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Post-Acute Program Development

Post-Acute Program Development

CCA serves in a financial advisory capacity to the Board of Directors of a community based not-for-profit skilled nursing provider in the Greater Boston market area.

Recent initiatives have included the introduction of a distinct short-stay unit of operations to accommodate increasing post-acute and rehabilitative service programing. This initiative was undertaken by reducing licensed bed capacity to accommodate the conversion of an existing long-term care unit to establish 20 private room accommodations; introduction of common area amenities; and reconfiguration of more customized resident support areas. The unit renovation and conversion was funded through extended capital provided by existing lenders interests.

The strategic business plan ideally introduces more distinct and customized post-acute programming responsive to market trends and demands of emerging ACO providers as well as other primary referral sources.

 

A Case for Convergence

A Case for Convergence

The future of what we now call the Senior Living Industry needs to be forged by a more collective voice. We are all familiar with Miles’ Law which states that “where you stand depends upon where you sit.” If you apply this thinking to our own Industry, an important question emerges. Does this future of aging rely upon attributes that are unique to any single age cohort? The clear answer is no. There are a myriad of consumer personas characterized by the tidal wave of baby boomers alone. The Senior Living Industry should represent what constitutes quality housing, care and connectivity for everyone. This requires us to learn from and incorporate what is happening in adjacent spaces. If we learn to rise above the market silos we have created, we will better honor our shared journey as a community. Aging begins at birth and the future belongs to all of us.

Senior Living

Progressive Senior Living providers are now focused on battling ageism and promoting more community connectivity. They recognize that lifestyle and personal preferences beyond supportive services alone must be sourced and delivered. To compete with an expressed preferences to “age in place” at home, it is necessary to offer an equivalent alternative – with broader programming. The unspoken issue is that freestanding homes do not offer an ideal setting for any age group either – they are only superior to the loss of independence that senior housing options conjure in our psyche. Even the allure of suburbia is fading because of a preference for quality over quantity in life and we are starting to question our role (and responsibility) in creating the built environments we share.

​When we leverage technology and economies of scale we get more value out of products and services. Increased consumer education reflects a market force that is not unique to seniors or boomers alone. Information access is the common thread disrupting all of our business models and worldviews. We want more, better, faster and we know now that it is possible.

Urban living / Coworking

Coliving and Coworking environments are being created in revitalized urban settings with growing prevalence. The same principles apply – exhibiting trends of community connection catering to lifestyle preferences. There is a coworking space in Syracuse, NY. that recently published a post titled, The Case for Micro-units. The author John Talaric relays that, “Coworking spaces supply these independents with a rich working environment where they can meet, make business connections, and be more productive than outside of home offices and cafes.” Is this not analogous to challenges confronting the Senior Living Industry? Community spaces supply isolated people and organizations with a rich environment where they can meet, make social connections, and be more productive than they can be from inside of their independent homes.

Common Threads

The example above is obvious and trite, but the argument for more integrated community development is simple – our world is changing and we need more customized property development that responds to evolving needs and preferences. The future of aging is not about our elders alone. It is a future that we need to imagine for everyone. We need better Cities and Towns cultivating connectivity rather than fostering fragmentation.

Knowledge Notes #002

Knowledge Notes #002

CCA’s “Knowledge Notes” covers varied perspectives on trends and best practices in the Senior Living Industry together with news about our practice, clients and associates. We want to help create a better future for aging by supporting professionals whose main capital is knowledge.

Read and Share:

July 28, 2015

Knowledge Notes #001

Knowledge Notes #001

CCA’s “Knowledge Notes” covers varied perspectives on trends and best practices in the Senior Living Industry together with news about our practice, clients and associates. We want to help create a better future for aging by supporting professionals whose main capital is knowledge.

Read and Share Issue #001:

July 27, 2015

Come together for Medicaid dependent elders

Come together for Medicaid dependent elders

A recent article in Newsweek entitled “You Don’t Want to Be Old in These States” amplifies a longstanding dilemma confronting long-term care providers in rural settings across America. The Medicaid program is broken – where inadequate funding is a breeding ground for unfortunate incidents like this. The negativity fueled by such circumstances should be a call to action rather than a blemish on the industry and its majority of compassionate providers of care to our Medicaid dependent elderly.

The emerging landscape of the collective Senior Living Industry is leaving the chronic care resident behind – particularly the resident dependent upon Medicaid funding. The industry remains highly fragmented where providers remain payer driven – more focused on payer sources to subsidize if not abandon the losing proposition of Medicaid funding. It’s time for the industry to come together to leverage the proven “low-cost” alternative of the nursing home setting – and drive legislative change rather than being policed in a reactive fashion by escalating regulations.

All constituents to the industry have ownership in the circumstances we confront. As we migrate away from fee for service to more outcomes oriented payment systems, antiquated government payer programs focused on cost reductions require reengineering to foster more integration and alignment of all providers.

It is essential that payment reform reaches across the “continuum of care” – providing reasonable incentive for all providers in the most cost effective and efficient care setting. Perhaps a solution could stem from thoughtful integration and redistribution of public funding – aligning interests rather than fueling a divide. It is no surprise that the aging inventory of nursing homes in rural America where there is inadequate public funding to support reasonable costs of care or for reinvestment in property interests is breeding “horror stories” like this. They will remain unavoidable until we catch up with the times.

Lead or Exit: Strategic Business Planning for Senior Living

Lead or Exit: Strategic Business Planning for Senior Living

Health Care Reform has essentially mandated that the Health Services realm imagine a New Future for Aging. This requires cooperation with the full complement of sub-acute care providers coupled with a renewed focus on technology gains and partnership with multiple stakeholders. Strategic Business planning that is responsive to emerging trends and dynamic changes in this sector must be equally informed by broader social and economic influences. Absent clear markers of Leadership and Vision, the advisable direction for current Operators is an exit strategy or plans for succession.

With all of the complexities emerging from healthcare reform, it is clear that the prevalence of “silos” threaten our survival. Now more than ever before, health care providers must conceive and execute strategic business plans to safeguard their asset interests and promote sustainability of continuing operations. This is particularly relevant to the Senior Housing & Care Industry – and most notably to freestanding operators of Skilled Nursing Facilities. The stable of inter-related issues and opportunities that confront us are financial, legislative, clinical, architectural, social and environmental. We would clearly advantage from an integrative perspective that acknowledges Aging as a universal process where preventative and human-centered measures apply equally across all age cohorts and business specialties.

The Skilled Nursing Sector is being dramatically redefined – where the traditional model of long-term chronic care is antiquated and trending to extinction. The new model is defined as the sub-acute provider – represented by progressive operating, clinical and rehabilitative service capabilities that are fully aligned and integrated into the “continuum of care” – strategically positioned and qualified to partner with acute care providers in particular. The greatest opportunity represented by the Skilled Nursing provider is a proven history of being the most cost effective post-acute care setting. The greatest threat is meeting and sustaining the qualifications to seize this opportunity.

Progressive operating capabilities and demonstrated care outcomes are essential. The key drivers for meeting the challenges of this new landscape will be strategic initiatives that promote active collaboration; foster provider integration; and leverage technology to evidence best practices and demonstrated outcomes. Strategic business thinking must extend to product, program and practice delivery – fully integrated and optimally aligned in the healthcare provider community. The status quo is clearly not viable – and undoubtedly operators not responsive to change will be casualties. Providers absent the willingness and resource capacity to conceive and implement Strategic Business Planning should take the next exit.

Not-For-Profit ALF Development

Not-For-Profit ALF Development

CCA recently completed a project development and financing transaction for a community not-for-profit skilled nursing and assisted living provider located in the Seacoast market of New Hampshire.  The transaction involved securing $16MM in development financing from a commercial healthcare lender.

The project contemplates an expansion of existing operations to accommodate 52 added units of assisted living and memory care programming for the provider.  Serving as business and financial advisors, CCA provided full scope services to originate, plan and close the project transaction.   The strategic business plan ideally leverages existing operations while revitalizing and expanding existing asset interests to strengthen and broaden continuing operations.

Rating the Five Star Ratings

Rating the Five Star Ratings

The Kaiser Foundation published an issue brief in May that presents an analysis of the February 2015 update of the Nursing Home Compare database: Reading the Stars: Nursing Home Quality Star Ratings, Nationally and by State.

The brief extends to identifying correlations between nursing homes and reported ratings – factoring not-for-profit vs. for profit status; number of licensed nursing home beds; and state locations. The brief effectively amplifies the complexities and select shortcomings of the Five Star Rating System – as well as the inference that there remains a high degree of subjectivity in the system. However, the analysis excludes two fundamental criteria that undoubtedly breed material variability in ratings. Namely, the attributes of financial performance and property features that are essential considerations in proving correlations among providers.
A conclusive correlation between not-for-profit and for-profit providers cannot be made absent a financial analysis of differentiations. This extends to elements of financial performance as well as capital structure. Factors associated with revenue realization, expense management, profitability and capital resources are highly variable and influential to the rating criteria. Financial metrics introduced in a transparent and uniform manner would prove insightful in validating or otherwise interpreting correlations.

As to property features, similar variability exists among providers beyond bed size alone. Chief among these are the age, condition and functional design of the operating environment. Operating efficiencies, and by extension financial performance, drive outcomes and prove influential as to impacting rating criteria. These are important disparities to consider. Prevailing initiatives to reposition, revitalize or re-invent new models of nursing home care are clearly responsive to the predominately aged inventory of nursing homes. This trend amplifies growing recognition that the traditional “geriatric” nursing home model is not sustainable – while new models the likes of The Green House Project and Small Homes emerge. These new models are clearly conceived to support and promote resident and staff satisfaction above all. This in turn advances all facets of performance outcomes – the fundamental drivers for any rating system.

As we consider the three domains of the existing Five Star Rating System (Staffing Measures; State Health Inspections; and Quality Measures), advancing efforts to develop a more reliable and equitable process – and to draw valid correlations from reported ratings – the playing field needs to be leveled. Truly reliable ratings are predicated on differentiating between the drivers of the measurement criteria – financial and operational factors alike.

SWOT – Highlights

SWOT – Highlights

swot-highlights

  • SNF Providers enjoy a distinct competitive advantage in the emerging environment driven by longstanding market insight and experience qualifications
  • SNF Providers are threatened by not adapting to changing Product, Program & Practice
  • SNF Providers are uniquely positioned to leverage new identity and strategic re-direction
  • The status quo is not sustainable in the new and emerging Senior Living landscape

SWOT – Strengths

swot-strengthsMarket Considerations

SNF settings are proven as the low cost providers in the post-acute environment. SNF Providers are advantaged by:

  • Growing demographic demand for skilled services – both post-acute and long-term care
  • The need-driven attribute of its business
  • Being most competitive in providing service value at low cost

SNF providers are competitively entrenched in the local healthcare and community market

Regulatory Influences

  • The franchise nature of the SNF Sector remains competitively advantageous
  • SNF Providers are most adept at managing regulatory intervention and influences
  • SNF Providers are proficient in the management of third party payer reimbursement
SWOT – Weakness

SWOT – Weakness

Product Attributes

  • The traditional “geriatric” model nursing center is not sustainable
  • The SNF Sector represents a low margin business
  • The SNF Sector is increasingly competing with assisted living product and other home and community based service providers
  • The SNF Sector is replete with aging property interests requiring capital reinvestment

Practice Attributes

  • The SNF Sector has historically been misdirected by adopting payer driven business strategies
  • The SNF Sector exhibits limited progressiveness in leveraging technology
  • More formalized and intensive marketing efforts are required to sustain and improve census and promote quality mix of residents.
  • Managed care associations require more aggressive and targeted collaboration coupled with demonstrating performance expectations
  • Limited proficiencies among direct caregivers are prevalent with respect to combining clinical and financial management capabilities
  • There exists inadequate financial and clinical management systems integration in promoting combined skill sets
  • Emerging technologies are proving essential to promoting progressive practice delivery

Market Considerations

  • Freestanding Community Providers are threatened by the economies and progressiveness represented by emerging competition.
  • The SNF Sector has been obstructed by prevalent fragmentation and competition within the industry
  • Industry data is scarce and disparate as available to providers for benchmarking and lenders/investors for underwriting and credit monitoring
  • SNF Providers experience heightened risk factors associated with resident claims and other contingent liabilities stemming from resident care activities

Regulatory Influence

  • Government programs offer no incentive and inadequate capital reimbursement for reinvesting in asset interests as well as advanced operating systems
  • There exists high disparity and growing complexities in principles of reimbursement in the SNF Sector where providers experience economic dependency on inadequate Government programs – principally Medicaid
  • Government payer programs are actively migrating away from the fee-for-service model where revenue realization is increasingly driven by demonstrated cost efficiencies and outcomes achieved
SWOT – Opportunity

SWOT – Opportunity

swot-opportunityStrategic Action Initiatives

  • Conduct a comprehensive situational analysis and develop strategic business plan for the enterprise
  • Develop specialized product and program services that promote market identity and heighten competitive advantage
  • Explore collaborative opportunities to strengthen market position and resource capacity (merger; partnership; alliance; other)
  • Migrate to diversify product and program services to represent the “Continuum of Care”
  • Collaborate to foster provider integration
  • Reevaluate the propriety of capital structure and evaluate alternative strategies
  • Conceive strategic plans that promote captive referrals
  • Leverage operating and reputational attributes to develop niche program services for targeted and /or ethnic populations
  • Promote greater community outreach and activities programming to enhance identity and foster relationships
  • Develop strategies to better penetrate the home and community based service realm
  • Strategically respond to targeted opportunities and trends tailored to heightened market position and increasing specialized capabilities
  • Broaden market identity to represent the Senior Care Community Provider in an outreach fashion of program development

Practice Attributes

  • Cultivate organizational development of a defined operating culture through leadership and effective “team building”
  • Invest in technology to foster progressive systems development and best practices compatible with collaborative partners
  • Promote emerging social network capabilities aligned with strategic plans and marketing initiatives
  • Foster combined skill sets of financial, clinical and operational capabilities among key management personnel