Focused on transformational change and increased collaboration, the annual event brought together more than 1,700 seniors housing and care executives – and a growing number of healthcare players – in San Diego, February 20-22.

The conference theme, “Investing in Seniors Housing & Healthcare Collaboration,” addressed the reality that the sector faces a period of change in which partnerships with a variety of service and healthcare providers will be key to business success.

Educational sessions explored the availability of capital, current market conditions, local market variations and how operators of skilled nursing properties can succeed under the new PDPM payment model. Sessions also explored innovation, taking on risk, and forging new partnerships in a value-based world.

NIC president and CEO Brian Jurutka outlined three forces driving the push for collaboration, saying, “These drivers will lead to transformational change,” in his opening general session remarks. He pointed out that baby boomers have different needs and preferences, and that the industry plays an important role as home to millions of high-need, high-cost seniors amidst significant healthcare delivery and payment reform. The third driver he pointed to is technological advancement, which he said will change operations for the better.

In his first public address since leaving Capitol Hill, Former Speaker of the U.S. House of Representatives, Paul Ryan, gave an encouraging perspective on the state of the U.S. economy. He reminded the packed general session audience of the enduring strength of the American system of government and the American dream.  In a follow-up fireside chat, Ryan and John J. Kelliher, a consultant and policy expert, discussed the growing role of Medicare Advantage programs, Medicare and Medicaid payment reform, and immigration issues amid a labor shortage. “Immigration reform will get done,” predicted Ryan. “But not in the next two years.”

Luncheon keynote speaker Ian Morrison, a healthcare futurist, identified the problems with the American healthcare system (too expensive) and then suggested some fixes. He pointed to technological advances, data analysis, and the importance of social determinants of health, and said that payors will increasingly cover non-traditional services, such as housing, to keep seniors out of the hospital. He answered questions in follow-up interactive session.

Highlights of the program of educational sessions:

Day 1

“Underwriting Healthcare in Private Pay Seniors Housing” showed investors how changes in the broader healthcare system impact the NOI of their properties. Using two scenarios, one from today and one from 2025, the panel illustrated how coordination of care will make a difference for fictional 86-year-old Mary and her eldest daughter, Sue, and also drive new revenue streams and improve NOI.

In a NIC first, video highlights were replayed on Day 2 along with a discussion, and live number-crunching, facilitated by moderator Joel Mendes of JLL, and NIC founder and strategic advisor Bob Kramer.

“Equity in Senior Care: Understanding the Players” was presented in a lively “Dating Game” format, complete with theme music and dating references. In two different games, two very different capital seekers asked tough questions of three potential financial partners to find the perfect match.

“I-SNPs: Why Providers are Becoming Payors in a Value-Based World” addressed the strategy of creating a Medicare Advantage plan. A panel of experts, already involved in the process, discussed Institutional Special Needs Plans, and keys to success.

Day 2

“Medicaid Managed Care in Seniors Housing and Skilled Nursing: Opportunity or Threat?” Panelists provided a roadmap of Medicaid managed care. How it works and the opportunities it represents.

“Valuation Methodology Revisited: The Impact of Change” covered current factors impacting property values: inventory, labor pressures, investor interest in the sector, and the availability of capital. The biggest risk going forward according to a poll of the audience is competition—for labor and from other providers.

“Beyond the I-SNP: Future Opportunities for Participation in Value-Based Care” explored how seniors housing providers can profit by assuming some of the healthcare risk for their residents. Panelists noted the need to prove value through data and outcomes.

“Recruit, Retain and Profit with a Top of License Workforce.” The panelists discussed scheduling flexibility, rewards, recognition, and a career path as retention tools. Referrals are the best source of qualified new workers. Attendees broke into small groups to share best practices.

“Real Estate Secured and Cash Flow Lending: Navigating Financing Options to Meet Your Business Needs” mapped out financing options. Debt financing is readily available from traditional sources such as Fannie Mae and Freddie Mac. Panelist Adam Sherman of Live Oak Bank highlighted loan programs that get overlooked from the SBA and USDA.

In “The Boomer Hackathon: Creating Models That Work for Boomers and Investors,” three teams – and those in attendance – brainstormed innovations in seniors housing appropriate for incoming Baby Boomers. A standing-room-only crowd participated in the highly engaging event, which featured a panel of boomer judges, two minute project pitches, and projected financials to consider.

“It’s Not Room Service, It’s Healthcare… Or Is It? Forging Partnerships in a Value-Based World.”  New technology and new building designs are morphing hospitality and healthcare into a new seniors housing model. Panelists discussed how their properties blend hospitality and healthcare into a “perfect marriage.”

“Path to Healthcare Risk: Do You Have a Decent Roadmap and Proper Footwear?” Owner and operator Lynne Katzmann and consultant Anne Tumlinson gave a brief presentation about the core issues facing operators considering the formation of an I-SNP. Attendees broke into small groups to address key questions, sharing their observations on how an I-SNP may be an opportunity for a property to differentiate itself from the competition.

Day 3

“Implications of PDPM for Skilled Nursing.”  Steven Littlehale of PointRight addressed an engaged audience of investors and operators eager to understand the ramifications of the new Medicare reimbursement system. Bottom line: Lenders and capital partners should be meeting with operators to determine their readiness for the changes which will require improved patient assessments, coding accuracy and better data capture. “Skilled nursing will be seen as the best place for quality outcomes,” said Littlehale. “Make sure you are a winner.”

“A Post-Acute Survival Guide: Real Strategies and Real Results for Increased Occupancy.” Strategic up- and down-stream networks are critical for survival for post-acute providers. Payors and hospital systems use data to select those they invite into their network. Panelists noted that operators must “lean in” and engage with them for continuous improvement.

“Location Matters: Winners and Losers in Local Markets.” NIC chief economist Beth Mace highlighted the latest NIC MAP® data and key findings, including which markets performed well and which ones did not meet expectations. NIC senior principal Lana Peck introduced the new rate tier report and walkability score data, now on NIC MAP, along with a deep dive on local markets.

“Current Market Conditions Impacting Seniors Housing & Care.” NIC chief economist Beth Mace presented an analysis of macroeconomic conditions. Concerns about the economy have recently been tempered by a halt in the rise of interest rates. Seniors housing new supply is still outpacing demand, but she noted a significant uptick in demand. Occupancy rates are expected to increase with a slowdown in construction. Referring to an apparent pull back by developers, she said, “The message got out there.”

Mark Your Calendar

2019 NIC Seniors Housing Bootcamp, Wednesday April 10, Charlotte, N.C.

2019 NIC Fall Conference. September 11-13, Chicago

Private Buyers Remain Very Active 

There may have been some challenges in the seniors housing and care markets in 2018 but it is safe to say that liquidity did not seem to be one of those challenges based on the latest sales transactions data. Indeed, not only was there strong dollar volume registered in terms of closed sales transactions, but the sheer number of transactions closed was greater than in 2017. 

In terms of the number of deals closed, a measure different than dollar volume, we saw continued signs of a very strong transaction market.  There were 514 deals closed in 2018 of which 85 were portfolio transactions and 429 single property transactions. That compares to the 502 transactions closed in 2017 of which 101 were portfolio and 401 were single property transactions.  Portfolio transactions have consistently represented about 20% of overall closed transactions when looking at the past few years, including in 2015 when the public buyer type, namely the publicly traded REITs, were more active with larger deals. However, 2018 saw portfolios represent closer to 16%, highlighting the fact that single property transactions are very important to the market in terms of the flow of transactions closing. We have seen 21 consecutive quarters of more than 100 total deals close. 

As far as the size of the deals, small deals of $50 million or less dominated in the fourth quarter, which is typical with every quarter given the large percentage of single property deals, representing about 89% of all deals closed.  Over the past few years we have seen a significant decrease in large deals of $500 million or more.  In 2015 we saw 10 transactions of $500 million or more and only 10 combined in 2016 and 2017, and only 1 in 2018.  However, we did see a significant pick up in deals between $250 million and $500 million as only 2 were closed within that range in 2017, but 7 were closed in 2018. 

To take a deeper look at the activity, let’s dig into the annual trends of who the buyers were for 2018. 

Private Buyers Still Very Active 

As far as the trends in buyer activity in 2018, one notable trend is the institutional buyer decreased significantly from 2017 to 2018 as a share of volume and the public and private buyers increased as a percentage of closed volume.  The public buyer category is just that — any publicly traded company. The private type is any company that is not publicly traded—for example, a private REIT or single owner or partnership. The institutional type is usually the equity funds that manage pension money or other types of institutional money. 

The institutional buyer type represented only 19% of the $13.9 billion in closed transactions in 2018 as its total closed dollar volume decreased by 48% from 2017 when it represented 32% of volume and closed $5.2 billion in transactions.  However, 2017 was represented in a significant way by Blackstone, within the institutional category, when they closed some larger deals over $500 million.  For additional comparison purposes, the institutional buyer closed $3.9 billion in 2016 representing 27% of closed volume that year.  The institutional buyer has averaged $3.9 billion in closed transactions per year over the last three years. 

From the public buyer side, its representation of volume increased from 25% in 2017 to 29% in 2018.  In terms of the dollar volume, it held relatively steady as the public buyer closed $4 billion in both 2017 and 2018.  In 2018 the volume was really carried by the Welltower/QCP deal and in 2017 it was carried by the Sabra/Care Capital Properties deal.   The public buyer has also averaged $3.9 billion in closed transaction per year over the last three years. 

The private buyer (see chart below) continues to be the most consistent and steady source of capital as it registered close to $6 billion in closed transactions in 2018 at $5.9 billion.  It represented 43% of all volume in 2018 which was up from 34% in 2017 when it closed $5.5 billion in transactions.  Over the past three years the private buyer has averaged $5.7 billion and it has closed above $5 billion in transactions for five straight years.  

Lastly, just to touch on cross-border activity as we have seen a steady decrease in that dollar volume ever since the 2015-time period when it registered $2.1 billion.  It has averaged about 5% of volume over the past three years and only closed $500 million in 2018 which was down from 2017’s $900 million.

Focused on the theme, “Investing in Seniors Housing & Healthcare Collaboration, the 2019 NIC Spring Conference kicked off on Wednesday afternoon. The Conference drew more than 1,500 attendees, including investors, seniors housing and care operators, and healthcare providers.

A reception was held for first time attendees. “Our company has six projects coming out of the ground,” said first time attendee Gary Elam of Carefield Living. “We are here to find capital.”

The afternoon included three well-attended educational sessions.

Meet Mary.  She’s 86 years old, with arthritis, osteoporosis, hypertension, and COPD.  Her story gave the NIC Conference opening panel “Underwriting Health Care in Private Pay Seniors Housing” a platform to illustrate how the broader health care system is starting to impact seniors housing net operating income (NOI).

Mary’s care cost Medicare over $60,000 during her time in assisted living.  Seniors housing operators on the panel described how their staff traditionally handled medical episodes, cooperating with medical professionals but receiving no financial consideration for the care they provided (other than standard monthly care charges).

The panel then fast-forwarded five years, playing out the same scenario in a community offering a Medicare Advantage plan.  As a member of this plan, Mary stays healthier longer, so pays less in monthly care charges.  But Mary increases her length of stay, and by providing medical services in a lower-cost setting compared to the emergency room, the company is able to keep an average of $500 per month in “gain sharing” – receiving some of the money Medicare might have had to spend on hospital care, but didn’t. Overall, the community realized a 20% increase in net operating income with Mary participating in the medical services revenue model.

How realistic is this? John Rijos of Chicago Pacific Founders, and Chris Winkle of Sunrise Senior Living, shared their real-world experience with Medicare Advantage plans, and said it is very realistic.  Jerry Taylor, of Solera, had not yet implemented a MA plan, but agreed with the concepts.  And all panelists agreed that communities risk being “disrupted out of the business” if they’re not on board. 86-year-old Mary has a typical profile, but her experience, and that of her eldest daughter, Sue, changes with coordinated care. Using two scenarios, one from today and one from 2025, the panel, moderated by Joel Mendes of JLL, got specific and detailed in order to illustrate key points that investors should be considering as the healthcare system increasingly influences how communities operate – and perform financially. Coordination of care will make a big difference for Mary, but it will also drive new revenue streams and improve NOI.

In “Equity in Senior Care: Understanding the Players” NIC injected some levity with a “Dating Game” format, complete with the famous game show’s theme music and a healthy dose of tongue-in-cheek dating references. Underlying the fun, however, was real insight into how capital seekers and providers find a match in the real world. In two different “games” two very different capital seekers asked tough questions of three potential suitors, eventually choosing a partner, but not before attendees made their wishes known with an instant poll.

The session yielded some fun moments, too, such as when John Stasinos, in the role of an investment management platform, said of a rival suitor (a private equity firm), “she’s gonna want to buy you and change you. I’m different because I’ll understand you. You’ll be comfortable with me. I won’t bring an investor to the table that doesn’t share your time horizon.” The session delved into numerous considerations, and many good questions that capital seekers should ask, before they commit to a new relationship.

The last session of the day, “I-SNPs: Why Providers are Becoming Payors in a Value-Based World” addressed the question: Is setting up a Medicare Advantage plan for residents the right strategy for your company? A panel of experts, already involved in that process, discussed I-SNPs, or Institutional Special Needs Plans. These programs provide Medicare coverage for residents of long-term care facilities.

“The process is complicated,” noted panelist Steve Fogg, CFO at Marquis Companies, a provider based in the Portland, Oregon, area. Marquis already has 500 long-term care residents in its program, not all of whom live in Marquis buildings. Panelist Lynne Katzmann, CEO of Juniper Companies is putting together a plan for assisted living residents that will be rolled out next year. Peter Longo, principal & managing partner, Cantex Continuing Care Network, commented: “Find a good insurance partner. That’s key to success. “

The 2019 NIC Spring Conference is just getting warmed up. Tomorrow will feature remarks from Paul Ryan, the 54th Speaker of the United States House of Representatives (2015-2019), and a full schedule of educational sessions. Follow NIC on Twitter for live-tweets of every session, and more.

Former Speaker of the U.S. House of Representatives Paul Ryan will offer insight on what to expect from the new Congress and the impact on America’s seniors

Paul Ryan, the 54th Speaker of the United States House of Representatives (2015-2019), will address the 2019 Spring Conference of the National Investment Center for Seniors Housing & Care (NIC) on Feb. 21 in San Diego. At the Opening General Session, scheduled from 8:00 AM – 9:30 AM PT, Ryan will deliver keynote remarks and participate in a “fireside chat” with John J. Kelliher, managing director, Berkeley Research Group, and former chief counsel of the Committee on Ways and Means of the U.S. House of Representatives.

Ryan is expected to share his views on entitlement and regulatory reform, the continued shift to private management of Medicare and Medicaid, and labor and immigration issues, including their impact on unemployment and wages. As a veteran Capitol Hill leader who has influenced national policy and legislation impacting seniors, Ryan’s remarks will be of keen interest to conference attendees comprised of decision makers in seniors housing and skilled nursing, as well as healthcare leaders who are exploring new partnership opportunities in the sector.

“As we embark on a new Congress, there are new players and dynamics that will shift the policy landscape. The seniors housing and care sector will be paying close attention to what Mr. Ryan has to say,” said Brian Jurutka, NIC president and CEO. “His timely perspective from the leadership seat on the sector’s most important policy, regulatory, and economic issues will be invaluable as attendees develop strategies to succeed in this time of change.”

Immediately following the Opening General Session, Kelliher will moderate a discussion featuring Republican and Democratic perspectives on Ryan’s comments.  The panel will feature Chris Jennings, who served at the White House in health policy under both President Obama and President Clinton, and Jennifer B. Young, who served as Assistant Secretary for Legislation at HHS as well as Senior Counselor to Secretary Mike Leavitt in the George H.W. Bush administration.

The discussion will cover what Americans can expect from a divided Congress and from the Trump Administration, in terms of further action on healthcare payment and delivery reform, and initiatives to address the housing and care needs of seniors.

The 2019 NIC Spring Conference will take place February 20-22, at the Hilton San Diego Bayfront in San Diego, California.

Last week’s post on NIC’s data group introduced some of the teams and processes involved in collecting the most accurate and reliable data available on America’s seniors housing and care properties. This second half of the story delves into processing and reporting on the data.

A team of three full-time analysts is responsible for processing the data from the Quality Assurance team and completing quarterly reporting on it. The team also produces specialty reporting throughout each quarter, such as the Seniors Housing Actual Rates Report and the Skilled Nursing Data Report. They also support all of NIC’s presentations and webinars with accurate, current data, analysis, and visualizations.

Working in collaboration, the Quality Assurance and the Data and Analytics teams jointly execute each quarter’s data finalization process. Data and Analytics Manager Leighann Garcia explains, “The two teams bring two different perspectives to the data. In the Quality Assurance department, they tend to have a property-level expertise, while the Data team looks at it from a higher level, looking at broader trends over time and at the aggregate, rather than at individual properties. Combining those perspectives works well when we’re finalizing the data before reporting on it. From there, we produce about 45 different reports each quarter.

Research Manager Brian Connolly added that, “the delineation between the Quality Assurance team’s property-level view and the Data Team’s aggregate view is deliberate. It frees up the Data Team to view the data without any bias that might come from looking at a particular property. On the flip side, the QA team can look at the property level without any bias that comes from the aggregate. We put that in place on purpose. That’s why the partnership between the teams works so well. Both teams find important nuggets, and, as a group, we are better able to direct our data collection efforts as a result, particularly as we identify long-term trends that might need clarification. When the Analytics Team looks at the finalized data for publishing and reporting, they know it’s reviewed and as clean as possible. When they see trends, they can be confident they’re not just seeing something that was missed in the QA or data collection process.”

Connolly’s team conducts regular audits, to further ensure nothing is overlooked. “We review the entire database, auditing each market individually versus state data. We’ll go to a given state’s department of health, for example, and find all their lists and compare them to our database. That’s one way for us to proactively research each of the markets outside our normal process of data collection and make sure our database is as complete as possible.

With clean data in hand, Garcia’s team generates reports throughout every quarter. “Reports fit into one of several categories,” she explained. “The first of these is reports that go to clients who have requested a customized report. We also generate reports that get uploaded to the NIC MAP^® Client Portal. Some reports are for internal use. For example, we provide our marketing department with data for their content and generate a few specialized reports for our senior leadership. We also work very closely with our Outreach Team, providing data for their webinars and presentations. We’re closest to the data, and often call out trends from the very beginning of the process.”

NIC is careful to spread out the collection of data points for each metropolitan market throughout the quarter. The way they structure their agreements with data providers – and execute their own collection processes – ensures that no metropolitan market’s data is collected within a single month, for example. All of NIC’s data collection occurs as evenly as possible throughout time and across markets.

Partnerships with leading software vendors in the space have streamlined processes by which NIC receives data. Customized reports, designed to automatically feed data to Connolly’s team, have significantly boosted efficiency, while helping to reduce human error. Because NIC either talks to or receives data from nearly every property in its database, every single quarter, accurate and efficient data collection processes are essential.

Reports are generally built in three different ways. Some are custom developed in SQL, others use the data tools in Excel, while still others are coded in a programming language called R. Using these tools, the team generates reports, some of which are complex and very time-consuming. Once generated, every report goes through a quality assurance process to be validated.

“One key role we play is subject matter expertise on our data,” added Garcia. “While we don’t advise on strategy or make predications, we can help clients if we know what they’re trying to achieve with our data. A client that’s running 14 reports manually in every one of their subscribed markets might come to client services and ask if we can save them time, for example. We’d be able to help them with a custom report.”

Looking ahead, the data group plans to expand the database to include, among other things, seniors housing financial benchmarking data. NIC’s Seniors Housing Financial Benchmarking Initiative will create a time series database that allows for consistent financial benchmarking of select property-level operational revenue and expense categories. “This will be another way our clients can benchmark their communities,” said Connolly.

Through everything they do, NIC’s data teams share a passion for accuracy. “NIC is really focused on getting the numbers right,” said Dan Raney, Director, Product Solutions & Technology. “It’s personally offensive to us if the numbers are wrong, even for a single property. I really believe that the care we invest on data accuracy at NIC is second to none.”

“And also, our transparency in the event that we have an oversight,” added Garcia. “Those things do happen. There have been errors, but we’re very forthcoming and transparent when that happens. I believe our customers appreciate that.”

New initiatives, new sources of data, and new reporting products will all be executed by NIC’s dedicated data group, on top of the considerable effort that goes into daily, weekly, and quarterly data collection, QA, analysis, and reporting output which NIC clients have come to rely on, year after year.