With the prospective resident demographic almost doubling in size in the coming decade, a panel of senior living thought leaders on Thursday discussed how not-for-profit providers should plan to respond to increasing consumer needs.
In a webinar Thursday hosted by marketing firm Love & Company, experts said that the not-for-profit senior living sector experienced a slowdown brought on by the Great Recession and the COVID-19 pandemic, which led to further effects from increased construction and operating costs. In the past four years, in fact, only 34 new not-for-profit continuing care retirement / life plan community locations were developed across the nation.
Affiliations, acquisitions and expansions of existing communities have been the story for the not-for-profit sector in the recent past.
But with the “profound” demographics — particularly the growth of the 75-and-older population — the sector has the opportunities to serve more prospective residents.
“We challenge you to be thinking about new locations in the form of satellite communities, smaller communities you can expand while pursuing affiliations, as well as acquisitions and expansions,” Dan Hermann, president and CEO of specialty investment bank Ziegler.
Not-for-profit CCRCs used to serve the top 30% of the market in terms of age and income-qualified households, said John Spooner, co-CEO of Greystone Communities. Elevated interest rates, construction costs and wage rates mean that those communities now serve the top 15% of the market.
And consumers in that slice of the market are looking for something different: a service-rich, choice-driven environment, he said.
“Choice, to them, means control,” Spooner said, adding that repeatedly offering the same programming gets stale. “It’s important to change and upgrade your product points of differentiation.“
HCBS as a revenue stream
To compete for the coming “unlimited demand,” Ohio Living CEO Larry Gumina said, operators need a strategic focus on where to put “precious resources” that are challenged in the post-COVID recovery by workforce shortages, diminished access to capital and margin pressures.
For Ohio Living, he said, that focus landed on the organization’s home- and community-based services vertical after it almost abandoned the offering 12 years ago. Gumina said that the organization was losing money on HCBS but knew that they provided a value-added degree of mission support. By partnering with physician-owned accountable care organizations and hospitals, Ohio Living turned its HCBS arm into a profitable revenue stream.
Approximately 50% of the organizations on the LeadingAge Ziegler 200 list are working in the HCBS area, many getting into the business in the early 2000s by organically setting up service lines by offering home care to individuals within their communities or setting up hospice services. Others bought a home care or home health company, which came with existing staff and licensing.
HCBS, Hermann said, can be a great additional revenue stream for operators because their residents already know their brand. And hospice can offer a better position for fundraising from families and individuals.
Gumina said that HCBS create opportunities to develop relationships early with those they want to serve. And although some eventually may move into a CCRC, others will continue to seek services in the home — and that’s OK.
“We don’t have enough bricks and sticks to house the growing demographic,” Gumina said. “We need to expand our reach out to the community.”
Spooner said he has seen more success among providers — in terms of service levels and resident satisfaction and trust — who have control over the HCBS system and deliver services in their own communities rather than depending on outside providers to come onto a campus.
Affordable housing through partnerships
Affordable or subsidized housing is another area that can present challenges and opportunities for operators, the speakers said.
Approximately half of the multi-facility systems on the LeadingAge Ziegler 200 list have at least one affordable or subsidized housing project. The majority of those projects are Section 202 Supportive Housing for the Elderly programs under the US Department of Housing and Urban Development.
But Hermann said that the “vibrant” government program dramatically slowed and shifted over to tax credit structures, making it difficult for anyone not already in the business to enter it.
Affordable housing, Gumina said, is another avenue for partnerships. When Ohio Living couldn’t secure its own development credits, it partnered with National Church Residences. Ohio Living contributed the land for a project, and National Church Residences lent its expertise, which resulted in Broadway Park opening in Youngstown, OH.
“We don’t have to be everything to everybody,” Gumina said. “We can use partnerships to bring services and care lines to communities.”
