Are Baby Boomers Now Ready for Seniors Housing?

I am 72. I graduated college 50 years ago and am a quintessential baby boomer. I studied seniors housing and care as a real estate market and stock analyst for more than 20 years. I spent several years raising capital and advising companies in the seniors housing and care space and served on the board of Quality Care Properties, a health care REIT.

The holy grail of seniors housing and care throughout the last 20 to 25 years has been the arrival of baby boomers as senior housing residents. Despite a series of ups and downs driven by overbuilding, varying economic conditions, and a pandemic, the arrival of the baby boomers at the front door of seniors housing properties nationwide continues to be seen as spurring huge investment upside for the seniors housing and care industry.

The problem with this thinking is boomers have not moved in mass to seniors housing in their 60s or so far in their 70s. There is a rethink going on among some in seniors housing considering if boomers may abandon traditional seniors housing offerings altogether and, instead, seek out active adult communities, both large ones like the Villages and Del Webb and smaller scale active adult options. In these scenarios, boomers use home health care to avoid traditional independent, assisted living, memory care and CCRC properties altogether.

A funny thing happened this past week. Two baby boomer couples we have known for many years, who are our age or just a few years older, independently started touring CCRC communities around Baltimore, where I live. These same boomers, until very recently, could not picture themselves ever living in a CCRC. It is too soon to call this a trend, much less a wave of baby boomer demand, but it appears to me that after three years of pandemic, on and off masking, and much reduced social interaction more boomers are ready to consider communities that offer a wide range of education, entertainment and social activities, even if these properties are full of “old people”. Another couple we know is selling their condo near the water in a hip Baltimore neighborhood to rent in a 55 plus community in the suburbs with pickleball courts, educational and social programs.

I am curious if other senior housing industry professionals and other baby boomers are seeing evidence that boomer attitudes toward at least CCRCs are beginning to change and the holy grail of increased boomer demand for seniors housing may yet remake the industry. Please respond with your comments on this post.

New FNMA/FHLMC Requirements Set National Standard For Condominium Maintenance

The Federal National Mortgage Association, commonly known as Fannie Mae (FNMA), and The Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac (FHLMC), are publicly traded, government-sponsored entities (GSEs) that purchase mortgage loans from banks and mortgage banking companies. GSEs package these loans into mortgage back securities that are sold to investors. This process results in lower interest rates for homebuyers and allows these two entities to set standards for the mortgages they purchase and securitize.

As of January 1, 2022, condominium properties for which banks or mortgage bankers are seeking to sell loans to purchase individual units to GSEs must meet the following requirements:

Properties with significant deferred maintenance items or that have received a repair directive from a regulatory or inspection agency must provide proof that needed repairs have been completed.

• At least 10% of the community’s annual budget must go to a reserve account to fund capital improvements needed to maintain the property.

• If a special assessment related to safety, soundness, structural integrity, or habitability has been proposed or approved, all related repairs must be fully completed.

Cooperator News New York

Prospective buyers of units in condominium properties with structural deficiencies or deferred maintenance that are unable to quality for FNMA/FHLMC financing are likely to have pay higher interest rates for their mortgage financing and will be able to finance a smaller portion of the purchase price, if they can get financing at all. The value of units in such buildings could significantly decline if they become more expensive and more difficult to finance.

Even if a condominium property has committed to make needed improvements and has a way to finance the work, GSEs will not purchase and securities mortgage to purchase units in a property with structural issues or deferred maintenance until all needed improvements are completed. For condominium properties needing major improvements, this could depress property values or prevent the sale of units for a year or more.

To collect information from condominium projects, FNMA and FHLMC or financial intermediaries wishing to sell mortgages for condominium unit will require condominium associations to complete form FNMA 1076A/FHLMC 476A shown below.

Benefits For Condominium Buyers – The amount of information available to purchasers of condominium units has varied by state and, in some cases, has required prospective purchases to dig through voluminous reserve studies and other documents to determine if any structural or deferred maintenance exist. It has also been difficult in some states for a prospective purchaser to determine if a condominium property has sufficient reserves to fund needed capital projects or may require a special assessment soon after a unit is purchased.

Since the collapse of Champlain Towers South (CTS), many have called for more stringent government requirements on condominiums, such as requiring more frequent independent studies to assess the adequacy of reserves and structural integrity and mandating minimum reserve levels. However, condominium developers and condominium associations generally oppose such mandates and it is not clear whether increased government regulation of condominiums will occur, despite the collapse of CTS. The adoption by FNMA and FHLMC reduces the need for governmental action by establishing a de facto national standard for condominium maintenance, reserves and structural integrity and a clear, straightforward way for a prospective purchaser to evaluate a property before purchase.

I would encourage anyone considering the purchase of a unit in a condominium, whether it be a multi-story property or community of single family homes, to obtain a copy of form FNMA 1076A/FHLMC 476A (shown above) before submitting a bid for a condominium unit, or making any purchase offer contingent upon your review of this form. Prospective buyers should also ask the seller to certify that the building qualifies for FNMA/FHLMC financing.

Making a purchase offer contingent on review of the FNMA/FHLMC form and having the seller certify the property qualifies for FNMA/FHLMC financing:

Assures the buyer that financing will be available at competitive rates.

Provides a quick and easy way to determine if structural deficiencies or deferred maintenance is a problem at the property.

Should alert the buyer to the potential for a special assessment soon after purchase.

Senior Housing Options

What we mean by a seniors housing community?   The industry defines seniors housing as communities that offer a place to live and varying levels of supportive services.   Such housing is grouped into four categories: (1) independent living, (2) assisted living, (3) memory care and (4) continuing care retirement communities that combine multiple levels of care on a single campus and may include skilled nursing care in addition or in lieu of distinct assisted living and memory care units.

Not included in this list are “board and care homes”, which are private residences in which usually less than ten seniors may be cared for.   Such facilities may offer a more homelike setting for seniors with limited needs for care but many such facilities are targeted to seniors that qualify for Medicaid rather than for private pay clients that are the focus of this post. Also not included in the definition of seniors housing are age restricted/senior apartments or condominiums that do not provide meals or supportive services and skilled nursing facilities that are considered healthcare facilities rather than supportive seniors housing.   While skilled nursing facilities historically provided long-term supportive care for seniors they are increasingly providers of either short-stay post-acute care following a hospital visit or long-term care for very frail seniors that need high levels of medical care or are indigent and covered by Medicaid.

It is helpful for consumers to understand the categories of seniors housing available. However, in reality, there is considerable overlap between the categories of seniors housing noted above and it is important to assess how well a particular community will meet your needs or the needs of a family member regardless of how a community is categorized. Increasingly IL communities offer assistance with the activities of daily living (ADL) services through affiliated or third party homecare providers, further blurring the distinctions noted below.

Independent Living Community

Capital Senior Living IL Community
Capital Senior Living IL Community

Snapshot

  • $1,800 TO $4,000+ per month
  • Meals, transportation, housekeeping
  • Emergency call buttons, 24-hour staffing, sprinkler systems in some

The typical IL community is located in a suburban setting, has been open eight years, and contains approximately 137 units. It offers full-size apartments with kitchen facilities as well as a central dining room and common areas for services that may include exercise classes, lectures, concerts, bingo, Wii sports, etc. We have seen properties with well-equipped gyms and pools, and more communities are adding space for rehabilitation and medical care. However, some older IL communities offer small units with limited space for services and face a risk of functional obsolescence.[1]

Approximately 92% of the IL communities surveyed by the American Seniors Housing Association (ASHA) in 2010 were owned by for-profit companies, with about 25% owned by publicly traded companies and 8% owned by not-for-profit organizations. About 94% of the IL communities surveyed by ASHA in 2010 were rental, and 6% had an entrance fee of more than $20,000.[2]

ASHA’s survey of IL community residents[3] indicates the average age of a resident moving to IL is 81.7 years. In IL communities, 54% of residents were widowed, 35% married, and 6% divorced or never married, and more graduated from college (45%) than in the general population of the same age. While the majority of residents in CCRCs (see Exhibit 16) live in IL units, CCRC residents are generally younger, have more education, and more are married than is the case in free-standing IL communities. Approximately 73% of IL residents had one or more cars at the community, and over 90% of those with cars drove within the last week. About 10% of new IL residents receive home health services in their residences, and the growing availability of home health services in freestanding rental IL communities is beginning to blur the line between IL and AL service offerings. Surprising to us, 37% of IL residents say they have long term care insurance. According to the ASHA’s IL survey, 61% of new IL residents were moving from a single-family detached home and 85% owned their former residence. About 20% of new IL residents moved from an age-restricted active adult community to IL. A majority of residents moving to IL communities (53%) had been hospitalized within a year before moving. The median income of all IL residents was approximately $46,500. About two-thirds of the residents moving to IL sold their homes when they moved, and the median sales price was approximately $243,000.

Assisted Living Community

Sunrise Assisted Living Community
Sunrise Assisted Living Community

Snapshot

  • $2,400 TO $6,000+ per month
  • Hospitality services – meals, transportation, housekeeping
  • Safety – emergency call buttons, 24-hour security, most offer sprinkler systems
  • ADL care – bathing, dressing, transferring, eating, toilet use
  • IADL care – financial oversight, phone use, shopping, money management
  • Medical Care – Medications management, in some cases dementia care, possibly registered nursing on site full or part time

The typical AL community is located in a suburban setting, has been open for nine years, and has an average of about 62 assisted living units and 20 dementia care (ALZ) units, with a resident capacity between 90 and 100. Assisted living units are more akin to efficiency apartments with private baths, but with minimal or no kitchen facilities. Common areas include a central dining room and space for hospitality services, but on a smaller scale than in an independent living (IL) community. In most surveys, freestanding Alzheimer (ALZ) communities are considered a specialized type of AL community. The typical ALZ community is smaller and slightly newer than the average AL community and has higher staffing ratios. An ALZ community is usually a one story secure community with about 40 units or 60-resident capacity. ALZ care is also often provided in dedicated units within an AL community (on the third floor of the community in Exhibit 16 for example) or in a dedicated unit within a skilled nursing facility.

Approximately 98% of the AL communities surveyed by ASHA in 2011 were owned by for-profit companies, with about 47% of the total owned by publicly traded companies and 2% owned by not-for-profit organizations. All of the AL communities surveyed were rental communities.[4]

According to the 2009 Overview of Assisted Living (published by a coalition of industry groups)[5], the average entry age for an AL community is 84.6 years. Female residents outnumber males by about three to one. Most are widowed, and only 12% are still married or have a significant other. Average length of stay in combination AL/ALZ communities is 26.6 months. The decision to move in was either entirely (22%) or partially (40.9%) the responsibility of the resident, and about 70% of residents moved from a private home or apartment. About 80% of residents live within 25 miles of a relative. The median single occupancy rate at combination AL/ALZ communities is $3,700 per month, with median resident income of about $19,000 per year and net assets of approximately $205,000 including home equity. About 66% of residents are self-paying, 10.6% receive assistance from their families, and the remainder pays with various combinations of Medicaid, VA, etc. However, the pure private-pay percentage is typically higher at communities operated by publicly-traded companies.

Memory Care

Arden Courts memory care community by HCR Manor Care
Arden Courts memory care community by HCR Manor Care

[6]

Snapshot

  • $3,500 TO $10,000+ per month
  • Hospitality services – meals, transportation, housekeeping
  • Safety – emergency call buttons, 24-hour security, most offer sprinkler systems
  • ADL care – bathing, dressing, transferring, eating, toilet use
  • IADL care – financial oversight, phone use, shopping, money management
  • Medical Care – Medications management, dementia care, possibly registered nursing on site full or part time

The typical MC community is located in a suburban setting and is generally somewhat newer than the average assisted living facility because the development of standalone memory care communities is a relatively new phenomenon.   In memory care communities, services are generally considered more important than design and layouts do vary, but a purpose built memory care community generally averages about 40 units and 60 person capacity or smaller.   Purpose built properties are generally one story with outdoor space that is secured to prevent dementia patients from wondering off the site.   Service offerings are similar to those for assisted living and many assisted living communities also include a dedicated memory care unit but a memory care community will generally have higher staffing levels, with more staff per resident and more staff with medical training such as registered nurses or nurse practitioners because medications management can be more extensive in such communities.

Independent statistics on ownership of memory care communities is not readily available because such communities are often grouped together with assisted living but the ownership characteristics for memory care and assisted living should be similar with most owned by private companies and run by for-profit operators.

Average entry age for many memory care communities is similar overall to assisted living and the incidence of dementia increases with age but may include younger residents suffering from early onset Alzheimer’s.

Continuing Care Retirement Community (CCRC)

CCRC by Brookdale Living Communities
CCRC by Brookdale Living Communities

Snapshot

  • $1,800 to $10,000+ per month and may include entrance fee options
  • Typically offers IL, AL and may offer MC care, all on a single campus and may, in addition also offer skilled nursing care providing for post-operative rehabilitation and long term care for very frail patients.

The typical CCRC is located in a suburban location, has been open for 15 years, and contains approximately 300 units, with over 60% of these being independent living accommodations. According to the American Seniors Housing Association (ASHA), about 13% of the units are assisted living and 23% skilled nursing. The large size of a typical CCRC allows these projects to offer a greater range of dining and hospitality options than are available in stand-alone IL or AL properties.

Publicly traded companies owned 16% of the CCRC communities surveyed by ASHA, another 31.2% were owned by private for-profit companies, and 62.8% were owned by not-for-profit organizations.[7] Of the CCRC communities surveyed, 77% were rental and 23% charged an entrance fee of more than $20,000.25

The majority of residents in CCRC communities are independent living residents with characteristics similar to those described above for IL communities. However, residents of entrance fee CCRC communities (see payment options below) are younger and significantly more likely to have a college degree, have higher household income, receive $300,000 or more from the sale of their home and have a net worth of $1 million or more.[8] We believe CCRCs, particularly entrance fee CCRCs, target more affluent seniors and those who are more likely to plan ahead for future care needs.

Payment Options

Most senior housing is operated as a rental on a monthly basis. The monthly fee covers room and board with an additional sliding fee based on the level of assistance the resident requires. In some settings, the community may bill only for room, board, and basic hospitality services, while a separate home-health agency may provide and bill patients directly for assistance with the activities of daily living, medications management, and other potential healthcare services.

Some private senior housing operators, notably Brookdale Senior Living and  Vi, and many non-profit providers operate entry fee CCRCs exclusively or in addition to operating communities charging only a monthly rental and service fee.  ASHA notes three types of entry fee contracts. These include:

  • Life Care Contract, in which the resident pays an upfront fee and an ongoing monthly fee in exchange for lifetime occupancy at whatever service level (independent living, assisted living, Alzheimer’s, or skilled nursing) the resident may need, with the monthly fee staying the same regardless of the service level provided;
  • Modified Life Care Contract, in which the resident pays an upfront fee plus a monthly service fee for independent living services with the community obligated to provide assisted living or skilled nursing care when required, but only for a specified period of time at a specified rate that may or may not be tied to the independent living rate; and
  • Fee for Service Contract, in which the resident pays an entrance fee essentially to pay for the real estate and a monthly fee that varies according to the services provided, with the community offering priority admission to its assisted living, Alzheimer’s, and skilled nursing units, but no guarantee of all services being available.

[1] American Seniors Housing Association, The State of Seniors Housing 2011.

[2] Ibid, the 94% assumes All or Virtually All Rental (60.8%) plus No Response (33.2%).

[3] American Seniors Housing Association, The Independent Living Report, 2009

[4] American Seniors Housing Association, The State of Seniors Housing 2011.

[5] American Association of Homes and Services for the Aged (AAHSA), American Seniors Housing Association (ASHA), Assisted Living Federation of American (ALFA), National Center for Assisted Living (NCAL) and National Investment Center for the Seniors Housing and Care Industry (NIC), 2009 Overview of Assisted Living, 2009

[6] Layout is of an Arden Courts community operated by HCR Manor Care and features four self contained neighborhoods to make the property easier for dementia patients to negotiate.

[7] American Seniors Housing Association, The State of Seniors Housing 2011.

[8] American Seniors Housing Association, The Independent Living Report, 2009

Benefits of Retirement Center Living

I thought a letter to the editor published in the Wall Street Journal on November 11, 2021 from Jane Shaw Stroup contained a number of good insights on retirement center living from someone whose husband had recently died after the couple spent five years in a community. Jane Shaw Stroup is a retired nonprofit executive and her husband, Richard L. Stroup, was an economist. The couple moved into a retirement community in Raleigh, N.C. in 2017.

Key points in Mrs. Stroup’s letter include:

Experience was mixed but generally a good one.

Your friends are close by, with was important during the depths of COVID pandemic. A small group of us met once week for wine and snacks during the pandemic.

A retirement center has some resemblance to a college dorm, but that a good thing. You are able to meet people at meals, exercise classes, lectures and clubs.

Having gym and a restaurant downstairs makes life easier.

Retirement centers are full of people who have experienced long, interesting lives – lots of opportunities for good conversation.

Emptying the contents of one’s home and selling it are poignant experience but leaving the process to one’s children may not be the right approach.

A retirement community can only succeed if it has caring staff who tolerate the foibles of older people. We were never reprimanded or chided by the staff even though we did some stupid things, like forgetting to push the button each morning to let staff know you are okay.

A retirement center is a place where you don’t have to be smarter or younger than you are. And a place where many friends can ease the loss of a spouse.

Recommended Home Accessibility Provider In Baltimore

After working for more than 15 years as a stock analyst covering senior housing and care and healthcare real estate companies, I try to apply what I learned professionally to my own lifestyle and care as I age. I am now 71 years old and was diagnosed with Parkinson’s Disease in September 2018. My Parkinson symptoms are well controlled with medication. I participate in Rock Steady boxing classes two or three days a week, have a once a week yoga class and, while the weather is good, I am playing one or two rounds of golf weekly (usually 9 holes). I also have speech therapy practice sessions for the LSVT Loud Program that I try to do several times a week.

My wife and I see ourselves as forward-thinking and well prepared for lifestyle changes as we age. Fifteen years ago we moved to a one-level condominium in an elevator-served 15 story building and our unit has wide door openings and no internal thresholds, which can be a fall risk. While our condo is well-designed for our current lifestyle and care needs, I recently decided to add a couple of grab bars in our walk-in shower in the master bath. Grab bars are not essential for my current condition. I can use the shower without them. But the grab bars should reduce the risk of a fall in the shower and you don’t want to prove you need grab bars by falling first. My movement disorders physician also recently adjusted my Parkinson’s medication, adding a time-released Carbidopa/Levodopa pill at bedtime to make my movement more fluid when I use the bathroom during the night.

After receiving their brochure from a Parkinson’s organization, we engaged a local firm, Home Safe Home (www.homesafehomemd.com – info@homesafehomemd.com – 410 394-8955) to perform an accessibility / safely audit of our condo. Home Safe Home recommended removing a number of small rugs and installing two grab bars in the showed in our master bath, which has about a 12 inch step to get in and out. Home Safe Home showed us samples of grab bars, ordered the bars we liked that matched the other chrome hardware in our shower and installed the bars though glass tile that we have in all of our bathrooms. The entire process required only one phone call from us and a few email exchanges. It took less that 30 days from our first phone call to installation, which took less than an hour, and the total cost for two grab bars and the home assessment was less than $500. If you are considering installing accessibility measures in your home for yourself or a loved one in the Baltimore area, I recommend Home Safe Home.

COVID-19 Vaccine Could Boost Seniors Housing Occupancy in 2021

This week we received preliminary very positive news that the Pfizer/BioNTech COVID-19 vaccine is 90% effective and that Pfizer could apply for emergency use approval by the end of the year.

On October 22, 2020, the Department of Health and Human Services (HHS) announced HHS’ partnership with CVS and Walgreens to provide the COVID-19 vaccine to residents in long-term care settings will include residents in independent living settings, including standalone independent living residences, IL/AL communities, and life plan or continuing care retirement communities (CCRCs).

Having a vaccine available in limited quantities that will be made available to seniors housing staff and residents on a priority basis could be a boon to seniors housing occupancy in 2021. Senior housing operators will be able to market that residing in senior housing residence will get you priority access to a vaccine, while staying in your might mean waiting 6 – 12 month or longer until a vaccine can be made available in large quantities.

We believe the impact of having access to a vaccine on a priority basis could most dramatic improve occupancy in IL and CCRC properties, where the move into a seniors housing community are most discretionary.

Seniors housing occupancy should also benefit from a track record demonstrating an ability to limiting the spread of COVID-19. For example, Ventas’ 3Q20 investor presentation indicates that its senior housing properties have not experienced a significant increase in new COVID-19 case since April 2020, while in the general community across American infections and death continue to increase.

Industry Response Needed On Coronavirus Impact On Seniors Housing and Care

At the Life Care Centers skill nursing facility in Kirkland Washington two thirds of the residents and staff were infected with the Coronavirus and 37 people connected to the facility have died. In Brooklyn, the Cobble Hill skilled nursing facility had 55 Covid-19 deaths and was stacking up bodies in a makeshift morgue. In my own State of Maryland, just released statistics show nursing homes accounting for about half of all Covid-19 deaths statewide.

The drumbeat of news about widespread infection of patients and staff at senior housing and care facilities (mostly skilled nursing facilities) and large numbers of Covid-19 deaths is damaging the reputation of the entire seniors housing and care industry. While it seems clear that patients in skilled nursing facilities, who are self-selected to be frail, usually more than 80 years and who often have multiple pre-existing conditions have been hard hit by the Coronavirus and Covid-19, it is far from clear to me that the seniors housing and care industry as a whole has performed as badly as the news reports would indicate.

Most articles on Coronavirus and Covid-19 deaths in long term care lump all seniors housing and care facilities together including: skilled nursing facilities, assisted living facilities, independent living communities and continuing care retirement communities that combine two or more levels of care within a single community. Even though each of these facilities serves residents with overlapping but often very different, age, income and health profiles, press reports dramatize conditions at a relatively small number of skilled nursing facilities and generalize the skilled nursing to all types of seniors housing and care.

To do a fair comparison of how the seniors housing and care industry has performed during the Coronavirus pandemic, a number of variables need to be considered.

First, you need an accurate baseline of Coronavirus infections and deaths in the community. Because of insufficient testing it is likely impossible to get accurate Coronavirus infection rates for the community at large. It has also been widely reported that the number of community-wide Coronavirus deaths has been undercounted because the overall number of deaths in the community in 2020 has been much higher than the increased number of Coronavirus linked-deaths reported. Early deaths were not attributed to the pandemic, many early victims were misdiagnosed and were never tested for Coronavirus and little retesting of corpses has been done. Even today, many of those dying at home and even some of those dying in hospitals may not be tested and deaths may be attributed to other conditions complicated by the virus. However, Coronavirus may not account for the entire increase in death rates in 2020, as some physicians believe patients with other emergency conditions, such as heart attack and stroke, may be avoiding hospital care in an attempt to avoid the virus and, as a result, deaths from some other conditions may be up as well.

So the first step is to calculate the overall increase in deaths on a statewide or metropolitan in 2020 for the period from January 1 2020 through the most recent date for which deaths are available with the average number of deaths say over the last three years. Then to refine these numbers by looking at trends for major diseases, such as heart attacks and strokes and developing a reasonable community-wide estimate of Coronavirus/Covid-19 deaths. Ideally death statistics would be available by age and race since both are believed to increase the risk of dying from Covid-19.

The second step in a fair analysis of the performance of seniors housing and care facilities during the Coronavirus pandemic would be to control for the age, race and health status of those in facilities and in the community. Provisional death counts for the Coronavirus (Covid-19) and pneumonia and influenza reported by the CDC for the period from February 1, 2020 through April 25, 2020 show that 56% of all deaths were among those 75 years of age and above. Deaths of residents in seniors housing and care facilities contributed to these totals but were seniors in these facilities simply more at risk because of their age or did senior housing and care facilities have higher overall rates of infection and death than similarly aged seniors in the community? It has also been reported that people of color have died at higher rates from Covid-19 and whites. Ideally, we would also compare both the racial composition of seniors housing and care facility residents with those dying community-wide in order to understands if the racial composition of seniors housing and care facility resident can explain potentially higher death rates.

Finally, why did some seniors housing and care facilities perform better than others. Seasonal flu and other contagious conditions are a risk at all seniors housing and care facilities and typically result in higher death rates during the winter months when flu is most common. Senior housing and care facilities, particularly skill nursing facilities, have well-established protocols for infection control that often include segregating sick patients, shutting down new admissions, limiting visitors, use of protective equipment and enhanced cleaning regimens. Did some facilities implement infection control measures sooner than others and was implementation of infection control measures delayed because of asymptomatic staff, visitors and patients and the inability to get patients and staff tested? What role did government regulations such as mandatory social isolation play, if any, in infection and death levels in seniors housing and care facilities?

As part of this final stage of analysis, it is important for the industry to evaluate how seniors housing and care facilities of various types performed. Did skilled nursing facilities housing the oldest and most frail seniors have higher infection and death rates? Did access to testing and protective equipment make a difference? Did continuing care retirement communities, which typically have younger, more affluent, better educated senior population perform better than other types of communities and better than living in the community.

I believe it is important for the seniors housing and care industry to undertake the study outlined above in order to provide a more accurate assessment of how residents of seniors housing and care facilities faired from the Coronavirus pandemic. This should be done to provide seniors and their families with an objective basis upon which to select seniors housing and care choices. It can also provide operators, property owners and investors with useful information on how to limit future risks from a Corona virus return.

Converting Colleges To Seniors Housing – Pandemic Creating New Opportunities

I have written twice before on this blog about the opportunity to convert small college campuses in senior housing communities. The first time was February 2, 2019 in response to an opinion piece in the Wall Street Journal about the challenges facing small, private colleges and how many of these would need to close or radically change their operations to survive. I reissued my original post with some updated commentary in September 2019 after Welltower REIT announced it acquisition of a college campus in the Boston area for conversion to a seniors housing community.

Today’s Wall Street Journal has an article entitled “Coronavirus Pushes Colleges to the Breaking Point, Forcing ‘Hard Choices’ about Education. The Journal article leads with the announced closing of MacMurray College in central Illinois after 174 years. The article goes on to indicate 50% of college enrollment managers are very worried about meeting fall targets for enrollment and tuition.

Before the pandemic, Robert Zemsky, a professor at the University of Pennsylvania graduate school of education in his book The College Stress Test indicated that 100 of the nation’s 1,000 private, liberal arts colleges were likely to close over the next five years. He now says 200 of these colleges could close in the next year, according to the Journal. Potential cancellation of on-campus classes this fall, growing impediments to overseas students and the increased appeal of lower cost, closer to home college alternatives all contribute to the growing financial distress of American colleges.

While the seniors housing and care is facing some challenges of its own, including: lower occupancy, some overbuilding, restricted admissions to due Coronavirus self-isolation and high levels of infection and death at some skilled nursing facilities, the number of seniors 75+, when many begin considering seniors housing and care options, is expect to grow about 40% between 2020 and 2030.

Strong population growth in the 75+ senior population, together with the fact that many seniors are looking for more dynamic living environments that include life-long learning, make us optimistic about redeveloping exiting college campuses in whole or in part to seniors housing.

Earlier in my career, before I began to focus on seniors housing and care and health care real estate as a stock analyst and investment banker, I spent more than five years as a real estate market and feasibility consultant doing a lot of work for colleges and universities including: University of Maryland at its flagship College Park campus, its Baltimore professional schools and UMBC in Baltimore County, Johns Hopkins, and Penn State Hershey Medical Center.

Please contact me at jdoc@robustretirement.com if you wish to discuss specific college to senior housing projects.

Converting Private Colleges To Senior Housing – Just Announced Welltower Transaction Shows Opportunity is Real

On September 18, 2019, news sources reported the sale of the Newbury College Campus in Brookline, Massachusetts to the health care REIT Welltower for redevelopment into a senior housing community. Welltower reportedly acquired the nearly eight acre site containing 8 buildings with approximately 142,000 sq. ft. for $34 million. Welltower’s purchase confirm my view, expressed in a February post, that small college campus have the potential to be successfully converted to seniors housing (see below).

There was an opinion piece in The Wall Street Journal on Friday, February 22 entitled “America’s Disappearing Private Colleges”, written by Allen C. Guelzo, a professor of history at Gettysburg College. The piece documents the closing of Concordia College, a small historically black school in Selma, Alabama. It goes on to assert “The post-Great Recession baby bust will soon mean not enough students to keep small schools alive.”

In the early 1990s I spent more than five years advising colleges and universities on real estate issues. My clients included the University of Maryland, Johns Hopkins and the Hershey Medical Center of Penn State. Even then, future weakness was evident in demand for higher education once the Echo Boomers (children of the baby boomers) passed through their college years. As Mr. Guelzo documents, the decline in the number of future potential college students has worsened since that time because of the Great Recession.

“Birthrates plunged by almost 13% from 2007 to 2012 and the CDC believes fertility could fall further”. The birth dearth means 450,000 fewer college applicants in the 2020s according to economist Nathan Grawe in Demographics and the Demand for Higher Education.  Hardest hit will be New York, Pennsylvania, New England and around the Great Lakes, areas most populated by private colleges.

Harvard and other well regarded and well-endowed universities will continue to see high demand and have the resources to make their institutions more affordable and more attractive to U.S and international student. Rice University, my son’s alma mater, for example just announced a 30% increase in applications after the University put in place a more generous and more predictable aid formula and my alma mater, Johns Hopkins University, recently announced a major gift from alum Michael Bloomberg to provide more generous aid for undergraduates.

While the best regarded and best-endowed colleges and universities will continue to do well, Mr. Guelzo documents a number of small colleges closing, “17 in Massachusetts alone in the past six years”, and cites estimates that up to half of all U.S. colleges will close or go bankrupt within the next decade. Moody’s estimates that 15 private colleges will close per year. My experience as a real estate advisor to colleges and universities, and as a student of demographics, lead me to believe these dire predictions.

At the end of his opinion piece, Mr Guelzo identifies four options for leadership of small private colleges (1. Get serious about mergers, 2. Focus recruitment strategies westward where the decline in birthrates was lower, 3. Craft a niche for a particular student, and 4. Establish partnerships with local two-year colleges. ) I doubt any of these options alone will be very effective in combatting the “birth dearth” but see another option that small colleges should definitely consider – converting in whole or in part to seniors housing communities.

I make the connections between private colleges and seniors housing because, after working as a real estate advisor to colleges and universities, I spent 15 as a stock analyst covering senior’s housing and care companies and REITs owning seniors housing and heath care real estate. While the demographics driving potential demand for colleges and universities are dreadful in the 2020s, the demographics driving demand for seniors housing and care are very strong. The first Baby Boomers turn 75 in 2021 and turn 80 in 2026.

Senior housing operators and REITs owning senior housing real estate are currently struggling with some overcapacity pressuring rents and occupancy and higher labor cost pressuring margins. I believe the seniors housing industry was too optimistic about the age at which seniors would move to seniors housing, found capital too easy to get, which prompted some overbuilding, and has been less than fully successful in providing living environments to which seniors want to move. Lower levels of seniors housing construction and the continued aging of the population should gradual and significantly improve demand prospects for seniors housing in the 2020s. I believe converting small colleges in whole or in part to seniors housing has the potential to allow small colleges to survive or provide a softer landing for faculty and staff at colleges that need to close; and can also provide a more desirable housing option for seniors and potentially help with labor costs.

Some of the most successful and most attractive senior housing communities i have observed offer campus-like settings with a wide range of social, cultural, educational and recreational amenities. Erickson Living and Senior Living Communities and a number of large not-for-profit continuing care communities (CCRCs) provide attractive campuses with a high level or amenities. (See links below to ericksonliving.com and senior-living-communities.com). Erickson’s first senior housing community was developed on the site of a former convent with some of the same qualities as a small college campus.

https://www.ericksonliving.com

https://senior-living-communities.com/

The challenge of developing large CCRCs is that they require very large upfront investments of money and time to be created on a greenfield basis. Small colleges, which have campuses, dormitories, cultural, educational and recreational amenities in place, could potentially be converted to seniors housing campuses at a lower cost than greenfield development while offering name recognition and character from the outset. One other feature seldom seen in senior housing communities, but which appears to significantly increase a community’s appeal to seniors, is a mixed age environment rather than a senior citizen ghetto. My favorite example remains Merrill Gardens at the University (see link below).

https://www.merrillgardens.com/senior-living/wa/

Merrill Garden at the University is a community near the University of Washington in Seattle that combines a senior housing community, non-age-restricted apartments and retail on a single site with the apartment building and senior housing community sharing an interior courtyard and the senior housing community’s bars and restaurant open to the public allowing apartment and senior housing residents to mix. Senior housing communities developed on or near other university campuses also have been attractive to seniors and appeal to alumni but I believe there is an opportunity to more fully integrate seniors housing into a college or university campus and create more interaction between seniors, traditional college-age students, faculty and staff than has been done to date. It is this type of integrated seniors housing / college setting development that I see as an attractive 5th option to those Mr. Guezlo identifies to save some of America’s small colleges.

Integrating senior housing into an existing college campus or fully converting a small college campus to seniors housing may also offer labor force benefits because students, existing college staff and potentially even faculty could be employed to providing programming, patient care and building maintenance for seniors housing as well as university buildings and might form a base labor force from which senior housing could draw even if the college is closing. Seniors may also be able to help fill college classes, particularly in the humanities or even serve as adjunct faculty.

The most feasible strategy for a college to evaluate and execute a partial or full conversion to seniors housing is to engaged qualified real estate and financial advisors to evaluate the option and help run a process to select a for-profit or not-for-profit senior housing partner. For some religious-affiliated colleges, the same denomination may also develop and operate seniors housing, which might ease some of the anxiety of teaming with a senior housing partner.

I welcome inquiries from colleges and universities wishing to consider a college to senior housing conversion and may be able to help evaluate such options at a strategic level and assemble a team to help a college or university execute such a conversion. For some insights into the process see the link to an article I co-authored in 1996 entitled “Privatizing University Properties” in the Journal Planning for Higher Education.

https://www.scup.org/page/phe/read/article?data_id=31113&view=article

Finding A Good Death – Understanding and Shopping For Hospice Care

Background

Like most issues about which I post, the topic of “Finding A Good Death” arose from a personal connection. In this case when a neighbor consulted me about his sister who was being referred to hospice care after battling cancer.  While not an expert in hospice care, I have long studied seniors housing and care and, for a time, I followed the publicly traded hospice companies as a stock analyst.  I also have some personal experience with hospice care.  My older brother (only four years my senior) utilized hospice care before his death in late 2014 from a degenerative neurological condition. To supplement my own knowledge for this blog post, I interviewed a friend and neighbor who is a long-time bereavement counselor volunteer at a large not-for-profit hospice in Baltimore and researched the topic on line.

John McCain’s death, which appeared to come quickly surrounded by friends and family after the Senator elected hospice care, also makes the subject of Finding A Good Death very relevant.

Even though we all die eventually, talking about death and planning for death, beyond making funeral arrangements, are taboo subjects for most Americans. We are culturally geared to want to live as long as possible and most physicians and patients have a strong bias toward utilizing the most expensive, invasive and technologically advanced medical procedures to prolong life, viewing death as failure rather than an inevitable part of the life cycle.

According to data from the Social Security Administration:

  • A man age 65 today can expect to live, on average, until age 84.3.
  • A woman age 65 today can expect to live, on average, until age 86.7.

About one out of every four 65-year-olds today will live past age 90, one out of 10 will live past age 95; and longevity estimates for 65 year olds continue to rise.   Also, these statistics are averages for the entire population, so healthy non-smokers and those with better health plans and medical care should expect to live longer. Once you reach 65, I would argue you already have a very good chance of living a long life and you and your family should be more concerned with the quality rather than quantity of the remaining life you lead, and with the quality of your death, the focus of this post.

A good death is generally understood to be one that comes quickly and peacefully and with minimal pain and suffering, ideally at home and with an opportunity for loved ones to say their goodbyes.

Understanding Hospice

English physician Dame Cicely Saunders first applied the term “hospice” to specialized care for dying patients in the UK in 1948. Hospice care was introduced to the U.S, in the mid-60s and did not become a Medicare eligible benefit until 1982. History of hospice care

As defined by Medicare, hospice is a program of care and support for people who are terminally ill (with a life expectancy of 6 months or less if the illness runs its normal course) and their families. Hospice helps people who are terminally ill live comfortably.

  • The focus is on comfort (palliative care), not on curing an illness.
  • A specially trained team of professionals and caregivers provide care for the “whole person,” including physical, emotional, social, and spiritual needs.
  • Services typically include physical care, counseling, medications for relief of pain and suffering, medical equipment, and supplies for the terminal illness and related conditions. Things like diapers are not covered by Medicare although catheters are.  Patients and their families should not expect 24/7 physical care from hospice unless the patient is receiving inpatient care.  Home health aides can be provided for bathing, etc. but cannot provide total care.
  • Care is generally given in the home.
  • Family caregivers can get support.

In order to qualify for Medicare’s hospice benefit, you must participate in Medicare Part A and

  • Your hospice doctor and your regular doctor (if you have one) certify that you’re terminally ill (you’re expected to live 6 months or less).
  • You accept palliative care (for comfort) instead of care to cure your illness.
  • You sign a statement choosing hospice care instead of other Medicare-covered treatments for your terminal illness and related conditions.

Medicare will cover the cost of a one-time hospice consultation even if you decide not to elect hospice care.   Once you elect hospice care, the first step in the process is development of an individualized care plan. Original Medicare will cover everything you need related to your terminal illness, but the care you get must be from a Medicare-approved hospice provider.

Hospice care is usually given in your home, but it also may be covered in a senior housing community, a nursing home or a specialized hospice inpatient facility. Depending on your terminal illness and related conditions, the plan of care your hospice team creates can include any or all of these services:

  • Doctor services
  • Nursing care
  • Medical equipment (like wheelchairs or walkers)
  • Medical supplies (like bandages and catheters)
  • Prescription drugs
  • Hospice aide and limited homemaker services. At Gilchrist, a large not-for-profit Baltimore area hospice, a volunteer may do light housekeeping but that is all
  • Physical and occupational therapy
  • Speech-language pathology services
  • Social worker services
  • Dietary counseling
  • Grief and loss counseling for you and your family
  • Short-term inpatient care (for pain and symptom management)
  • Short-term respite care
  • Any other Medicare-covered services needed to manage your terminal illness and related conditions, as recommended by your hospice team.

Note that the above list does not include the cost of room and board in a seniors housing or skilled nursing facility, so the patient or their family may have to cover this cost if routine hospice care cannot be provided at home.

If your usual caregiver (a family member or other caregiver) needs rest, a hospice patient can get inpatient respite care in a Medicare-approved facility (such as a hospice inpatient facility, hospital, or nursing home). Your hospice provider will arrange this for you. You can stay up to 5 days each time you get respite care. You can get respite care more than once, but only on an occasional basis.

Medicare pays the hospice provider for your hospice care.  There’s no deductible. You’ll pay:

  • Your monthly Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) premiums.
  • A copayment of up to $5 per prescription for outpatient prescription drugs for pain and symptom management.
  • 5% of the Medicare-approved amount for inpatient respite care if used.

Medicare won’t cover any of these once your hospice benefit starts:

  • Treatment intended to cure your terminal illness and/or related conditions. Talk with your doctor if you’re thinking about getting treatment to cure your illness. You always have the right to stop hospice care at any time.
  • Prescription drugs (except for symptom control or pain relief).
  • Care from any provider that wasn’t set up by the hospice medical team. You must get hospice care from the hospice provider you chose. All care that you get for your terminal illness and related conditions must be given by or arranged by the hospice team. You can’t get the same type of hospice care from a different hospice, unless you change your hospice provider. However, you can still see your regular doctor or nurse practitioner if you’ve chosen him or her to be the attending medical professional who helps supervise your hospice care.
  • Room and board. Medicare doesn’t cover room and board. However, if the hospice team determines that you need short-term inpatient or respite care services that they arrange, Medicare will cover your stay in the facility. You may have to pay a small copayment for the respite stay.
  • Care you get as a hospital outpatient (such as in an emergency room), care you get as a hospital inpatient, or ambulance transportation, unless it’s either arranged by your hospice team or is unrelated to your terminal illness and related condition.

The Medicare hospice benefit is paid by original fee-for-service Medicare.   To understand how the hospice benefit relates to Medicare Advantage plan, Part B or D coverage speak with Medicare or your hospice provider and you might consult the publication Medicare Hospice Benefits – Medicare Hospice Benefits

A Popular Benefit

Hospice care enjoys wide support from patients and patient advocates who are supportive of patients dying with dignity and having control over the final chapter of their lives.  It is supported by policy makers who believe hospice can save Medicare funds by having terminally ill patients avoid expensive procedures at the end of life that often provide little lasting benefit.  Mean medical spending during the last 12 months of life is reaching $80,000 in the U.S., with 44.2% spending for hospital care (57.6% is hospital spending during the final three months of life).   To the extent hospice care can reduce expensive end of life hospital care it has the potential to reduce growth in Medicare spending. Hospice Impact On Medical Spending

Hospice care is also viewed favorably by investors and for-profit healthcare companies who see it offering stable reimbursement, attractive margins and very attractive growth prospects as Baby Boomers age.   Because hospice reimbursement is designed to adequately fund small not-for-profit hospice providers, not-for-profit and for-profit operators with scale can generate an excess revenue/profits from spreading their overhead costs over a large number of patients, thereby generating reasonable margins from hospice reimbursement.

Electing Hospice Care

The key issue for patients and their families in electing hospice care is that doing so requires you to forgo additional curative treatment for the condition that is expected to lead to your death in order to receive funding for palliative care designed to give you a dignified death with minimal pain and suffering. As noted above, In order to qualify for hospice care a physician, typically your primary care doctor or a hospice doctor, certifies that you are expected to live no more than six months if your disease follows its typical progression.  With this physician’s certification and your election to shift from curative to hospice/palliative care you will qualify for Medicare hospice benefits or hospice benefits from a private insurer.  If you live more than six months in hospice care, the hospice benefit can be extended but Medicare manages this by penalizing operators that have average length of stays in hospice care.

Selecting A Hospice Provider

According to the National Hospice and Palliative Care Organization (NHPCO) Medicare paid about 4,200 different hospice providers for services in 2015. About 60% of these hospice providers were profit-making companies and 40% are not-for-profit (Long-Term Care Providers and Services Users in the United States: Data From the National Study of Long-Term Care Providers, 2013–2014 Department of Health and Human Services, Centers for Disease Control, Center for Health Statistics, February 2016 – CDC Report On Hospice Services

Hospice providers served approximately 1.3 million patients in 2013 with an average length of stay of 23 days – indicating an average daily census of about 14 patients per hospice.

The statistics above suggest two criteria for selecting a hospice provider 1) for-profit vs. not-for-profit and size.  Many hospice providers are small not- for-profit operations.   For-profit companies tend to be larger in size, as are some well established not-for-profit organizations, such as Gilchrist Hospice in Baltimore.    Smaller operations may offer more personalized care options but larger operations may have their own specially designed dedicated inpatient hospice units and greater resources to Invest in family grief counseling, for example.

Your physician or a social worker/discharge planner at a hospital should be able to recommend or refer you to one or more hospice providers.  A simple online search on “finding a hospice provider” results in links to larger for-profit and not-for-profit providers in your area (Heartland, Amedysis and Gilchrist in Baltimore) and links to referral services, such as A Place for Mom, an Internet focused senior housing and care referral company, and the National Hospice and Palliative Care Organization (NHPCO). Keep in mind that referral services will only refer you to organizations that are members of that organization or agree to pay a referral fee.

The Medicare.gov/hospice compare website provides ratings for hospice providers with percentage scores for a number of objective and subjective measures including results from user surveys.  The site allows you to search for specific providers and provides near particular zip codes. See Medicare Hospice Compare.   Some of this data is likely self-reported but still appears useful for comparing providers.

Before committing to a particular hospice provider a prospective patient and their family should ideally meet with the provider to assess the staff who will oversee and deliver care to your loved one, share information about your family’s situation and discuss options for delivering hospice care in a way that best meets your families needs.   Care will most likely be delivered at home with family members engaged in the hospice care delivery process.  It can also be provided in a seniors housing or skilled nursing facility but this may require the family to pay for the coast of board. If required, typically right at the end of life when 24/7 oversight is needed, the location of care may be shifted to an inpatient hospice care facility and you should understand when and how such a facility might be used.   You may wish to check on the location and quality of the inpatient option.

I welcome comments and questions on this blog and hope it aids you finding a good death for you and your loved ones.