The Government Will Not Pay For Your Long Term Care

Too many middle and upper income consumers still believe that Medicare, Medicaid or some other government program will pay for their long term care or the long term care of other elderly family members.

Medicare, the Federal healthcare program for those age 65 and over, pays for hospital care (Part A), physician care (Part B) and prescription drugs (Part D) and is often combined with private Medicare supplemental insurance to help cover copays. Some consumers opt for a Medicare Advantage (MA) /managed care plan (Part C) in lieu of Fee for Service Medicare that combines A, B and D benefits and may add other benefits in exchange for a restricted network of providers. Medicare will cover home health care or care in a skilled nursing or other post-acute care facility but only after a three-day inpatient hospital visit (observation status doesn’t count). While some MA plans may waive the mandatory 3-day hospital visit and provide home health or skilled nursing care to avoid a hospital stay, Medicare only pays for home health or skilled nursing care on a short-term basis to avoid or recover from an inpatient hospital visit. The basic Medicare Fee For Service benefit for skilled nursing care is for a maximum of 100 days in a given year only after a 3-day inpatient hospital stay, with only 20 days fully funded and the remainder with a 20% co-pay and only as long as the patient is progressing toward recovery. Long term custodial care for a senior who needs assistance with the activities of daily living, at home or in a facility, is not covered by Medicare.

Under the Medicare hospice benefit, Medicare will provide comprehensive palliative care but only for those (1) whose hospice doctor and regular doctor (if you have one) certify that you’re terminally ill (with a life expectancy of 6 months or less) (2) accept palliative care (for comfort) instead of care to cure their illness and (3) who sign a statement choosing hospice care instead of other Medicare-covered treatments for your terminal illness and related conditions.   Hospice care is provided under the Medicare Fee for Service Part A even if you are a member of a MA plan.    The Medicare hospice benefit offer comprehensive in-home or in-institution care for those expected to live six months or less.  It is an extremely valuable, and still somewhat underused, benefit but it does not provide long term custodial care.

Medicaid, the joint Federal / State program that pays for medical care for the poor will pay for long term care in a skilled nursing facility or in a home and community based setting, which in some states includes assisted living facilities. However, there are strict income and asset tests for Medicaid, which in Maryland are an individual income of approximately $12,000 or less ($16,000 or less for a couple) and assets of no more than $4,000, $6,000 for a couple. A spouse is generally allowed to exclude a home from the asset test and his/her retirement savings but all joint savings and investments would have to be spent down to at least $6,000 before Medicaid benefits can be used and states have become increasingly good about looking back at least three years to see that assets have not been distributed to other family members to meet the asset test. These tests effectively exclude middle and upper income individuals and families from using Medicaid for long term care without first exhausting the large majority of their savings. Medicaid may also limit which facilities and programs you can use since not all assisted living facilities or home health agencies accept Medicaid patients.

With this post, I hope to kick of a series of posts on the issue of Paying for Care that will provide information on the cost of care and strategies for funding it through savings or long term care insurance.

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Ten Takeaways From NIC Conference

The Fall conference of the National Investment Center for the Seniors Housing and Care Industry (NIC – www.nic.org) was held in Washington, DC from September 14 to September 16, 2016.   This is the largest industry conference for seniors housing and care.

I moderated a panel entitled “Somewhere Over The Rainbow: Where Winning Post Acute Strategies Attract Investors. “   Panelists included: Benjamin Breier, President & CEO, Kindred Healthcare, Inc.; Larry Cohen, CEO, Capital Senior Living Corporation; George V. Hager, Jr., CEO, Genesis HealthCare, LLC and Andy Smith, President & CEO, Brookdale Senior Living.

When I served as an equity analyst I would spend almost my entire time at NIC conferences in private meetings with companies and investors.   As a retired analyst, blogger on seniors housing and care and session moderator, I had many informal conversations with operators, industry organization staff, lenders and investors, a few scheduled meetings and attended more of the actual conference sessions.

My ten takeaways from the 2016 Fall NIC Conference are:

  1. Record Attendance – Guarded Optimism – NIC’s Fall Conference at the Marriott Marquis Hotel next to the Washington Convention Center had a record reported attendance of 2,700. Senior housing operators are guardedly optimistic, with asset prices still high, reasonably positive operating metrics and only spotty reports of rising labor costs.   There is some caution about overbuilding but that threat may be receding (see below).   Skilled nursing and post-acute care operators are struggling with top-line revenue pressure and big transition to value-based purchasing.
  2. Capital Plentiful But Diversifying – Capital for seniors housing property acquisitions and renovation remains readily available as does investment capital for experienced senior housing operators to grow their businesses.   HUD financing is still very attractive for skilled nursing but, with the underperformance of some skilled nursing and post-acute care operators, REITs are diversifying to limit their exposure to these subsectors. Ventas led this charge with its CCP spinoff and new investments in hospitals and university-tied biotech. HCP has announced its intension to spin off its skilled nursing holdings into QCP and Welltower has also announced a desire to reduce its exposure to Genesis.
  3. Construction Lending Standards Tightening – NIC’s in-house economist Beth Mace and NIC’s bluebook featuring key industry trends note a tightening of lending standards for new seniors housing construction as reported by surveys of loan officers.   If true, this may help limit widespread overbuilding of assisted living properties, about which I have expressed concern.   Other conversations I had during the Conference seemed to support NIC’s view that underwriting standards for new seniors housing projects are tightening.   Some finance types I spoke believe the cutback in senior housing construction lending is driven by a broader cutback in lending for multi-family construction projects rather than lenders making a specific determination that seniors housing is becoming overbuilt.
  4. Good and Some Less Good Development Continues – Despite the cutback in lending, many seasoned senior housing operator/builders are continuing to develop projects in markets in which is it is difficult to develop and for which the approval process may have been 3-5 years.   There appear to be a smaller number of projects still being developed by inexperienced players with money from community banks and smaller equity investors and hopefully tightening lender standards will further weed out more of these types of projects in the future.
  5. NIC Continues to Built Its Value For Skilled Nursing & Post-Acute Care – Since adding skilled nursing data to its NIC-MAP data service a number of years ago and adding a Spring conference with more skilled nursing focus, NIC continues to build its data and content for skilled nursing and post-acute care providers and is at the forefront of educating senior housing operators about the convergence of seniors housing and post-acute care.   As post-acute care transitions from a fee-for-service to value-based purchasing, NIC appears well positioned to help educate investors and attract investment capital for this portion of the industry, as it has previously done for seniors housing.
  6. Post-Acute & Senior Housing Providers Have Opportunity to be “Strategic Aggregators” – Former HHS Secretary Michael Leavitt opened the NIC Conference by providing an overview of the broad changes occurring in the U.S. healthcare system with a focus on the shift to value-based purchasing.   Mr. Leavitt believes the shift to value-based purchasing increases the risk that senior housing and post-acute care providers become commoditized fee-for-service price-takers.   But Leavitt also believes that senior housing and post acute care companies that serve significant numbers of patients in their facilities and programs have the opportunity to aggregate patient lives and serve as general contractors making value-based purchases themselves rather than just being price-takers in a value-based payment world.   While the shift to value-based payment is slow and fragmented, Mr. Leavitt quoted Bill Gates as saying, “Don’t overestimate what will happen in the next two years or underestimate what will happen in the next 10.”   He foresees continued consolidation through both mergers and acquisitions and additional joint ventures among operators.
  7. Major Post-Acute Operators Generally Agree With Leavitt – The four publicly traded senior housing and post-acute care operators who participated in my panel are clearly frustrated as they function in a fee-for-service world (Only 1-2% of their revenue is now truly value-based) while pivoting their organizations to profit from value-based payments.   These large operators are pursuing a wide range of strategies to provide post-acute care and adapt to value-based payments (from senior housing operators contracting out all post-acute services, to focusing on being the preferred provider for a few segments of post-acute care, to being a comprehensive provider of all services – LTACHs, IRFs, SNFs, home health, rehab therapy and even hospice – in select markets).   Two common themes appear, however.   Major post acute care providers are positioning themselves to be strategic aggregators and value-based purchasers and major senior housing operators believe offering post-acute services within their buildings themselves or through third parties will be key in continuing to attract and retain senior housing residents.   Most operators are also looking to increase their concentration in select markets.
  8. Managed Medicare Rate Pressure Slowing – NIC reports that the downward pressure on Medicare managed care (Medicare MA) rates to skilled nursing operators slowed in 2Q16 and it will be interesting to see if relentless downward pressure on SNF rates and length of stay from Medicare managed care providers is really beginning to subside. This would be very good news for skilled nursing operators.
  9. Importance of Data/Information Systems Growing – Both post-acute care operators and senior housing operators providing, or contracting with others to provide, post-acute care within their facilities are seeing an increased need for data to measure outcomes in order to make the case to ACOs and other bundlers of post-acute patients and in order to take a more active role themselves in managing patient lives.     Data to predict future performance of facilities in a value-based purchasing world is also key to underwriting future investments for sophisticated investors, like Formation Capital, since past performance alone of a skilled nursing or post-acute care facility may be a poor predictor of how it will perform in a broader value-based purchasing environment.
  10. NIC-Map Making Some Important Strides – NIC-MAP has expanded to an additional forty metro markets for its traditional data reporting and is adding two important products – actual monthly rent, occupancy and turnover information for a national sample of 250,000 senior housing properties and actual monthly rates by payer source and occupancy for a smaller but growing sample of skilled nursing properties.   These are national surveys electronically reported from operator’s actual month end data and NIC hopes to grow these samples.   This will allow NIC to be much more accurate and timing on rent and other key financial metrics on a national basis and provide benchmarking data to participating operators and other industry participants.
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A Wall Street Journal article on Tuesday, July 26, 2016 entitled “Can This Brain Exercise Put Off Dementia?” hitp://on.wsj.com/2arSPfA reported on the results of a new study, called “ACTIVE” for Advanced Cognitive Training in Vital Elderly, that were presented the previous Sunday at the Alzheimer’s Association International Conference in Toronto, the world’s largest gathering of Alzheimer’s researchers.    The article immediately attracted attention within a group of my close Baby Boomer friends who have known each other since elementary school.  The New Yorker also published an article on the same study on July 24, 2016 http://www.newyorker.com/tech/elements/could-brain-training-prevent-dementia.

According the Journal “The study results showed that speed training—computer exercises that get users to visually process information more quickly—beat out memory and reasoning exercises, two other popular brain-training techniques sometimes suggested for improving cognitive function and reducing dementia. Researchers found that a total of 11 to 14 hours of speed training has the potential to cut by as much as 48% the risk of developing dementia 10 years later.”

As reported by the WSJ, the ACTIVE study, which was funded by the National Institute on Aging and the National Institute of Nursing Research, included 2,832 healthy subjects, ages 65 to 94, at six study sites around the U.S. Participants were randomized to get one of the three cognitive-training programs or be in a control group.  Since 1998 the study has received a total of $33.8M in funding and is still in touch with all but 4o of the original participants.

Prior to release of the ACTIVE results there was no evidence that computerized brain training had any effect on cognitive ability or dementia prevention.   The New Yorker cites a consensus statement by more than 70 academics in 2014 that “playing brain games has been shown to improve little more than the ability to play brain games.”  And in January of this year the Federal Trade Commission fined Luminosity, the largest and best known provider of brain games, two million dollars for making unsubstantiated claims of cognitive improvement for its games.   Thus, the large and well-funded ACTIVE study is likely to provide a big credibility boost for the use of computer mind stimulation games to combat cognitive decline and dementia.

The speed training component of the ACTIVE study used a computer game in which, for the briefest instant, two images appear, one in the middle and one on the periphery of the screen (see below).   The computer then prompts you to identify whether the central image is a little car or little truck along with which edge the second image appeared.   The more accurate you get, the more quickly the images appear and the more complex the background becomes.

Double Decision Image

Double Decision is a more user friendly version of the speed training game used in the ACTIVE research that was acquired by Posit Science, of San Francisco, in 2007 and is now part of the company’s BrainHQ online service, a cognitive-training program. A monthly subscription, which includes access to Double Decision, is $14 a month, or $96 a year. Posit Science says the company intends to file a medical-device application to the Food and Drug Administration based on the recent clinical trial findings.

After reading the WSJ article my friends and I were immediately tempted to purchase Double Decision through the Brain IQ service, as would any Boomers concerned about their future cognitive abilities.   However, our group of friends includes Mitchell Clionsky, Ph.D. who is a clinical neuropsychologist and has worked extensively on dementia testing and evaluation.   Dr. Clionsky, or Mitch as we know him, pointed out that, unfortunately, these kinds of stories hit the news with some regularity, always look really great, but sometimes aren’t.

Mitch points out that the ACTIVE research was presented at AAIC as a talk. It has never been subjected to peer review or published in a journal, which the WSJ and The New Yorker also mention. In other words, lotsa sizzle, maybe not so much steak. It also defies reason that 10 sessions of training would impact cognitive functioning 10 years later.  Finally, the 48% difference in the frequency of dementia in the ACTIVE study is the calculation of decline from a conversion rate after 1o years of 14% for healthy adults with an average initial age of 73 to a conversion rate of 8% for the subgroup undergoing computerized speed brain training for 10 hours and receiving just four more hours of training. In a large group this is statistically significant. However, it may be less meaningful when applied to individuals.

Mitch is hoping that there is something to the ACTIVE research and looks forward to a replicated study, with a more varied dosing schedule of exposure to training, and better measures of cognitive functioning 1, 2, 3, 5, and 10 years later. In the meantime, he thinks it the impact of using computerized speed training exercises on dementia are way overblown.

Mitch believes it would be better for us Boomers to take home the message: Don’t retire entirely or, if you do, stay mentally and physically active (by writing a blog, playing golf and exercising for example). Get yourself a cool gaming station and play some intense shoot em up games or other video games that require lots of visual processing and reaction time. That way, at least you will be having fun. Control your diet, keep your BMI at about 25, don’t drink too many margaritas at one sitting, take a 30 minute walk every day.

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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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On Tuesday, May 17, 2015 I was featured in a question and answer session over breakfast with subscribers of Senior Care Investor, moderated by its editor Steve Monroe. We covered a wide range of topics.   I summarize below key takeaways from my Senior Care Investor interview and provide a link to the nearly one hour webcast.

Key Takeaways

The public markets are much less important for seniors housing and post-acute care than they were twenty years ago when there were as many as 30 public companies including operators and health care REITs.   If you review the investment history of seniors housing and post-acute care there have been a number of “pivot points” where stocks in these sectors experienced significant sell offs and then rebounded strongly.   These pivot point were driven by overbuilding and reimbursement and operating problems that in some cases led to operator bankruptcies.  If you got the timing right, these pivot points provided very attractive investment opportunities in the stocks of private pay senior housing operators, post-acute care operators and health care REITs, with the stocks within each of these industry groups moving on somewhat different events and at somewhat different times.

I see current industry conditions again creating pivot points for investments in senior housing, post-acute care and health care real estate and believe it is the right time for investors to be studying these sectors and deciding when it makes sense to invest.

Private-Pay Seniors Housing – Overbuilding, few publicly traded investment options and operating issues at the largest publicly traded operator, Brookdale Senior Living, Inc. (BKD), have caused most public market institutional investors to flee the private-pay seniors housing space.   I don’t see a quick pivot in private-pay seniors housing because capital remains plentiful for new construction, underlying demand from older seniors (80+) is slower than it was before 2010 (see Slow 80+ Pop Growth, Elevated Construction Spark Concern For Seniors Housing on this blog), and issues at Brookdale will take some time to resolve. I also believe private equity investors will await a more receptive market before bringing other quality operators public.

Post-Acute Care – Post-acute care currently has more publicly traded operators with scale than private-pay seniors housing, but deteriorating operating fundamentals and high leverage have also driven public market institutional investors away from publicly-traded post-acute care operators.   Major REITs, such as Ventas (VTR) and HCP (HCP) spinning off skilled nursing assets has underlined the risks investors see in this space.     Increased use of Medicare and Medicaid managed care and ever expanding use of bundled payments are reducing lengths of stay (LOS), pressuring post-acute care rates and volumes and eroding operator revenue and EBITDA.   However, because baby boomers are now beginning to turn 70, the pool of post-acute care patients should grow dramatically over the next 5 – 10 years while the supply of post-acute care facilities and beds is flat or declining and quality operators should be able to attract higher volumes of patients from hospitals if they care demonstrate quality outcomes.   A mild flu season and high operator leverage exacerbated poor 1Q16 financial performance.  I anticipate pressures on rates and LOS stabilizing and volume growth providing upside for post-acute care operators over a 1 – 2 year period while operators are rationalizing their delivery systems and paying down debt.   I believe these factors put post-acute care closer to a performance pivot point than private pay seniors housing.

Health Care REITs – Health care REIT share prices have been buffeted by some of the same issues affecting private pay seniors housing and post-acute care operators but health care REIT share price performance has been much more mixed than that of the operators. Many health care REITs are well diversified, have strong lease coverage and are less exposed to overbuilding and revenue pressures than the operators themselves.   Health care REIT stock performance is also significantly influenced by investor’s views on interest rates and overall economic growth.   Some healthcare REITs, with more significant exposure to seniors housing or post-acute care issues, such as HCP, presumably its future SpinCo, and CCP, have been more directly impacted by the industry and operator issues noted above.   These REITs, and some others, offer larger cap, more liquid investment vehicles than seniors housing or post-acute care operators but likely also have potential for upside from the industry pivot points described above.

Having retired as an equity analyst who followed seniors housing, post-acute care and health care REITs for 15 years, I no longer make Buy, Sell, Hold recommendations.   I do recognize that there are significant risks for private pay senior housing operators and particularly for highly leveraged post-acute care operators. However, experience in the 1999 – 2002 crash of private-pay seniors housing and post-acute care and other sell-offs driven by operating underperformance, reimbursement cuts and regulatory issues show that these sell-offs have often proven to be great investment opportunities and have absolutely been a time to look harder at these sectors and develop an investment strategy and timetable rather than to flee the space.

For a more in depth discussion of these issues, listen to the Senior Care Investor webcast by clicking on the link below. Comments, including those with opposing viewpoints, welcome.

 

 

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UnSenior “Seniors Housing”

Earlier this month I toured The Stories at Congressional Plaza, a new type of “seniors housing” project designed to appeal to seniors as well as those of other ages looking for a high-tech, high-service environment in an urban mixed use setting.  The Stories opened in February 2016 and is a joint effort of Federal Realty Investment Trust and Ryan Frederick’s Smart Living 360.

Federal Realty is a publicly traded REIT (NYSE: FRT) that specializes in the ownership, operation, and redevelopment of high quality retail real estate in the country’s best markets and is increasingly developing mixed-use projects in connection with its retail holdings.   Ryan Frederick has long been known as one of the leading thinkers on the future of seniors housing through his Point Forward Solutions consulting company.   Ryan has now created a new company, Smart Living 360, to work with a retail/mixed use developer, rather than a seniors housing company or health care REIT, to bring us his vision of the future of “seniors housing” in a property designed to appeal to seniors but open to those of all ages.

The Stories is a new 48 units apartment building located at 1628 E. Jefferson Street in Rockville, Maryland.   It is part of Federal Realty’s Congressional Plaza redevelopment that includes a high-end shopping center, Federal’s corporate headquarters and an existing 150+/- unit apartment building with structured parking (The Crest), now about 10 years old.   The Stories was developed on a site long designated for residential use as phase 2 of the Crest. According to Ryan, Federal became interested in consciously designing The Stories to appeal to the seniors market because they wanted a way to differentiate the projection from other high-end rental projects in the same area of the Rockville Pike, northwest of Washington and Bethesda.

The Stories is designed to appeal to the baby boomer market, now passing age 67, and other seniors with a “younger” outlook, unlikely to consider independent or assisted living or even a continuing care retirement community (CCRC).   This market is large and rapidly growing and not well served by well served by conventional seniors housing. While those 75 and up are considered part of the senior housing markets in many market studies, the average entrance age for most dedicated senior housing communities is now closer to 85 than 75 (See Slow 80+ Pop Growth, Elevated Construction Spark Concern For Seniors Housing on this blog – http://03c242c.netsolhost.com/WordPress/?p=209.

Ryan and Smart Living 360’s vision for The Stories is derived from a view of what “younger” seniors want in a living environment to enhance their wellbeing and tries to anticipate the growing role of technology for enhancing seniors’ lifestyle and delivering the services they want and need.   It is also purposefully designed to be flexible so it can adapt to the needs of its target market as they are discovered over time.

To understand what Federal and Smart Living 360 have created at The Stories, you need to think outside the traditional seniors housing box regarding design, services and technology.

Physically, The Stories is a attractive 5-story modern apartment community located in high-income, high-wealth, high-education zip code with a unit mix favoring larger 2 and 3 bedroom units (75% 2 bdrms) over one level of structured parking.   With rents from $2,500 to $4,000, The Stories is priced at about half the cost per square foot of traditional IL properties in its market.  But unlike conventional IL properties, The Stories does not bundle food service and activity programs into its rent.   It is part of a mixed-use project including retail, office and other residential uses in a nice residential area a block off a heavily travel arterial street, the Rockville Pike, MD 355.   The property faces other residential uses and fronts on a relatively quiet suburban street.

P1040397

Units within The Stories look like high-end non-age-targeted residential rental units with small balconies that are designed with largely invisible accommodations for an aging senior market – wider doorways and master baths able to accommodate a wheel chair with higher toilets, easy entry showers, modest grab bars in the bath with studs behind the wall to allow more to be installed, roll out lower shelves in cabinets, electrical outlets further up on the wall, etc.   These are accessible units that intentionally look like conventional units.

P1040395

Common areas include a large fitness room with some specialized equipment for seniors that could also be used by personal trainers or rehab therapists, a central lounge with a refrigerator and cooking equipment and a self-serve coffee bar.  
There is a small conference room that is designed so that it can also be used for a visit by a health professional or for telemedicine care.   The entire building is pre-wired for high speed Verizon Fios internet with pre-installed routers; and service providers are available to install Sonos wireless speaker systems and other electronic amenities in the units.   The electronics designed into the building are intended to accommodate increased use of patient self-monitoring and wellness devices that Ryan believes will become increasingly prevalent, sophisticated and integrated over time.

P1040391

The building offers a secure electronic entry system, with an enhanced concierge called a Lifestyle Ambassador (services described below) manning the front desk during the day. The building is monitored in the evening by management personnel from the larger Crest Apartment building that is located at the other end of the block, across a parking lot from The Stories.   The number and length of coverage by on-site personnel is partly limited by the buildings relatively small size, only 48 units.

What really sets The Stories apart as a community that will appeal to seniors is its use of a Lifestyle Ambassador, in this case a hotel industry trained and certified concierge cross-trained in seniors housing design and services.   The role of the Lifestyle Ambassador is threefold – 1. Help residents connect with one another and with the outside community, 2. Provide access to any needed services, and 3. Simplify resident’s lives by taking care of pets and plants while residents are traveling and providing other services.   Smart Living 360 makes use of many off-the-shelf on-demand services, has prearranged for a wide range of additional services to be available to residents of The Stories and will provide referrals to providers, including:

  • Transportation
  • Pharmacy
  • Physicians
  • Food Delivery
  • Financial Advisors
  • Case Managers
  • Home Healthcare
  • Personal Trainers
  • Tech Services

The goal at The Stories is to offer attractive housing, location and services to enhance the well being of baby boomers and other “younger”, generally healthy seniors without the stigma of a traditional seniors housing community with a large percentage of very old, frail people; and to do it in a flexible way that allows it residents to order in any services they may need and to adapt to rapidly evolving technology for medical monitoring and wellness.

Smart Living 360 hopes to monitor residents of The Stories over time to see if the building’s design and the flexible services it offers will enhance residents’ well being compared to those living in other residential settings. This will be done using the Gallup-Healthways Well-Being Index that measures five factors:

  1. Purpose – Liking what you do each day and being motivated to achieve goals
  2. Social – Having supportive relationships in your life
  3. Financial – Managing your economic life to reduce stress and increase security
  4. Community – Liking where you live and having pride in your community
  5. Physical – Having good health and enough energy to get things done.

What is interesting to me about Smart Living 360’s approach compared to a traditional senior housing facility is that Smart Living 360’s Life Style Ambassador begins with the residents’ wishes and customizes activities and services the resident desires while a traditional senior housing facility has a menu of services into which it tries to fit a resident. I see the Smart Living 360 approach as more resident centric, more personalized and more adaptable over time.

The Stories occupies an interesting place somewhere between non-age-restricted market rate apartments and conventional seniors housing.   Interestingly, the project was voluntarily described as 55+ housing in pre-opening marketing material but the developers have now decided to market its advantages for seniors but without the age restriction, which they believe may be a turn-off for their primary but not only target market.   Of the first several residents moving in, two are seniors and one is age 29 but liked the amenities.

It remains to be seen whether The Stories will be successful in attracting baby boomers and other seniors with a “younger” outlook and how Ryan Frederick’s vision of meeting residents’ needs and increased use of electronic devices to monitor and enhance health and wellness will come to pass.   But I believe, even at this stage, The Stories has some interesting lessons for seniors housing and multi-family developer/operators and institutional real estate investors.   These include:

  1. Non-age restricted housing and un-senior “seniors housing”, as I categorize the Stories, may be more appealing to under 80s seniors, and even those over 80 in good health with younger outlook, than more conventional seniors housing projects.   For a significant portion of the senior population today and I believe for even a larger portion of the baby boomers, living in mixed aged neighborhoods or even in mixed age buildings like The Stories may be preferable to living in a senior ghetto or in an isolated age-restricted community.
  2. We have already seen obsolescence in seniors housing communities, such as IL projects without sufficient provisions for handicapped residents, IL and CCRC projects without AL and memory care units, AL communities with insufficient common space for gyms or rehab care and IL and AL buildings with too many small units.   This history suggests that building flexible design into seniors housing communities, which The Stories has very deliberately tried to do, may be an advantage for the community over time.
  3. Seniors housing located in mixed use projects or higher density urban areas, where services and amenities are close-by, while often more difficult and more expensive to develop than stand-alone conventional IL or AL communities, would seem to offer a lot of appeal for the baby boomer age cohort and other active seniors.
  4. In an age of on-demand services, such as Uber and Foodler, planning seniors housing around services delivered by outside vendors may prove both cost effective and better able to meet seniors desires and needs than the service packages typically available in seniors housing communities.
  5. Seniors, particularly the baby boomer age cohort, are increasingly tech-savvy and should be able to adapt to electronic delivery of health and wellness services, as well as other on-demand services, and may see projects designed to accommodate more high-tech amenities as more appealing than conventional care models.
  6. The resident centric and holistic approach to meeting resident’s needs built into the Lifestyle Ambassador approach that incorporates both social and care needs, seems to offer some advantages over the way conventional seniors housing services are organized with responsibility fragmented between healthcare, activities, dining and caregiving personnel, each of whom may only see themselves responsible for a slice of a senior’s needs.   While the staff in any well managed seniors housing project should get to know the “whole resident”, making resident on-demand centric services the organizing principal of your care delivery system appears to offer some advantages and a have a better chance of assuring a residents need are met.

 

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Posted in Finance, Lifestyle Choices, Senior Housing & Care, Senior Housing Innovation, Suburban Office Reuse | 3 Comments »

There is an excellent article in today’s Wall Street Journal, Monday, March 28, 2016 on the difficulties of sorting out your parents’ financial affairs after they become incapacitated.   It includes a number of recommendations on steps you should take with your family while your parents are still healthy to share financial information and avoid the difficulties the author experienced.

http://www.wsj.com/articles/the-difficult-delicate-untangling-of-our-parents-financial-lives-1459130770

 

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Posted in Finance, Medicare & Social Security | No Comments »

Confessions of a Recent CCRC Mover

The question I most encounter when speaking with friends, family members and acquaintances about seniors housing is: How do you get a reluctant family member of advanced age living alone to agree to move to seniors housing? It doesn’t seem to matter if the family member is 79 or 99, there is still a strong reluctance on the part of many of today’s seniors to move to any type of seniors housing despite objective information that such a move improves socialization, nutrition and overall health and wellness, and may increase longevity.

While “How to get a reluctant family member to move?” may be the quintessential question to which families would like an answer, I find very little useful information on the web and from seniors housing organizations on how to address this question.   In order to seek an answer for myself and for those who ask me about it, I interviewed a 97 year-old friend and former neighbor who made the decision to move to a CCRC about 18 months ago.   I wanted to understand her decision to move, what finally convinced her to move and how her experience has been since moving to her CCRC.   For the purpose of this blog, we will call her Ms. F.

Ms. F is a remarkable person in many ways but I believe her decision to move to seniors housing and her experience after she arrived are still illustrative for others.   As I indicated, Ms. F is 97 years old. She moved from the large, single family home where she raised her family to a condominium in 1979, when she was only 60, partly due the health of her husband who died seven years later.     She continued to live in a full-service elevator-served condominium with a wide-range of resident ages until 2014, when she made the move to a CCRC. In her condo, Ms. F had occasional cleaning help but lived independently and drove. When living at her condo, Ms. F attended a Pilates class once a week, played 9-holes of golf regularly through 2013 and had an active social and cultural life. Ms. F is college educated, cultured, very well dressed and had enough wealth so that all housing and care options were available to her.

The discussion of a move to seniors housing started with Ms. F’s children, the oldest of whom is 74, about three years before Ms. F’s decision to move.   Her children, who live in another city at least six month of the year, were concerned about her living on her own and continuing to drive.   Ms. F indicated she finally agreed to move to a CCRC to make her children happy and because after a bout of pneumonia in the winter of 2013 she did not bounce back completely to her previous stamina.   The discussions for her to move also began after her significant-other, with whom she had a very long-term relationship, died.

Ms. F’s reluctance to move to a CCRC or another type of seniors housing primarily arose from the fact that moving to such a facility would require her to “admit she was old”, something she had never really done despite being 95 at the time of her move.   Ms. F, like many in the current generation of Roaring Twenties Babies in their 80s and 90s, also saw moving to seniors housing in a negative light because it indicated to her that she could no longer live on her own and she saw it as giving up some of her independence.

One of the key lessons I took from Ms. F’s experience is that us Baby Boomers, the children of today’s 80 and 90 year-olds, tend to see their parents as very old, frail people in need of care while many seniors do not view themselves as old and cherish their independence. This suggests that any conversation about a move to seniors housing should not begin with the senior’s frailties but how such a move could enhance and prolong independence.   It would be better for us Boomers to approach these discussions thinking about the attributes of senior housing that we would find attractive because a seniors’ view of him or her self, if still healthy and not cognitively impaired, sees 80 or even 90 as the new 60.

The other clear lesson from Ms. F’s experience, and that of other seniors and their families that I have observed, is that the decision to move to seniors housing, if made voluntarily, is often a prolonged process that can stretch to a year or more. It is also important to realize that senior housing facilities offer a broad range of housing and lifestyle choices and may involve trade-offs between housing and lifestyle amenities, something that seniors and, in many cases, their children may not understand.   Visits and short-term stays, which many facilities offer, can help a senior and their families get to know a facility well before committing to move.

It is also worth noting that a mixed-age full-service condominium served Ms. F very well as a housing choice for 35 years, from the time she was 60 until she was 95.    With the growing availability of smart-phone accessed transportation, grocery and food delivery and home care services, it is important for the seniors housing industry to realize that well-designed, mixed-age apartments and condominiums can be a very viable option for many seniors and that seniors may prefer such options that don’t require them to “admit they are old”.

Ms. F and her family did not undertake an exhaustive search of senior housing facilities because they were looking for something high-end and were familiar with many of the choices because Ms. F, at 95, knew people living at a number of the likely choices.   The facility Ms. F chose was relatively close to her condominium, offered extensive educational and cultural programming, which appealed to her, and had friendly and welcoming staff.   The downside of the community Ms. F chose was that it dates from 1984 and did not offer some of the amenities within its units and common areas of other facilities that were newer or which had undergone extensive renovations.   Ms. F looked at a number of different units before she found one on an upper floor that had enough natural light to make it appealing. Ms. F moved from a modern three-bedroom, two-bath condo with larger windows and lots of light to an oversized one-bedroom, one-bath senior housing unit.   She believes the size of the unit is fine but would prefer a larger bath and a separate powder room for when she has quests.     Ms. F’s focus on a welcoming staff, light in units and other factors dovetail well with industry studies of independent living customer satisfaction.   (See my blog on Finding Happiness In Seniors Housing http://03c242c.netsolhost.com/WordPress/2015/08/20/finding-happiness-in-senior-housing/).

It is worth noting that the CCRC to which Ms. F moved is about to undertake a major expansion and renovation that will add larger independent living apartments in response to demand, add a memory care section and renovate public areas to update the look and add casual café-style dining in addition to the formal dining room.

Ms. F’s transition to a CCRC has been relatively easy for her. She only knew one person well at the CCRC when she moved but Ms. F was able to make friends quickly.  Today Ms. F gets around without a walker but does worry about falling and is careful when she walks. Ms. F was still driving at the time she moved to a CCRC but not long after she arrived she had a minor traffic accident and decided to give up driving.   However, using the CCRCs and private transportation services, Ms. F still gets to her Pilates class once a week and to cultural events (She will be traveling to New York soon to see Hamilton) and she has added personal fitness training at the CCRC and is attending many of the programs that the facility offers, including a current lecture series on the Supreme Court planned before Justice Scalia’s death.

I believe Ms. F’s attitude toward her move to a CCRC also eased her transition.   Rather than focus on the space she was giving up and the things she was leaving behind, Ms. F chose to view her move as an opportunity.   She got help from a decorator to design and furnish her new home, bought some new things and recovered some of the furniture she chose to move from her condominium.   So she made it a new beginning rather than a move down.

Ms. F is very positive on her CCRC now that she has moved and agrees that she may have benefitted from moving sooner. But Ms. F doubts she could have made the decision to move until she started to notice herself slowing down following her pneumonia, had lost her significant other and was ready to admit she was old.  One of the benefits she sees at the CCRC is knowing other couples that are older than her but still mentally active and able to get around.   Her close friends at the facility include a couple that are 102 and, while he uses a walker, are still in very good health and very alert.

Top on Ms. F’s list of what makes her CCRC a good place to live are:

  • Activities/Programming – special events (St. Patrick’s Day and Easter Dinners for example), movies including first run movies such as Spotlight and Brooklyn, Lectures that cost residents $25 and outsiders $125, religious services, entertainment every Wednesday and other events like a forum for local mayoral candidates.
  • Volunteer Opportunities
  • In-House Exercise Programs and therapy
  • Housekeeping Services that include weekly linen service, biweekly cleaning and an annual complete unit cleaning as part of the base rate and PAL service that for $21 per hour provide additional light cleaning, laundry and making the bed.
  • Friendly Staff who know you by name and friendly residents. Many of the staff are African American high school students interested in careers in healthcare or food service/hospitality industry that the facility trains.
  • Someone Looking Out For You – It is comforting knowing there is always someone there for you. The facility has an electronic monitoring system that can tell if you are not up moving around your unit by a certain time and uses other checks such as attending meals and taking in your paper to check to be sure you are all right, as well as emergency alert system.
  • A Healthy Future – Ms. F can see that she is not the oldest and certainly healthier than some others.
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Posted in Lifestyle Choices, Senior Housing & Care | 1 Comment »

As my bio indicates, I spent more than 25 years working in the private sector, primarily in equity research and investment banking for publicly traded securities firms.    I, like many with private sector careers and nearly everyone even slightly right of center politically, take as an article of faith that the private sector is more efficient than the government at doing just about anything.    However, when it comes to Social Security and Medicare (technically the Centers for Medicare and Medicaid Services or CMS) my experience over the past year indicates these agencies far exceed private sector insurers in quality of service.

In a single week in January 2016, I applied for Social Security, my wife applied for Medicare and my wife interacted over a billing issue with CareFirst, the Maryland Blue Cross / Blue Shield company.    These interactions highlighted for me the contrasts between dealing with these two Federal government agencies and dealing with a private sector health insurer.  I found the difference in quality in the government’s favor to be so dramatic that I thought it warranted a comment on my blog.

The quality differences with Social Security, Medicare and private insurers start online.    The ssa.gov and medicare.gov websites are well designed and easy to negotiate and the online process to apply for Social Security and Medicare are clear, easy to understand and complete.   Follow up correspondence from the agencies can be couched in bureaucratic language but is timely, understandable and alerts you and your spouse to possible benefits, like Social Security if one of you signs up for Medicare, help paying for drugs or the availability of spousal benefits.

After I recently filed online for Social Security benefits the agency had some questions.  I was contacted via email by an agency employee within 48 hours of filing my application for benefits and asked to set up a time to talk.    I received a call back from a claims specialist within the time slot to which we had agreed.   She was very pleasant and enthusiastic, was able to resolve the questions she had and indicated she would move my application along with formal notification likely coming closer to the month in which my 66th birthday would occur.  She clearly disclosed that the detailed guidelines for staff of Social Security changes included in the recently passed budget bill had not yet been prepared but agreed that May 1 was the deadline, which I had met, for various rules changes.  In short, both my online and telephone interaction with a Social Security claims specialist were easy and pleasant and I believe they will prove effective.

My wife’s experience with Medicare and CareFirst involved only online experiences.   With Medicare she was able to quickly and easily complete her Medicare application and has already received her notice of eligibility with coverage beginning in the month she will turn 65.     She has yet to select Part B and Part D providers, which will be private insurers operating within Medicare requirements.    Contrast this with her almost simultaneous online interaction with CareFirst, which has provided one or both of us with individual health insurance coverage for the last five years or so.

In January, our credit charge used to automatically pay my wife’s CareFirst monthly premium had some information change, so the automatic payment of her CareFirst premium had not gone through.    This was communicated to her with conflicting emails, one auto-generated indicating the payment had been processed and another saying it had been rejected and she risk losing coverage if payment was not received.   This led us to the CareFirst website, where we spent 10 – 15 minutes trying to find the right area to update the payment information and then another frustrating 15 minutes plus because the system would not allow us to update the information on the credit card.   We finally realized we had to first delete the exist card on file for automatic payments and then enter the same card with updated information.   But nowhere was this explained in instructions or in the repeated message that the system was unable to update the card on file.

We have previously had equally or more frustrating experiences with CareFirst online, over the phone and even going to an office and dealing with a person face to face when we initially tried to sign up for individual policies (pre Affordable Care Act Exchanges) and when I shifted from our joint policy to Medicare and we tried to keep coverage in place for my wife.  The letter we received from CareFirst indicating we had first been approved for individual health insurance policies was so badly written that neither of us, despite two sets of graduate degrees, were able to understand it.    It was only when we received a bill that we realized coverage had been approved.   After going to a CareFirst office in person to remove me from our CareFirst coverage when I switched to Medicare but leave coverage in place for my wife, the company still miss-handled the conversion and my wife had to have a number of phone calls with the company before she was able to get her coverage continued.   Lest you think this is only an issue with CareFirst, I have also found Medicare.gov much easier to negotiate than the websites of United Healthcare for Medicare Supplemental Insurance and websites of Medicare Part D drug coverage providers.

So, for seniors and their family members, take heart.   Our experience indicates that Social Security and Medicare are much easier to deal with than your current private insurer.   Kudos to the dedicated employees working at the Social Security Administration and the Centers for Medicare and Medicaid Services and keep up the good work.   America’s seniors need you.

For all of us as citizens, we need to admit there are times when government works and may even work better than the private sector – despite what you will hear during this Presidential election year.   And before you say it – the cost to operate Social Security and Medicare is also lower on a percentage basis than the cost to provide private insurance.

 

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Posted in Medicare & Social Security | 2 Comments »

Beware Of Observation Status At Hospitals

The Affordable Care Act includes a number of measures intended to rein in unnecessary or wasteful spending by Medicare.    These are generally grouped under the label “value-based purchasing”.    One key element of value-based purchasing are penalties for hospitals that have high levels of readmissions after discharge that went into effect in 2012.    The penalties, which gradually ramp up to 3% of inpatient Medicare reimbursement to a hospital, are designed as an incentive for hospitals to provide quality care while in the hospital and to assure that the patient is provided with a smooth handoff to quality post-acute care after a hospital visit.

Hospital readmissions are down significantly since excessive readmission penalties have come into effect but according to an article in the Wall Street Journal on December 2, 2015 entitled “U.S. Rules Reshape Hospital Admissions” http://www.wsj.com/articles/medicare-rules-reshape-hospital-admissions-1449024342 the new rules have also prompted hospitals to reclassify many more hospital visits as “observations” rather than “admissions”.    In most cases, a stay of even a few days may be classified as “observation” rather than an inpatient “admission” and a patient can be on “observation” status even though given a room.    Medicare treats “observation” visits as lower cost outpatient treatment and they do not trigger a readmission penalty because they don’t count as an admission or readmission.

So if you or your loved one is cared for in a hospital on “observation” status rather than as an inpatient “admission”, gets a room and receives the same level of care, why should you care about how the hospital classifies the visit?   The big risk for a patient and patient’s family in an observation visit is that Medicare does not treat an observation visit as a three-day hospital stay that triggers Medicare payments for post-acute care.    As a result, a patient treated for three or four days in a hospital on “observation” status who then needs rehabilitation care or time to recover in a skilled nursing facility would be fully responsible for these costs rather than Medicare fully paying for up to 20 days of skilled nursing care and partially paying for up to 100 days of skilled nursing care if the patient needs that much care and is still making progress toward recovery.     The WSJ article cites families being on the hook for $20,000 of skilled nursing care because a hospital classified a four-day visit as “observation” rather than an inpatient “admission”.

I would urge any patient or family of a patient to strongly advocate to be formally admitted to a hospital for any serious injury or condition and to use right to appeal to Medicare if you or your loved one is not admitted or is admitted but is being discharged in less than three days to skilled nursing care.  It is unfortunate that the stress of any hospital visit for a patient or a loved one needs to be further complicated by worrying about “observation” vs. “admission” status but the downstream costs can be dramatically higher for one vs. the other.

Posted in Medicare & Social Security, Post-Acute Care | No Comments »