Welltower (NYSE: WELL) is making further strides on health system partnerships, with senior housing playing a key part in the strategy.
The Toledo, Ohio-based health care real estate trust on Monday announced a memorandum of understanding with Philadelphia-based Thomas Jefferson University and Jefferson Health to create a joint venture that may eventually include partnering on new senior housing developments.
If the two sides can come to an agreement in the next 90 days, Welltower would by a stake in Jefferson Health’s real estate portfolio, providing a cash infusion which would allow Jefferson to expedite its ambulatory care network expansion plans, and leverage Welltower’s predictive data analytics to determine the best sites to build these centers.
Additionally, Jefferson Health clinicians would provide health care within Welltower senior housing communities in the greater Philly and southern New Jersey region, giving Jefferson the opportunity to manage the care of residents across the full continuum. The two parties may also partner on the development of future communities.
Welltower and Jefferson believe that technology can drive more visibility into how improving social determinants of health for seniors can improve their health and wellness, touting the potential of wearable devices, alert messaging integrated into electronic medical records, mobile-enabled communications and wellness tracking in Monday’s news release.
“These living facilities could truly provide healthcare services with the future in mind,” Stephen K. Klasko, president of Thomas Jefferson University and CEO of Jefferson Health, said in the release. “An environment where you wake up and your home monitor device has collated the data from your wearable device and medical history and cross referenced that data with the day’s pollen count to make recommendations on how you should manage your day. This is what we mean when we talk about Jefferson using creative strategic partnerships and innovation to change healthcare.”
This would be Welltower’s first partnership with an academic health system. Jefferson Health has 14 teaching hospitals in the region, along with 19 outpatient centers, 22 rehab specialty centers, 25 imaging and testing centers, seven urgent care centers and a cancer center.
“This landmark joint venture partners Welltower, the leading health and wellness delivery platform, with one of the largest and most innovative health systems in the United States,” DeRosa said in the press release. “Welltower and Jefferson are well aligned in our thinking that much of the current built environment for healthcare delivery cannot meet the promise of technological innovation and value-based care.”
Welltower and Jefferson Health declined to discuss further details to Senior Housing News, saying that it was too early in the process.
Nonprofit health systems are a new frontier for health care REITs, and particular focus for Welltower.
Welltower CEO Tom DeRosa last year said that U.S. nonprofit health systems hold over $600 billion in real estate assets on their balance sheets, and are looking to reconfigure these holdings in the near future. These health systems recognize they can free up capital through strategic partnerships to restructure their businesses to offer more services in the community, and these JVs can offset declining margins.
Welltower is no stranger to partnering with nonprofit health systems. In July 2018, Welltower and nonprofit health system ProMedica closed on a $4.4 billion joint venture that included the acquisition of the large HCR ManorCare portfolio of skilled nursing facilities and senior living communities. The concept is that the JV will be able to drive population health by giving ProMedica more control over the heath and wellness of older adults living in ManorCare buildings.
As part of that JV, ProMedica is pledging $400 million in capital expenditures over the next five years to upgrade its HCR ManorCare portfolio, which includes the pioneering Arden Courts line of memory care communities.
REITs are not alone in pursuing health system partnerships.
Last March, Houston-based Belmont Village announced a partnership with Baptist Health South Florida to develop, own and operate senior living communities throughout the region. Headquartered in South Miami, Florida, Baptist Health South Florida is the largest health care group in the region, operating 10 hospitals, 50 outpatient and urgent care facilities and over 40 physician practices across Broward, Miami-Dade, Monroe and Palm Beach counties.
Another example is the relationship between Intermountain Healthcare and Summit Vista, the first life plan community in Utah.