As our healthcare system continues to shift from the  fee-for-service payment and delivery model to a value-based system, the seniors housing and skilled nursing sector will increasingly experience significant change. Not only policy, but demographic change, workforce issues, evolving consumer expectations and the dynamics of competitive markets are beginning to drive a period of disruption featuring a host of new challenges – and exciting opportunities – for the sector. 

Perhaps chief among these is the emerging need for seniors housing and care owners, operators and investors to collaborate with the healthcare system. Upstream and down, players across the spectrum of healthcare are already beginning to take an interest in bringing their services into the homes of the elderly, particularly those high-need high-cost seniors that account for the lion’s share of healthcare costs in the US. Not to do so will make it all the more difficult for them to be successful. 

Of course, this may be unfamiliar ground for many in the seniors housing and skilled nursing sector and its prospective partners in healthcare. They have as much to learn about each other as they have a pressing need to do so. That is why NIC just launched seniorcare.nic.org. This microsite is designed to inform, and to encourage contributions from leaders across both healthcare and seniors housing and care. The site offers a wealth of thought-leadership, with curated news, op-eds, case studies, white papers, videos, and other materials, all focused on the realities of healthcare collaboration with seniors housing and care.  

In addition to frequent updates to news and educational materials, the site features the Housing and Healthcare blog, focused on the challenges, opportunities, news, and practical realities that decision-makers are encountering on this topic. NIC is inviting those with expertise and experience to submit their blog post ideas via the site’s simple submission form. Weekly posts will feature these industry insights, as well as our own observations, interviews, and analysis. The more perspectives and voices the blog reflects, the more it will become an essential – and unique – resource. 

Recent headlines, which can be found on the site’s Resources page, reflect an accelerating spate of merger and acquisition activity, much of which features new partnerships across old silos. Leading journals are publishing more news and analysis on the emerging need to deliver healthcare services to seniors beyond traditional retail and healthcare venues. Stories on corporate efforts to capture the promise of added value and cost-savings through new value-based partnerships are on the rise. Every headline to be found on seniorcare.nic.org links to a story that is relevant to our sector. 

The site also offers information and links to a growing number of events that are highly relevant to the concept of collaboration across housing and healthcare. The 2019 NIC Spring Conference, in particular, has a focus on the thesis, and has been attracting a small but growing cadre of leaders from the healthcare industry.  In service to our mission, NIC has made relevant conference content available on this microsite as well, to help encourage education and the sharing of ideas. Organizers may submit information for relevant upcoming events through the site, for inclusion. 

Anyone interested in thought-leadership, ideas, analysis, and even networking opportunities concerning collaboration between the seniors housing and care and healthcare sectors will value the content now available to them via seniorcare.nic.org. In a time of rapid change, information, ideas, news, and opportunities to make new connections can be essential to success. Beyond the challenges, real opportunities exist, promising improved outcomes, as well as greater access and choice for America’s seniors. And that matters.

Expanding on a recent NIC blog post that detailed care segment performance in the NIC MAP® 31 Primary Markets since the most recent Q42014 market cycle peak, and another blog post that went a step further and examined segment market fundamentals within Continuing Care Retirement Communities (CCRCs, also referred to as life plan communities) compared with those in non-CCRC freestanding or combined communities, the following narrative describes 3Q2018 CCRC occupancy aggregated from the NIC MAP Primary and Secondary Markets—99 of the nation’s largest core-based statistical areas (CBSAs), broken out across eight regions.

This analysis is useful for understanding the regional occupancy performance of independent living, assisted living, memory care and nursing care segments. The occupancy rate used was the “all occupancy” rate which includes units still in lease-up as well as those occupied.

Regional CCRC Care Segment Occupancy

Overall, the Northeast and Mid-Atlantic regions had the strongest performance in terms of CCRC occupancy across care segments, whereas the Mountain and Southwest regions performed relatively weaker.

• The Mid-Atlantic had the highest CCRC independent living segment occupancy (94.8%), followed by the Northeast and Pacific regions (93.7% and 93.5%, respectively). The Southwest region had the lowest CCRC independent living occupancy (88.6%).
• The Northeast had the highest CCRC assisted living occupancy (93.4%), followed by the Atlantic region (92.2%). The lowest CCRC assisted living occupancy was reported for the Mountain and Southwest regions (85.2% and 86.4%, respectively).
• Regarding CCRC memory care segment occupancy, the East North Central and Northeast had the highest (92.4% and 92.1%, respectively), whereas the Mountain region had the lowest memory care CCRC occupancy (77.9%).
• CCRC nursing care segment occupancy was highest in the Northeast (92.4%), while the Mountain and Southwest regions reported the lowest CCRC nursing care segment occupancy (80.5% and 81.2%. respectively).

CCRC Segments vs. Non-CCRC Segments

Across all regions, 3Q18 CCRC occupancy in the 99 Primary and Secondary metropolitan markets was 90.8%; five percentage points higher than non-CCRCs (85.8%). Generally speaking, this difference is perhaps due in part to the CCRC product profile, which tends to attract planners who wish to make one move to a continuum of care, or perhaps because new CCRC residents are generally healthier than residents in other types of seniors housing, resulting in lower resident turnover in CCRCs. Another potential reason for the difference is perhaps due to the inventory mix in the CCRC analysis aggregation (both entrance fee and rental payment options, combined). Note that 98.8% of non-CCRC segments were rental, whereas CCRC segments were comprised of 63.3% entrance fee and 36.7% rental payment models.

Interestingly, across care segments, occupancy at CCRCs was also generally higher than non-CCRCs. By care segment, the greatest differences in occupancy rates for CCRCs compared with non-CCRCs were reported for the memory care segment (6.7 percentage points), followed by the assisted living segment (5.4 percentage points), and the narrowest for the nursing care segment (2.6 percentage points).

• Independent living segment occupancy was three percentage points higher for CCRCs than non-CCRCs (92.3% vs. 89.3%). The greatest differences in CCRC independent living segment occupancy compared with non-CCRCs was reported for the Mid-Atlantic region (5.6 percentage points) and the East North Central region (4.1 percentage points).
• Assisted living segment occupancy was more than five percentage points higher for CCRCs than non-CCRCs (91.2% vs. 85.8%). The greatest differences in CCRC assisted living segment occupancy compared with non-CCRCs were found in the Mid-Atlantic and Southeast regions (differences of 7.8 and 7.7 percentage points, respectively), although large differences were also noted for the East North Central and Southwest regions.
• Memory care segment occupancy was more than six and a half percentage points higher for CCRCs than Non-CCRCs (89.4% vs. 82.7%). The greatest differences in CCRC memory care occupancy compared with non-CCRCs was found in the East North Central region (12.0 percentage points), the Southwest region (10.0 percentage points), and the Mid-Atlantic region (9.6 percentage points).
• Nursing care segment occupancy was about two and a half percentage points higher for CCRCs than non-CCRCs (88.0% vs. 85.3%). The West North Central and Southwest regions had the greatest differences in CCRC nursing care segment occupancy compared with Non-CCRCs (7.2 and 7.0 percentage points, respectively).

Non-CCRCs had higher occupancy than CCRCs in the following care segments by region: independent living in the West North Central region (a difference of 1.8 percentage points), memory care in the Mountain region (a difference of 3.1 percentage points), and nursing care in the Mountain and Pacific regions (differences of 1.1 and 0.6 percentage points, respectively).

Further analysis is needed to more fully explain regional differences in CCRC occupancy performance in comparison to non-CCRC segments. Contributing factors that could be explored include economic drivers such as industry mix, cost of doing business and living costs, employment growth, the health of the residential housing market in terms of home sales prices and velocity. Other considerations include income levels, inflation-adjusted purchasing power, prospective resident educational profiles, product acceptance and familiarity as well as penetration rates, longevity of the CCRC product in the area, and cultural differences.

The second installment of this two-part blog post will compare the regional occupancy performance of entrance fee and rental CCRCs.

Over the year, the U.S. economy added 2.64 million jobs, making it the third best year for job growth since the recession a decade ago and the third best year since 2000.

The Labor Department also reported that there were 312,000 jobs created in the U.S. economy in December, well above the consensus expectation of 176,000. This was the 99th consecutive month of job growth. November was revised up from 237,000 to 274,000 and October was revised up from 237,000 from 274,000. With these revisions, employment gains in October and November combined were 58,000 more than previously reported.

In December, employment in health care rose by 50,000. In the past year, health care has added 346,000 jobs, more than the gain of 284,000 in 2017.

The unemployment rate increased 0.2 percentage points from a near-50 year low of 3.7% in November to 3.9% in December. Nevertheless, the jobless rate remains well below the rate of what is generally believed to be the “natural rate of unemployment” of 4.5%, which suggests that upward pressure on wage rates will continue. Further indications that this is in fact starting to occur were released in the report. Average hourly earnings for all employees on private nonfarm payrolls rose in December by eleven cents to $27.48. Over the past 12 months, average hourly earnings have increased by 84 cents, or 3.2%. This was the strongest pace since 2008. Last year, they rose by 2.6%.

A broader measure of unemployment, which includes those who are working part time but would prefer full-time jobs and those that they have given up searching—the U-6 unemployment rate—was unchanged at 7.6% in December.

It is important to note that the jobless rate is calculated from a different survey than the survey used to calculate the number of new jobs (the household versus the establishment survey, respectively).

The labor force participation rate, which is a measure of the share of working age people who are employed or looking for work rose to 63.1% in December from 62.9% in November, still very low but up from its cyclical low of 62.3% in 2015. The low rate at least partially reflecting the effects of an aging population.

As widely anticipated, the Federal Reserve hiked the fed funds rate by 25 basis points at its December 18th and 19th FOMC meeting to a range of 2.25% to 2.50%. This marked the fourth increase in 2018. The Fed has now raised rates by a quarter percentage point nine times since late 2015, after keeping them near zero for seven years. However, the Fed did shift its tone a bit and lowered its official projection for additional rate increases in 2019 from three to two increases.

Its notable that most economic data releases, including all of those published by the BEA, Commerce and Census Bureau, will be suspended while the Federal shutdown continues. However, media reports suggest that data releases from the BLS, including the Employment Report and CPI, will continue as scheduled.

Medicare is changing the way skilled nursing operators are paid, effective October 2019. The new Patient-Driven Payment Model (PDPM) system replaces Resource Utilization Groups (RUGs) and will dramatically shift predictors of financial success, while raising new compliance concerns as operators change their business strategies to adapt. Skilled nursing investors, as well as owners, operators, and care/service providers will not want to miss PointRight Executive Vice President and Chief Clinical Officer Steven Littlehale’s upcoming NIC Spring Conference presentation on the subject. NIC recently discussed the session with Littlehale, which is recapped here: 

NIC: Can you tell us a little about yourself? 

Littlehale: I am a unique blend of advanced practice nurse and applied researcher. I’ve been a principal with a data analytics company called PointRight since its founding over 20 years ago. The way we at PointRight think about the changes in CMS programming, reimbursement, and quality measurement is very different than how most people would think about the same data. We use predictive and prescriptive analytics to plot a course for success. Investors work with us to make better-informed decisions, as well as manage their portfolios. We go much deeper than publicly-available information. Owner/operators work with us to ensure they have excellent clinical, regulatory, and financial outcomes. 

NIC: What’s the session all about? 

Littlehale: PDPM represents a massive shift in how CMS is reimbursing nursing homes for Medicare patients. It’s been just about 20 years since the current system was put in place. Transitioning to PDPM is not another “RUG update”, it really is a theoretical and conceptual shift in how nursing homes are reimbursed for Medicare patients. In my view, it’s restating many of the values embedded within the Affordable Care Act. I feel that PDPM is an evolution out of the ACA, something that many people, along with MedPAC, have been advocating for in the skilled nursing environment for quite some time. PDPM is also a stepping stone to a unified payment system for post-acute care, which will replace it in a couple of years. 

NIC: Who should attend the session? 

Littlehale: It’s really geared for the investor, as well as the owner/operator, who will come into the session with some solid background information on PDPM by February. The investor will be more sensitive in responding to the “PDPM rumor mill” and want to better understand how to anticipate PDPM pitfalls. Both groups will get great insights from the session.  

NIC: Why is understanding PDPM important? 

Littlehale: Because PDPM is just for Medicare reimbursement, many people will say “yes, but the Medicare population in skilled nursing is shrinking.” The reality is that many of the Medicare managed care programs will follow the values embedded within PDPM, along with the actual structure, and abandon the current RUGs system. Even though it’s just for Medicare, it will have a ripple effect through not only managed Medicare but also the Medicaid Case Mix state. They’re using the current RUGs system to understand and reimburse for Medicaid. That will be impacted as well. 

Also, I see PDPM as the federal government tipping their hand to indicate how they value skilled nursing, and what role they see it playing. PDPM rewards facilities that take care of very sick elders. They’re not rewarding an arbitrary allocation of therapy minutes. That is not to say that therapy isn’t essential in skilled nursing care – it will not be the tail wagging the dog. In the continuum of post-acute care, CMS is valuing skilled nursing to provide medical/nursing and rehabilitation to complex elders who often have a host of comorbidities. The upside is when, a few years from now, we get to a unified payment system, in which all post-acute care will be paid at the same rate, agnostic to the setting, skilled nursing will be the best, most cost-effective, institutionally based care setting. The long-term view is that PDPM is really setting us up for future success, if we don’t blow it. 

NIC: How did this session come to be? 

Littlehale: It came from clients asking great questions, like “what does PDPM mean to me? I’m a REIT and need to understand how to manage my portfolio, do I need to make changes?” or “I’m in the midst of an acquisition, is it going to be a winner or a loser under PDPM?” Owner/operators are asking what they need to do differently to be successful under PDPM. It’s also a response to a really obnoxious rumor mill around PDPM, that still exists today. Within moments of the proposed rule coming out of CMS on PDPM, the environment was saturated with experts who were making really bold statements. They’d say that MDS was now irrelevant, or that now you can get rid of the MDS coordinator due to lower volume of MDS assessments or eliminate therapy. It was foolishness. If someone was to hold on to that belief, they’d head off a cliff.  

There’s also another very important part of this. A lot of very smart people are trying to “figure out” how to win under PDPM. It happens in every industry – when the rules change, players come up with strategies to win the game. When you dig into PDPM, you see that what CMS has done is really quite brilliant. If you try to manipulate one part of the assessment, it will hurt another part of the assessment. There are checks and balances built into the system. It’s as if they’ve given providers enough rope to hang themselves. They’ve basically said “we’re not going to be overly prescriptive about when you have to do this or that assessment, or how you have to think about this concept. We’re going to let providers do the right thing. But we’re going to monitor the hell out of you, and if you abuse it, you’re going to get severely penalized.” Part of the session is to discuss PDPM from a compliance perspective. We’re trying to make sure they’re creating or updating a compliance program that avoids abusing PDPM. 

NIC: How will the session be structured to help attendees understand these issues? 

Littlehale: It’ll be very interactive. Following a brief didactic, I’m going to engage the audience with lots of questions and answers. I’ll ask, for example, “what are the most ridiculous things you’ve heard about PDPM since it first went live?” We’ll do a lot of myth-busting and will discuss what the truth is. 

NIC: What are the key takeaways you hope to leave attendees with? 

Littlehale: I hope they’ll leave confident that they know the right questions to ask. During mergers and acquisitions, that is so essential. Someone who is successful under the current RUGs system won’t necessarily be so under PDPM. The questions that will help you understand whether they’ll be successful, or whether they’re pulling the PDPM wool over your eyes, will be revealed by the end of the session.  

“The Implications of PDPM for Skilled Nursing” is scheduled for Friday, February 22, 2019, from 9:30 AM – 10:45 AM at the 2019 NIC Spring Conference in San Diego, California. To learn more, or to register, click here.

It’s the day after Christmas—a time when so many of us are taking a reprieve to enjoy family and friends. Some of us have loved ones who are living in the communities in which we operate, invest and provide services. We are all dedicated to providing an environment where residents, and often our family members, can thrive. In that spirit, this post is not about data, or industry news, or conferences. It’s a personal perspective about what it means to make lives more joyful, meaningful, and healthy for those living in our communities.

Four years ago this Spring, my mother, who is one of my best friends and my biggest inspiration for living a life with positivity and laughter, had a massive brain bleed. She was 83 years old. After weeks of rehab, her neurologist shared the news that she’d no longer be able to live at home—we needed to start looking at assisted living communities. I had no choice but to begin exploring options, accompanied by a lot of fear (will she hate it? Will they take good care of her?) and guilt (none of the five kids’ homes were options).  I was not yet working in the senior living sector, so I wasn’t armed with all the information and perspective I have today. But we kept an open mind, hoping to find a place where she would feel at home, and in which four siblings and I would feel confident that she’d be well cared for. After looking at six communities, we selected one that felt right—caring staff, a warm ambiance, nicely appointed apartment, quality dining, ample activities, and a gathering place for music and happy hour. As hopeful as we were, I’ll never forget her saying, as she sat in her new bedroom, “I know I’m going to die here”. My heart sank.  But we remained optimistic about the life she could have there and the loving care she’d receive.

Our expectations couldn’t begin to match what we watched unfold.

My mother quickly fell in love with the staff (who she fondly calls “the girls”), found a group of ladies to have lunch with, gradually started taking part in outings, and even found a “beau” who keeps her company an hour or two a day. She looks forward to her twice daily trips to get her medicines and eye drops because it gives her a chance to chat up the nursing staff. And, if she forgets, they bring the medicines to her and she’s delighted to see them. She makes her way downstairs every morning to get coffee and a danish, which she miraculously balances on the seat of her walker and brings back up to enjoy in her apartment. She does laps around the hallways to keep herself moving and makes her way back downstairs over the course of the day to socialize and chat with her new friends—she remembers few of their names, but greets them with compliments and takes a sincere interest in them.

As I walked into her community a few days ago after a long drive to Cincinnati from Annapolis, I felt, as I always do here, a warmth and kindness that does my heart good. I was welcomed by enthusiastic greetings from staff I’ve grown to know and love, hear my mother asked if she is planning to come to dinner, see the grand holiday decorations transform the lobby and each of the four levels, and residents offer to help me up with my bags of gifts. I’ll always remember the delight and pride she had the next morning when she brought back to her apartment the candies she had made in that morning’s activity.

Over the past 15 months working in the seniors housing and care sector, I have heard many speakers at  conferences talk about studies proving the importance of community and human connectivity and interactions on emotional, psychological and physical health. I see that first-hand in the life of my mother. Her life is full. Her life is better than if she lived in her old house or in the home of one of her children. During this holiday season, when we take a little extra time to focus on the love of family and friends, I recognize that although my mother may indeed die here, more importantly, she is living here. Living a good life, surrounded by caring people who love her, just as her children do. In these moments, I am so grateful and proud to work in this industry. We are helping residents live their best lives.

Wishing you and yours all the best for the holiday season and 2019.