Kate Nicholls of Investments at Ventas, Inc. explores the opportunities and challenges of senior housing and care integration

With options for senior housing and care integration continuing to evolve—and the discussions around the options increasing in frequency and volume—senior living operators may be starting to tune in.

Although the senior housing value proposition has not traditionally included healthcare, it has included offerings known to positively impact residents’ overall health, such as socialization, nutrition, and assistance with activities of daily living. With changes in Medicare and potential future healthcare payment reform, seniors housing providers find themselves in a position where formal involvement with healthcare may make more sense.

In the December issue of the NIC Insider newsletter, Kate Nicholls, Director, Investments at Ventas, Inc.,  offers insights into the opportunities and challenges for seniors housing operators looking to align with healthcare.

Nichols details why alignment may offer positive opportunities and prepare operators for future success, covering points such as:

• why improved care coordination may lead to better outcomes,
• the opportunity for increased revenue,
• potential for cost savings, and
• how the healthcare industry is moving in this direction.

Nicholls also lays out potential risks operators should consider when evaluating healthcare alignment:

• potential high cost to implement,
• increased regulatory risk,
• government reimbursement,
• distraction to the core business, and
• unanswered questions.

As Nicholl’s points out, “There is no one right answer, but operators and investors should avail themselves to all of the information available to decide what is best for their respective businesses.”

Read Kate Nicholls’ full article, “Senior Housing and Care Integration: An Opportunity or a Threat?,” in the December issue of the NIC Insider newsletter.

The Labor Department reported that there were 145,000 jobs added in December. This was less than the consensus estimate of 160,000 and marked the 111th consecutive month of job gains. For all of 2019, employers added 2.11 million jobs. That was a slowdown from the increase of 2.68 million in 2018 and ranked 2019 eighth for job growth in the past 10 years.

Revisions also subtracted a number of jobs to the prior two months. The change in total nonfarm payroll employment for October was revised down by 4,000 from 156,000 to 152,000 and the change for November was revised down by 10,000 from 266,000 to 256,000. Combined, 14,000 jobs were subtracted from 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. After revisions, job gains have averaged 184,000 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 28,000 jobs, and has added 388,000 jobs in 2019, similar to the increase of 359,000 in 2018.

The December unemployment was unchanged at 3.5% in December, a 50-year low. Average hourly earnings for all employees on private nonfarm payrolls rose in December by three cents to $28.32. Over the past 12 months, average hourly earnings have increased by 2.9%. 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 unchanged at 63.2% in December, which was the highest since August 2013.

The December employment report will support the Fed’s “on hold” stance, at least for the time being. In December, the Federal Reserve left interest rates unchanged and signaled it would stay on hold through 2020, keeping the Fed and its policies on the sidelines during the election year. “Our economic outlook remains a favorable one despite global developments and ongoing risks,” Chairman Jerome Powell told a press conference in mid-December following the FOMC meeting in Washington. He continued that “As long as incoming information about the economy remains broadly consistent with this outlook, the current stance of monetary policy likely will remain appropriate.”

In 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.
Fed officials also released new quarterly forecasts. These showed:

• The median estimate for the fed funds rate is at 1.6% at the end of 2020, 1.9% in 2021 and 2.1% in 2022. Thirteen officials expect rates to stay on hold next year, while four see a hike as appropriate.
• The jobless rate is expected to be 3.5% by late 2020, the same as it is now. The long-run unemployment rate is seen at 4.1%, down from 4.2% in September.

In 2020, there will be an estimated 23 million Americans over the age of 75 and 8.9 million over 83, a common move-in age of a resident to seniors housing. These will be members of the Greatest Generation and the Silent Generation. And some of these older individuals—roughly 90,000—will be centenarians or older. It’s not until the end of this upcoming decade in 2029 that the oldest baby boomer will have turned 83—effectively opening the proverbial floodgates for seniors housing. 

But that doesn’t mean it’s time to sit back and just wait because there is a lot of change on the horizon for the seniors housing sector. This blog highlights just one of these changes and focuses on technology.

Age-tech, gerontechnology, assistive technology, silver-tech are all descriptors of this emerging focus of technology applications as they specifically apply to older individuals. It’s the intersection of gerontology and digitization and the applications are wide ranging as older adults and their family caregivers adopt technology that can support their shared goals of safety, longevity, independence, quality of life and connection to friends and family.

Aging 2.0 identifies “Eight Grand Challenges” for this intersection of aging and technology: (1) Engagement and Purpose, (2) Financial Wellness, (3) Mobility and Movement, (4) Daily Living and Lifestyle, (5) Caregiving, (6) Care Coordination, (7) Brain Health, and (8) End of Life.

While this commentary is too short to do justice to each these focus areas, below are a few applications being developed by a host of software and hardware entrepreneurs and businesses, including the mega-giants Amazon, Google and Apple. 4Gen estimates that revenues in the U.S. age-tech market exceeded more than $350 billion in 2018, a significant industry indeed.

Brain Health.  Technology has the potential to help with cognitive care and brain health issues related to memory, language, problem solving and other cognitive skills that affect a person’s ability to perform everyday activities.   

Caregiving, Mobility and Movement.  From a health and wellness perspective, telehealth has the potential to reduce health care costs and improve health care coverage by allowing instant connectivity via video conferencing with live doctors. Hand-held devices with medical applications, remote monitoring of residents and connected equipment can provide visibility and insights about exercise regimens, diet and vital signs as well as help with sensory functions such as vision, hearing and motor skills.

Engagement, Purpose and Socialization.  Socialization, engagement and purpose are important considerations in aging.  Studies have found that social isolation and loneliness among seniors has the same impact on health as smoking 15 cigarettes a day, while a strong purpose in life can add five or more years of life span to older adults. Smart phones and appliances, remote sensors, mobile personalized connectivity applications and software systems have the potential to better allow aging in place, independence and virtual socialization.

Daily Living, Lifestyle and Care Coordination.  Robots, virtual assistants, smart phone apps, iPads and other devices can help with medication management, emergency response services, fall detection, vital signs tracking, transportation, finance, sensory aids and mobility aids. The on-demand economy can also help address these issues. Japan, whose society is aging more rapidly than the U.S., and which has a more vexing labor shortage challenge than does the U.S., is a good place to look at advancements in this realm.

As these technologies get tested and winners and losers emerge, the operations, real estate, social and medical aspects of the sector will be forever changed.

As we embark on a new year, it’s time to look back for a moment and review the milestones of 2019, which, in addition to our most popular posts, includes the relaunch of this blog platform over the July 4^th weekend. It’s now easier to search for articles by topic and keyword and easier to read on your phone or other device. We also installed better tracking software, enabling us to better understand which posts are most valued by our readers. As explained in our “Welcome to NIC Notes” post, NIC took the opportunity to change the blog’s name, too, in an effort to reduce the potential for confusion around our mission and focus, particularly for new readers from the healthcare space. Hence, “NIC CARES” has become “NIC Notes.”

A review of the new blog’s traffic reveals that it remains popular, and continues to steadily grow, both in terms of overall views and new subscribers. The most popular posts on NIC Notes remain those focused on trends and analysis, although a perspective piece (Bob Kramer’s views on the “Silver Tsunami”) ranks in the top five for the year. In case you missed any of these, here are the top posts for 2019, dating back to the re-launch of NIC Notes.

CCRC Market Trends: 3Q 2019

When measured both by unique page views and time-on-page, NIC Senior Principal Lana Peck’s “CCRC Market Trends: 3Q 2019” post was the most popular in 2019. Clearly, readers found this post interesting enough to rack up an average time-on-page of almost five minutes – a substantial commitment in a world of momentary quick-scans and high bounce rates. Our analytics indicate that many readers spent much more time with the post. As the post provides a substantive, well-considered narrative on the state of CCRCs, supported by the latest NIC data, and illustrated with original graphs, this is hardly surprising. While Peck refrains from stating any opinions, readers likely value her insights as they work to support their own analysis.

Five Key Takeaways from NIC’s Second Quarter 2019 Seniors Housing Data Release

When NIC MAP releases new data each quarter, and accompanies it with a webinar, hundreds of NIC MAP clients pay close attention. But you don’t have to be a client to gain real insights from the latest NIC MAP data. Blog subscribers know that NIC Notes features a breakdown of the key takeaways, complete with key graphs and some of the insights that are shared in the webinar. Perhaps this is why our quarterly “Five Key Takeaways” posts on seniors housing data rate so many readers. This year is no different, with the second quarter post drawing the most pageviews for the year.

Looking into the Future:  How Much Seniors Housing Will Be Needed?

Another big driver of pageviews is NIC Chief Economist, Beth Burnham Mace. When she co-authored a post with NIC Research Statistician, Anne Standish, titled “Looking into the Future:  How Much Seniors Housing Will Be Needed?” the blog saw a spike in traffic. Their analysis of several scenarios projecting future seniors housing needs at different penetration rates concludes that significantly more housing will be needed by 2040. The post includes their base case results, scenario analysis, and conclusions, along with an explanation of their methods and supporting graphs.

Why ‘Silver Tsunami’ is an Ageist Term

Not every top post this year is supported with graphs and statistical analysis. Many readers found NIC Founder and Strategic Advisor Bob Kramer’s post, “Why ‘Silver Tsunami’ is an Ageist Term” worth reading for another form of insight. He uses the blog to draw attention to his view that “Rather than thinking about a catastrophic ‘Silver Tsunami’ we need to be thinking about the potential benefits of a ‘Silver Stimulus.’” The post links to a more in-depth piece published in the NIC Insider, in which Kramer delves into the potential opportunities that a wave of aging baby boomers will open up for the seniors housing sector.

Current Occupancy Performance Patterns of Older Seniors Housing Markets May Surprise You

Rounding out our list of top NIC Notes posts for 2019 (since July 4), is another post from Lana Peck. Titled “Current Occupancy Performance Patterns of Older Seniors Housing Markets May Surprise You” the piece delves into the latest NIC MAP data to raise some interesting insights – and questions – around an aging supply of properties. The piece is brimming with data points, graphical illustrations, and the observations of a senior professional analyst who spends her time focused on the sector.  

As we look forward to a great 2020, NIC Notes resolves to remain as relevant, useful, and interesting as ever. The blog will continue to post detailed analysis based on the latest NIC MAP data, as well as expert insights on market trends, and the occasional perspective on the seniors housing and care industry. Subscribing is simple – and ensures you will receive a single weekly recap email, linking you to the latest posts, many of which will be read and studied across the sector.

The skilled care delivery and payments system is going through a significant transitional period and it is increasingly difficult to be financially successful without meeting quality standards.

“Financial success is being tied to quality,” said Marc Zimmet, president and CEO of Zimmet Healthcare Services Group, a New Jersey-based consulting firm. “A much more complex system has emerged with so many players, payors and vested interests, but meeting increasingly stringent value targets often results in counterproductive strategies that may improve one revenue source but hurt another. It’s all connected, or said another way, it’s our “Theory of Reimbursementivity.”

Zimmet’s firm advises skilled nursing facilities and other stakeholders on all aspects of what he calls the reimbursement-compliance ecosystem. His firm works with more than 3,000 providers and related stakeholders nationwide.

Based on his broad experience, Zimmet noted the difficulty for a skilled facility to be financially successful today without meeting the quality standards demanded by payors and provider partners. “Rewarding quality is the right thing to do,” he added, cautioning that quality measures can vary. “The issue is that everyone measures quality and rewards quality differently.” The process includes understanding the nuances of bundled payments and the new patient driven payment model (PDPM). “Many operators struggle to manage all these moving parts, and the result is lost reimbursement,” said Zimmet. “Things [] fall through the cracks; we try to make sure that doesn’t happen.”

Another important factor is the growth of Medicare Advantage plans. About 65% of new Medicare recipients are opting for Advantage plans, which push down episodic treatment revenue from fee-for-service Medicare.

Some skilled operators may benefit by joining an institutional special needs plan, or I-SNP, according to Zimmet. The goal of the I-SNP is to treat residents in place. A skilled nursing facility may be able to share in the savings generated by not sending residents to the hospital.

But Zimmet warned, “An I-SNP may be a balancing act for the facility. It has to consider how all the pieces fit together, including the dynamics of contracted services, such as physical therapy, the impact of capitated payments, and the new Patient Driven Payment Model (PDPM). It’s all connected.” An operator that brings down costs in one area may be raising them in another. Also, facilities in states with higher Medicaid rates may be better positioned to benefit from an I-SNP.

Another challenge: In a complex environment, operators can run afoul of regulations, particularly regarding Medicare coverage rules which can be impacted by whether or not the resident is enrolled in the I-SNP or traditional fee-for-service. “Compliance is a big issue that often gets overlooked—facilities must have consistent policies,” he advised.

See an extended interview with Zimmet, including his thoughts on positioning a facility and his outlook for the sector, in the December issue of the NIC Insider newsletter.