Does Obamacare Need a Senior Housing Reality Check?

The full impact of healthcare reform on senior living is still largely an unknown to operators and investors, and state regulations may impact how well the landmark law aligns with the industry’s capabilities.

“There are a lot of issues to work through in order to align the goals of the Affordable Care Act—fewer hospital stays, less emergency room visits, and more proactive wellness for seniors—with reality: that regulation doesn’t allow us to do what the ACA wants,” said Patricia Will, founder and CEO of Texas-based Belmont Village Senior Living and panelist at SHN’s 2013 Senior Housing Summit.

It’s especially complex for the assisted living industry, as healthcare reform initiatives are pushing for post-acute care to have a much larger role in the care continuum as opposed to acute care in a hospital setting. Belmont Village’s care model includes round-the-clock nurse staffing in each building, but there’s still liability.

“The ACA is begging us to do what we’re not allowed to do in most states: Keep seniors at almost all costs, and provide for what they need,” Will said. “Seniors want that too. But as providers, we’re kind of stuck in a vise right now. We’ve got to do exactly what the ACA partners don’t want—[send] the senior to the hospital. Otherwise, we run afoul of state regulations, or we get sued, or both.”

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At this point, it’s “way too soon” to draw conclusions regarding how the ACA will work in general, and particularly with respect to seniors, she said. And while it’s expected there will be financial implications, those are yet to be determined.

One huge challenge associated with healthcare reform and the aging population will be affordability, said Sharon Yester, chief asset management officer at CNL Financial Group, during the panel.

“With assisted living and even independent living, so many things get pushed down to [these levels],” Yester said. “We’ve taken that successfully and run with it, and we’ve created models more affordable and desirable by seniors.”

Those models will vary, she said, but will likely align with healthcare reform’s push for prevention.

“Some people are trying models, [maybe] accessing outside resources; it’s a bit like herding cats, but it might have to go there,” she said. “The ACA will force us to look at wellness to keep people out of the hospital.”

While Obamacare’s implementation may force some volatility in the senior care market, none of the panelists seemed to think it would affect the availability of capital.

“Looking at the core fundamentals of the industry, it’s doing very, very well [in terms of] occupancy and [performance] during the downturn,” says John Cobb, chief investment officer at Chicago-based REIT Ventas (NYSE:VTR). “There’s a lot more capital to enter this space, because the performance is good. There are always going to be things like Obamacare, regulation—something to change the volatility of performance, but the industry has gotten over that the past few years.”

Written by Alyssa Gerace

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