Home care can be a competitor or a potential partner for senior living providers looking at new markets for development, but the market agrees it largely depends on the product type in question.
For developers looking to build independent living communities, home care agencies can present opportunities to become valuable partners in maintaining occupancy, whereas they can be direct competitors for assisted living communities where residents have “lighter” acuity needs.
“For independent living, we view home care as a good option if the product is assisted living ‘light’ or independent living ‘heavy,’” says Aaron D’Costa, director of acquisitions for Virtus Real Estate Capital.
Light and heavy refer to the acuity levels of residents, on average, D’Costa says, with “light” meaning residents may not have as much difficulty carrying out activities of daily living (ADLs), while “heavy” suggests residents have greater care needs.
“From a subjective standpoint, that assisted living ‘light’ community is now competing with the home health agencies in the market, and these agencies know that so they’re not making referrals to those communities,” says D’Costa.
For an assisted living community catering to residents with higher acuity needs, home care agencies might not be seen as direct competitors, since the greater acuity levels of residents might be so high that their needs are best served in an assisted living setting, notes D’Costa.
Partnering with home care can even help assisted living communities maintain occupancy by keeping their residents out of higher institutionalized care settings, according to Chris Guay, president of Operations & Ancillary Service for Emeritus.
“The right home care agency should be looked at as a partner, though it’s up to the tolerance of the provider,” says Guay. “If you partner with the right home care company, it can be a really strong partnership to keep your resident at your community and keep them as independent at home as long as possible.”
A home care provider can help an assisted living fill any gaps in providing care for certain interventions that may fall beyond an assisted living community’s state regulations, notes Guay.
“If a resident had a short-term episode that we can’t manage, home care comes to the table to manage that for us,” he says.
Emeritus, which acquired 91% of Florida-based home care company Nurse on Call for $102.5 million in 2012, says it is critical for providers to exercise the proper due diligence before partnering up with a home care agency.
This includes looking at quality indicators such as patient outcomes to see how home health providers rank against other agencies, however, a lack of empirical data can cause a potential hurdle taking into account the presence of home care in a new market, says D’Costa.
“Most people aren’t aware what to do in terms of gathering information, or what impact that information might have,” he says. “There isn’t really industry-wide information available.”
Interested provider can, however, access information on how many home health agencies are in a certain area, as well as the last time those agencies were surveyed by visiting Medicare’s Home Health Compare.
When entering a new market to develop in, providers should also look at the adoption rate of home care in that market, which might mean polling poll local agencies to get a sense of what percentage of their client base is seniors, D’Costa says.
Taking these factors into account are critical for providers to quantify market demand in a particular area, according to Michael Baldwin, executive vice president of Salus Valuation Group.
“If you’re analyzing a new market, look at the number of home health agencies and see how much care they are giving,” says Baldwin. “How much care is being provided in the home health space takes up a part of demand? If someone didn’t account for that, then they’re missing a piece of that market.”
Written by Jason Oliva