NIC MAP® Data Service clients attended a webinar in mid-January on the key seniors housing data trends during the fourth quarter of 2019. Key takeaways included the following:

Takeaway #1:  Seniors Housing Occupancy Edged Higher in 4Q 2019  

• The occupancy rate for seniors housing inched up 10 basis points (bps) to 88.0% in the fourth quarter. This was the same level as in the first quarter and placed it 30 bps above the eight-year low of 87.7% reached in the second quarter of 2019. As the chart shows, the all occupancy rate for seniors housing has been hovering near 88.0% since the second quarter of 2018. 
• For seniors housing, net absorption totaled 3,835 units in the fourth quarter, slightly more than inventory growth of 3,758 units.

Takeaway #2:  Annual 2019 Inventory Growth Slowed for Assisted Living

• In the fourth quarter, the assisted living occupancy rate rose 30 bps to 85.7%, the highest level since the fourth quarter of 2017 and up 60 bps from the year-earlier low of 85.1%. During the quarter, net absorption totaled 2,407 units, outpacing new inventory growth of 1,593 units.
• On an annual basis, assisted living net absorption reached a second record year in a row. It totaled 9,661 units during 2019, the most units absorbed during a year since NIC began reporting the data in 2006 and slightly more than in 2018 (9,264). Net demand exceeded inventory growth of 9,175 units, albeit slightly (486 units), for the first time since 2012.
• Note the slowdown in inventory growth in 2019 compared with 2018. In 2018, there were 14,635 units of assisted living inventory added in the NIC Primary 31 markets. This compares with 9,175 in 2019 or roughly two thirds the volume of 2018.
• Based on this inventory data, it appears that 2018 was the peak year for inventory growth and 2019 may be the inflection year.

Takeaway #3: Independent Living Units Under Construction Steady

• Construction as a share of inventory for majority assisted living properties decelerated and equaled 7.3% or 22,000 units in the fourth quarter. This includes all properties under construction from start to completion. This was the lowest rate since 2015 and down from a peak of 10% in late 2017.
• The same pattern is not yet evident in independent living as the graph shows. In the fourth quarter, construction as a share of inventory totaled 6.2%, where it has been hovering for the past year.
• Note, however, in terms of units under construction for IL, it was almost the same as for assisted living at 21,000 units in the fourth quarter.

Takeaway #4: Seniors Housing Occupancy Year-over-Year: 17 Markets Up, 13 Markets Down

• The graph below shows a comparison of occupancy rates among the NIC MAP Primary 31 seniors housing markets.
  • For perspective, the 31 Market average was 88.0%, as seen in the middle of the graph by the green bar. Sixteen markets had occupancy rates higher than the Primary Market average. Starting on the left is the market with the highest first-quarter occupancy rate: San Jose, at 95.7%, a new high for that market. After San Jose, the highest occupancy levels are in New York, Portland, San Francisco and San Diego. 
  • At the other end of the spectrum are Houston, with an occupancy of 82.5% followed by Atlanta (82.7%), Phoenix (83.4%) and Las Vegas (84.1%).
  • This chart highlights the very wide disparity between the best performing markets and the poorest performing markets with a 13.0 percentage difference between the strongest and the poorest performing markets.
  • In the second quarter, 13 markets had occupancy rates lower than year-earlier rates, while 17 had occupancy rates higher and one was unchanged.

Key Takeaway #5:  Private Buyers Still Very Active in 4Q 2019

• Seniors housing and care closed transactions volume in 2019 totaled $13.1 billion, with the fourth quarter representing 14% of that volume, according to the preliminary figures for 2019. Volume has varied by buyer type.
• The private buyer type has been consistent in terms of closed transactions volume over the past 3 years, ranging from $5.6 billion in 2017 to $6.1 billion closed in 2018 to $5.8 billion in 2019, according to preliminary data. 
• The institutional buyer type represented 23% of the $13.1 billion in closed transactions in 2019 as its total closed dollar volume increased by 5% from 2018 when it represented 20% of volume and closed $2.9 billion in transactions. The current closed total volume for 2019 is $3.1 billion. 
• Public buyers representation of total volume decreased from 32% in 2018 to 21% in 2019. In terms of the dollar volume, it saw a significant decline in closed transaction volume which dropped 41% from 2018’s $4.7 billion to close 2019 at $2.8 billion.

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What does it take to get advocacy groups, insurance companies, foundations, and policy makers all on the same sheet of paper? In the case of caring for chronically ill older Americans, it appears that it takes a shared sense that improved outcomes, lower costs, and strong business performance are achievable – but only with cooperation, innovation, and a willingness to think differently.

On January 7, we attended an extraordinary and encouraging presentation hosted by Senator Mark Warner’s office, made possible by The SCAN Foundation, and led by the Long-Term Quality Alliance (LTQA), and Anne Tumlinson Innovations (ATI). Titled “Medicare Advantage and the CHRONIC Care Act: Implementing Innovative, Non-Medical Solutions for Older Adults,” the event served to launch and support a set of newly developed guiding principles for an updated Medicare program.

The principles in question were arrived at by an unusual working group convened by ATI and LTQA. As described in the accompanying white paper, “A Turning Point in Medicare Policy: Guiding Principles for New Flexibility Under Special Supplemental Benefits for the Chronically Ill,” the group was “comprised of a diverse array of national experts on Medicare Advantage and long-term services and supports.” The white paper lists the group’s members, stating their support and commitment; it’s a collection of leaders from entities that in other settings have sometimes found reason to take potshots at each other in the press or to cast blame for inaction. We are not accustomed to seeing them working together in a consensus-building process.

Members include classic advocacy groups, such as AARP, The Arc of the United States, the National Council on Aging, the Community Living Policy Center UCSF, the National Association of Area Agencies on Aging, Meals on Wheels America, and Justice in Aging. What makes the group particularly rare is the fact that all these groups worked side-by-side in a collaborative process with leading insurers such as Kaiser Permanente, Centene, CVS Health Aetna, Anthem, Blue Cross Blue Shield Association, and others. Add to the mix funders such as The SCAN Foundation, The Commonwealth Fund, and the Robert Wood Johnson Foundation, and you truly have strange bedfellows. But what they’ve achieved could only be brought about by such an array – and by a shared understanding of a common challenge: to deliver better outcomes at lower cost through utilization of the new flexibility in care for the chronically ill.

Clearly, these leaders have listened to one another and reached agreement on how best to move forward and take advantage of an unprecedented opportunity: the passage of a new law named “Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act.” Enacted as part of the Bipartisan Budget Act of 2018, the law, as summarized in the white paper, which is subtitled “Guiding Principles for New Flexibility Under Special Supplemental Benefits for the Chronically Ill (SSBCI),” “expands what qualifies as a supplemental benefit to meet the needs of chronically ill Medicare Advantage enrollees.”

The white paper further explains:

“Prior to the CHRONIC Care Act, Medicare Advantage plans could only offer supplemental benefits that were primarily health related, such as dental care, and had to make them available to all plan enrollees. Through the CHRONIC Care Act, Medicare Advantage plans may now offer SSBCI. These benefits may include services that are not primarily health related, such as home care, as long as the service has a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee. The new law also gives the Secretary of Health and Human Services the authority to waive, only with respect to SSBCI, the requirement that benefits be made available to all enrollees.”

A review of the “Guiding Principles” that the group has released indicates that they see a real opportunity in the flexibility now afforded to MA plans to tailor benefits to the needs of a particular individual, rather than to an entire class of plan beneficiaries, as required under former rules. If payers and providers can address the individual needs of the chronically ill population, not all of which are directly health-related, they may have a significant impact on health and healthcare utilization.

This working group is extraordinary, not only for including such an array of interested parties, but for arriving at a shared vision “to guide a diverse array of stakeholders as they work to develop, implement, offer, deliver, and use SSBCI.” The group also serves as hard proof that as our healthcare system continues to move towards value-based care new partnerships will arise – often putting strange bedfellows together in ways they might not have imagined just a few short years ago.

But there are tensions that are real and must continually be addressed. Providing insurers greater flexibility so that they will innovate may be necessary, but there are concerns around giving them too much freedom. It is also likely that some innovations will fail. Convening major players representing such a broad array of interests ensures that every perspective is accounted for, as the system seeks to innovate without failing the people and institutions that it serves. The principles account for a realistic balance of these interests, while providing the tools necessary for everyone to play a role in achieving the common aim.

While every other stakeholder was well-represented, health systems were noticeably absent from this effort. They will likely be the last institutions to fully buy in to value-based care. Most systems today are still operating on the fee-for-service system, and few, if any, have developed expertise in managing chronic diseases, or pre- and post-acute care. These factors, along with their traditional focus on curative intervention may underlie their absence, but as everyone else works diligently to keep patients out of the hospital, and to renew the focus on value-based care, even health systems will have to evolve, or else suffer the consequences of a disruption in their markets.

There is a great opportunity to learn from this period. The working group recognizes that this is the “beginning of a path toward person-centeredness in Medicare.” They include as a principle that the SSBCI should “evolve with continuous learning and improvement.” To be successful over the long-term we will need research, with reporting requirements, as outlined under this principle. We will need some of these stakeholders to pilot innovative programs, measure and compare results, and test new ideas. Across the program, we will need to “build the evidence base” – which is one of several suggested next steps in the white paper – as these initiatives develop.

There is plenty of work to do, both to address major challenges in our approach to caring for frail elders (and everyone else) and to seize new opportunities to succeed. But this unique and surprising effort indicates that our institutions are willing to work together to be successful. And that’s a turning point.

Each spring thousands of leaders in seniors housing and healthcare convene for 3 days of collaboration and education at the NIC Spring Conference. Attendees expand their networks, make lasting professional connections, explore partnerships, and learn about recent trends in the industry.

This year’s 2020 NIC Spring Conference: Investing in Seniors Housing & Healthcare Collaboration — March 4-6 in San Diego, CA — offers innovative new options that make it easier than ever to connect with peers and potential partners.

To ensure conference attendees connect efficiently and effectively throughout the event, “the NIC” features welcome and networking receptions, networking breakfasts and breaks, meet up points, and the highly effective networking lounges. Plus, the conference mobile app and attendee list is provided to all conference registrants in advance of the event to allow for meeting planning and scheduling with ease.

Braindate

New this year, NIC is launching braindate, a platform that facilitates experiential peer learning during the conference. Braindate will help attendees find and start conversations with other attendees who share interests or challenges for topic-driven, learning-focused conversations. Exploring partnership opportunities between healthcare organizations and seniors housing? Use braindate to break the ice and maximize networking at the 2020 NIC Spring Conference. Braindates can be scheduled using the conference mobile app, with details available on our website.

As NIC Founder & Strategic Advisor Robert Kramer wrote in this blog’s first post of 2019, Welcome to Senior Care Collaboration, there’s a powerful case for healthcare and seniors housing leaders to pay attention to the disruption now occurring in their industries, and consider working together to achieve common goals. Kramer launched the year (and this brand-new microsite and blog), with the statement:

“Players in various healthcare silos and payors, many of whom would have had no interest in sitting down with our sector previously, are beginning to take an active interest in settings that are home to several million frail seniors with multiple chronic conditions and functional needs each day. As we recently argued in the October Insider, it will be necessary in this new environment for the seniors housing and care sector to develop new partnerships, as it collaborates with healthcare organizations, both upstream and downstream, to meet the needs of our residents in a value-based world.”

Since then, there has been a significant surge in new partnerships, M&A activity, collaborations, and other business initiatives that draw seniors housing and healthcare closer together, often featuring innovative models and new thinking on how to improve outcomes while achieving robust business performance. This trend has been reflected in a long list of headlines focusing on new deals being inked, from major investments by the likes of Amazon, CVS, Walmart, Microsoft, Humana, and other giants, to smaller collaborations and partnerships between seniors housing and healthcare players across the country.

Our recent recap of that news, all of which is carefully, and regularly, curated and presented on the resources page of this website, was selected for Ziegler’s “Senior Living Finance Z-News’ Recommended Reading List” for Q4, 2019.  It’s already one of our most-read blog posts for the year, which likely reflects a growing interest among industry decision-makers in staying informed on the latest deals and innovations in healthcare collaboration.

Kramer’s welcome post also announced what readers could expect: “The ‘Housing and Healthcare’ blog will feature interviews, original articles and analysis, along with commentary on news items and trends. It is a platform both for NIC to distribute analysis and for contributors to voice their perspectives.” Indeed, the blog has featured exclusive interviews with some of the industry’s most influential leaders and produced widely read articles featuring their unique insights. Our two top posts for the year feature such insights from two of the industry’s most respected CEO’s.

The most-read “Housing and Healthcare” blog post for 2019 is “Investor Bets on Medicare Advantage,” which focuses on the investment strategy of former Brookdale Senior Living head John Rijos, and his newly-formed healthcare investment firm, Chicago Pacific Founders (CPF). The post, which blends insights from Rijos with an overview of Medicare Advantage trends, draws attention to what may be an important opportunity for others in the industry, presented with context and some perspective on the underlying drivers of the strategy. We believe its popularity is due in part to interest in a recognized leader, and partly by an interest in understanding how to approach major changes in our healthcare system, which are already beginning to impact the seniors housing and care sector.

Close behind our top post, by only a hundred or so views, is “Marquis Embraces Mission of Collaboration,” another piece that features the insight of a well-known leader in seniors housing and care. CEO Phil Fogg, Jr. discusses Marquis Companies’ I-SNP strategy as an important part of his vision for the business – and for his residents. His exclusive interview with NIC provides blog readers a connection with a leader who is innovating in the space and is willing to outline how he views the market today. The post ends with Fogg directly addressing blog readers: “His advice: Providers should decide whether they want to own or outsource ancillary services. Those providers without the management bandwidth, financial resources, and enough residents or patients to enjoy the benefits of scale should find partners and collaborate with them. Fogg said: “The worst thing someone can do is nothing.”

Specific pain points and solutions, garnered from real partnerships, are featured in our third most-read post of the year. “Collaboration vs. Competition: How to work with a home health agency” features an exclusive interview with Sarah Walmsley, national director of strategic partnerships at Bayada Home Health Care. NIC’s interview focuses on how seniors housing leaders can create better resident experiences and extend length of stay by collaborating well with outside agencies, rather than refusing to work with “competitors.” Walmsley offers practical insight and advice on managing those partnerships.

Some of our posts are intended to shine a light on developing trends, innovations, and investments in the future that may have a real impact on seniors housing in coming years. “America’s New Hub for Innovation is Focused on Senior Care,” is the result of Bob Kramer’s attendance at a major ribbon-cutting in Milwaukee, Wisconsin. The post features Direct Supply’s Innovation & Technology Center, a multi-million-dollar investment focused entirely on improving seniors housing and care. After reporting on the center’s mission and focus, this top post ends with Kramer’s quote, “We are truly fortunate to have an innovation center like this, totally devoted to issues around senior care and senior living.”

Our final top post rounds out the group with another opinion from Kramer. In “Good Care Transitions Are Not Enough,” Kramer appeals to seniors housing and healthcare leaders alike on the subject of improving collaboration in order to improve outcomes. He points out a real problem: in a siloed system, “Each time you hand off to a new setting, the senior healthcare professional in that setting becomes like a dog marking its territory. They routinely overrule the other silo.” Kramer’s post provides a thoughtful, constructive perspective on the issue, and links to a recently published white paper for further reading. We believe that kind of insight on a real problem affecting millions – as well as the post’s directness and potential for controversy – is likely responsible for its popularity.

Look for this blog to continue to deliver exclusive interviews, insights, news, and commentary on the quickly developing phenomenon of housing and healthcare collaboration. As our most-read posts of 2019 clearly indicate, there’s real interest in developing collaborations to improve outcomes and build robust business performance. And you need only subscribe to stay informed of the very latest developments in 2020.

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.