratoriums on admitting new residents, and thus difficulty backfilling residents lost due to normal attrition, residents moving to higher levels of care, and coronavirus illness and related move-outs—and the pace of move-ins ground down.
• By the end of July as shown in Wave 10, with move-in moratoriums easing across organizations, some residents waiting on sidelines with ADL needs could not wait to move any longer, and shares of organizations with increasing move-ins in assisted living was at the highest point to date. Recently, the shares of organizations with assisted living units that reported an acceleration in move-ins in the past 30 days increased in Wave 13 to the highest levels since the survey began in March.

Operators are invited and encouraged to help provide transparency to the market by participating in the next Executive Survey. Click here to complete the survey.

Interested in Learning More?

While the full presentation of the key takeaways from this article is only available to NIC MAP clients, you can access the abridged version of the 3Q20 Data Release Webinar & Discussion featuring my  exclusive commentary below.

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Now more than ever, the actionable data provided by NIC MAP^® Data Service can help you stay informed. To learn more about NIC MAP and accessing the data featured in this article, schedule a meeting with a product expert today.