Posts Tagged ‘memory care’

On Monday June 6, 2016, The “Ask Encore” column by Glenn Ruffenach in the Wall Street Journal responded to a question from a reader about “what features, at a minimum, should be added to our current home or incorporated in a new home so that we can stay in our home as we get older.”   The columnist’s response identified three resources to make a home accessible and adaptable for seniors.   These included:

These all appear to be useful resources and the Wall Street Journal column cites the Harvard Study as saying five features, in particular, that make for safe and acceptable homes are: no-step entries; single-floor living; switches and outlets reachable at any height; extra-wide hallways and doors and lever-style door and faucet handles.   The Harvard Study indicates that 90% of existing homes have one of these features but that only 57% have more than one.

Research (AARP United States of Aging Survey, 2012) indicates that 90% of seniors would prefer to stay in their own home vs. moving to a seniors housing community and I have no doubt that for some seniors making adaptations to an existing home or buying a new home with adaptable feature may allow them to defer a move to seniors housing for some period of time.  However, because of most seniors’ strong bias toward staying in an existing home, I see far too many seniors resisting a move to seniors housing even when this would be more beneficial for their health, their finances and their families.

I believe it is important for a senior and her or his family to also consider other issues when considering whether to modify an existing home vs. moving to a seniors housing community. Chief among these are (1) the location of one’s existing home, (2) the age and medical conditions of the residents, (3) access to companions and support services, and (4) the cost of maintaining a home.  The key points I want to make are:

  • seniors and their families need to think through how making accessibility improvements to a home will meet a senior’s physical and mental health needs over time, not just at a single point in time, and
  • staying vs. moving should be considered in light of the full occupancy and care costs for each alternative.

Location

Location is important for the resident, her or his family and other formal or informal caregivers. Too often, seniors of advancing age become increasingly isolated in their homes because they are not located where public transportation, taxi or Uber-like services are readily available. If this is the case, as a senior’s ability to drive diminishes, which it invariably does, a senior’s ability to visit friends, see medical professionals, attend social, educational and civic events will be restricted with negative implications for their physical and mental health. If they are living alone, studies have show poor diet and social isolation can take a heavy toll. Technology may be able to reduce these isolating effects in the future but is not yet able to overcome all the location issues noted here.

Location is also important for family members and other formal and informal caregivers. If you live hundreds of miles from your children or if your home is not readily accessible in good and bad weather to formal and informal caregivers, a home modified to be accessible for a senior may still prove unable to meet a senior’s needs over time as their physical or mental health deteriorates and caregivers are needed.

Age and Medical Condition

The age and medical condition of residents is also important to consider when thinking about whether to modify one’s home or move to a retirement community. Physical limitations, such as needing a walker, shower grab bars, lever door handles can help extend the ability of an existing home to accommodate a senior. But, if a senior is 85 or older or has medical conditions that will escalate over time, the benefit of these types of improvements may be short lived and fully modifying a home for a wheelchair equipped senior – completely flat floors, wider doorways, larger baths with turning radius for a wheelchair can get very expensive. In addition, if a senior has early signs of dementia, this condition too is likely to deteriorate over time and may require a more secure setting with full time care at some point, which an individual’s home cannot provide.

Access to Companions and Support Services

The cost to bring qualified caregivers and other support services into one home can quickly exceed the cost of a seniors housing community if care is required on a 24/7 basis. It can also be difficult for a senior or their family to manage care and home maintenance services and to monitor the quality of care delivered in a senior’s home, particularly if the family does not live nearby.   The availability of qualified caregivers varies with geography, with access to public transportation and with population density tending to improve the availability of care.

Cost of Maintaining A Home

When comparing the costs of staying in one’s home vs. moving to a senior housing community, seniors and their families too often view the cost of staying in one’s home as only including the cost of making accessibility modifications and do not fully consider the cost of part-time or full-item care, the cost of taxes and maintenance, or the income that can be generated from investing proceeds from the sale of a home. This sticker shock of a $2,500 to $6,000 per month fee for seniors housing may seem a lot less daunting when one makes a accurate assessment of the costs of staying at home.   It is also important to understand that the average length of stay for an 85 + senior in assisted living is about two years, so $150,000 in home sales proceeds is usually sufficient to fund an average stay.

There is some additional discussion of housing options and issues to consider when moving to seniors housing on this blog www.robustretirement.com.  The American Seniors Housing Association also has a new website Where You Live Matters with a lot of information for seniors considering whether to stay in their existing homes or move to a retirement community, including cost calculators.    Specific posts on this website that may be of interest include:

 

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Repositioning Older Assisted Living Properties

Background

With NIC-MAP data starting to report an upturn in senior housing development activity, many older senior housing properties are or can soon be expected to face a more competitive market for new residents.    Senior housing, and particularly purpose built assisted living and memory care, are relatively young industries and most early assisted living properties were developed in the mid-1990s.    Nevertheless, early assisted living properties, particularly those that did not receive substantial capital infusions during the recession, are becoming dated in comparison to newly constructed buildings.   As a result, repositioning of older assisted living and memory care properties is likely to become increasingly important for the senior housing industry as more new units are constructed and competition increases.

Because many, but certainly not all, early assisted living and memory care properties are located in very attractive, hard-to-duplicate infill locations, repositioning good 1990s vintage properties may prove a very attractive investment alternative if such properties decline in value because of occupancy declines in a more competitive environment.   In this blog, I focus on repositioning opportunities for the classic Sunrise Mansion property as a proxy for all older assisted living and memory care properties.   I focus on Sunrise properties not because I believe the company has underinvested in their assets relative to other operators but because the Sunrise Mansion is the prototype for almost all of the mid- to late-1990s assisted living and memory care buildings.  As I write this, it has been 3 – 4 years since I toured a Sunrise mansion. So some of my observations may be dated.   However, over the course of my consulting, equity research and investment banking careers I easily toured dozens of Sunrise Mansions and similar vintage properties operated by national companies, regional and local operators.   I had the opportunity over the years to meet with several generations of Sunrise senior and operational management as well as senior and operational management of many other national and regional senior housing operators.   I also have had many informal discussions advising family and friends about senior housing options and getting feedback on their senior housing experiences and was actively engaged with the placement and experiences of my own parents in both assisted living and skilled nursing care.

Sunrise Mansion Pros and Cons

Before providing my thoughts on repositioning Sunrise Mansions and properties of similar vintage, I wanted to list the pros and cons I see for these Sunrise Mansions as a proxy for well located, good quality 1990s vintage assisted living properties:
 

Sunrise chart

Suggestions For Repositioning Sunrise Mansions and Properties Of Similar Vintage

Location – Most locations are very good.  However, some may have become less viable because of changing neighborhood conditions, because some site locations were forced at height of late-1990s development push or because newer competition has come on the market.  You can’t move the buildings but in most cases existing locations work and some existing sites may offer redevelopment or new construction options.

Design – Property sizes range from 75+/- resident capacity to 120+ resident capacity.   While I conceptually agree that residents should be out interacting with other residents and staff, not in their units, some Sunrise and other early assisted living units may be too small for current affluent senior preferences, which I summarize as independent living size apartments with assisted living + level services.   I continue to like pricing flexibility that flexible single/dual occupancy units provide but some may need to be reconfigured into more interesting larger units given demand.

Since, in most cases, buildings are on in-fill sites and cannot be enlarged, the practicality of combining some existing units to increase average room size, reduce total unit count and add some common space elements should be explored.   Given building size, an opportunity may exist to differentiate a Sunrise Mansion type property as the boutique/exclusive/personalized sized provider with somewhat smaller buildings than competitors if the economics will work.  I do not know the economic impact of reducing residents/increasing unit size but believe these options need to be explored and believe that there may be pricing flexibility for more exclusive, more personalized services in smaller buildings.

I believe the basic building design in Sunrise Mansion type properties is excellent but I would add room for a personal trainer and possibly some weight equipment, and perhaps more dedicated space for classes like yoga/palates, more space for a spa (facials/pedicures/massage, etc.) rather than just a beauty shop and perhaps space for a rehab therapy provider, which might be combined with personal trainer space.   If rooms are being enlarged and number of residents reduced, I believe it should be possible to convert a few smaller rooms to the uses noted above.   I believe these changes should appeal to affluent consumers and their children and can be used to offer more personalized care options than three levels of care that have traditionally been used by Sunrise and many other operators.   Personal trainer, yoga classes, extra beauty treatments could all be offered on fee for service or club membership plan.   I believe personalized services like those described above could all be offered in relatively small spaces and still make Sunrise type buildings much more competitive with larger AL and IL properties with services.

I believe space for Internet café within building and a broader look at use of technology for patient interaction with families, staff monitoring, etc. is important.   See my blog on “Technology In Seniors Housing” for a more extensive discussion of how technology can be used to increase resident and family engagement, interaction, mobility and evaluation.   But FaceTime or Skype interaction between residents and families, regular email or video reports to families on the condition of loved ones, computerized links to physicians and other care providers, computerized tools for patient monitoring and stimulation and things like Uber for more flexible transportation services are all things that might reasonably be incorporated into existing senior housing communities.   Some of these require dedicated space and all require trained or specialized staff.

Overall decor, which in early Sunrise properties I remember as being a bit fussy “Laurel Ashley-like” may need to be updated.

The levels of cap ex spending by operator varied, particularly during the recession but I expect basic-cap ex and infrastructure investment will be needed for mid-90s vintage properties to remain competitive as new properties are introduced to the market.

After a fire last year in senior housing facility in Canada, the importance of life safety standards, which I believe is high at Sunrise Mansion properties but not all 1990s vintage properties, should be emphasized.

Services – Service has and will continue to be more important than space for high quality senior care.   Sunrise was a trendsetter in quality and personalized care compared to traditional skilled nursing properties and I believe continues to have a strong commitment to resident independence, dignity and quality care. However, patient wellness and treatment standards for memory care have evolved since the core Sunrise care concepts were developed in the 1990s and I believe a complete review of Sunrise’s memory care service offerings and those of many other AL/memory care operators with an eye to setting a new standard for quality and personal attention is likely needed. Key elements in a revision to services that I see include:

  • A wellness program that provides individualized and integrated exercise, nutrition and mental health services for each resident.   This would incorporate a personal trainer rather than the group exercise programs now seen at Sunrise Mansion and other facilities, even more personalized meal planning and both computer assisted and staff provided mental agility and health services screening and stimulation.   This assumes additional staff on contract or employed with specialized training not now found in Sunrise facilities to the best of my knowledge.
  • More active review of medication management, particularly for memory care residents.   This may require a more active link between Sunrise facilities and healthcare or mental healthcare providers.  I am no expert in this area but believe that some dedicated memory care providers, such as Silverado, are more active in reviewing medications and medication management than most AL operators, are more likely to recommend changes in medication regimens and have more active involvement by attending physicians in reviewing their resident’s medications.  I believe over medication and adverse medication interaction remains a bit issue for seniors and this is an area with AL operators may be able to distinguish their service offerings.
  • A review of the memory care program. My sense is that providers like Silverado, with links to leading healthcare researchers at many of its facilities, have developed more comprehensive memory care treatment protocols than Sunrise any other operators who have been in the business for a while and Sunrise and other national AL operators should again set the standard.
  • I believe respite care is offered at many Sunrise communities but not certain if this is considered an integral part of the service offering that could be coordinated with a more robust therapy offering to position Sunrise as a post-acute or recovery option in a more integrated healthcare system. My recollection is that respite care is just used where units are vacant as a marketing and supplemental revenue generation tool.   I am not certain that Sunrise or other assisted living providers should be in the post-acute or respite business but these options should be evaluated and a business decision made.   Focusing some buildings on respite/post-acute care may make sense and it may be possible to combine on site respite care with rehab therapy to offer a more attractive and lower cost post-acute care alternative for some seniors and insurance providers.
  • Other ancillary services, in addition to rehab therapy and medications management noted above, such as hospice and home healthcare care have been at times offered by Sunrise and other operators both in and outside their properties with company staff.  I believe home healthcare and hospice care continue to be offered by third parties at some Sunrise properties.   I believe Sunrise’s commitment to let residents age and ultimately die in place is an important part of the Sunrise culture and a differentiated element of the Sunrise brand and is also an important part of some other operators culture.   However, there are a range of ancillary care options for assisted living operators ranging from: avoiding supplemental ancillary services to make their buildings more appealing to healthier seniors, to allowing residents to purchase services from third parties, to having approved partners, to directly providing ancillary services. My sense is that directly providing of ancillary services would be a significant distraction for many assisted living operators but a clear policy about the use of ancillary services in all of a company’s properties should be made if this has not already been done and using different levels of ancillary care at different buildings may be a way to differentiate a particularly property within a market.
  • Medicare managed care for residents is another option that Sunrise and other operators may wish to consider, likely teamed with a partner.   The only senior housing operator to operate its own Medicare Advantage plan, to the best of my knowledge, is Erickson Retirement and only at some of its communities.   Sunrise, Brookdale and some regional operators may have the resident density in some markets to either operate a MA plan themselves or team with a managed care or healthcare provider partner to operate one.   This could be an important differentiator if it helps ease the burden of coordinating healthcare services for residents and their families and is seen an providing quality care.  It might also be a more effective way of providing other ancillary services rather that teaming with various hospice, healthcare or therapy providers. In some markets it may be possible for multiple operators with links to a single healthcare REIT to join in a Medicare Advantage or other type of ACO plan to gain sufficient scale to be effective.
  • Transportation – Mobility is an important factor for many seniors.   A review of transportation options with multiple vehicles and multiple drivers available in lieu of the single bus should be considered. I envision each repositioned property having or having access to two or more of the new small SUV cab-type vehicles increasingly seen in major cities, and becoming standard in New York, that can readily accommodate a wheel chair and perhaps up to four passenger in total.  In addition, I envision each facility having something more akin to Uber to schedule cars and pick ups as needed, giving residents much more flexible mobility.   It may even be possible to use an outside Uber or Lyft like service specially tailored to seniors for this. The traditional facility bus might or might not still be needed for group outings.
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