Senior Living Providers Devise New Strategies to Tackle ACOs

In an ever-evolving healthcare landscape that demands higher care quality at lower costs, several senior living providers are engineering various strategies to establish themselves as partners in Accountable Care Organizations (ACOs).

Diversified service offerings across the post-acute care continuum, or building near existing hospitals and health systems are just a few practices senior living providers have put into play in efforts to carve out their niches within the ACO fold.

“If you want to play, you have to be in a position to effectively participate in the whole care pathway,” says John Morgan, CEO of the Avamere Family of Companies.

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Avamere is well-equipped to fill in a number of care gaps a health system might require. The company provides a suite of senior care services, from traditional senior living (assisted, independent and memory care) to home health care, hospice, respite care, skilled nursing, transitional and outpatient rehabilitation.

“It becomes advantageous when working in a managed care environment,” Morgan says. “Because we participate across the entire continuum we become greater value to those groups forming ACOs.”

A few programs Avamere is involved with include ACO strategies with health systems such as Kaiser Family Health Foundation, Oregon Health & Science University and Providence Health and Services’ Portland network.

With 42 properties under its belt—locations heavily concentrated in Oregon with a few in Washington, Idaho and Colorado—Avamere is involved in several ACO strategies with health systems such as Kaiser Permanente, Oregon Health & Science University and Providence Health and Services in Portland, Ore.

Avamere is also involved in the Centers for Medicare & Medicaid Services’ (CMS) Bundled Payments for Care Improvement (BPCI) initiative as a convener in 31 care settings.

Through the program, Avamere will be working with other providers, both within its own family of companies as well as outside organizations, to provide care over a 90-day episode for a patient that has a specific diagnosis, Morgan says.

As part of the BCPI program, Avamere will be responsible for providing care to a patient with a specific diagnosis over a 90-day episode and will be benchmarked against its historic costs.

If the company underperforms from a cost standpoint, it will reap the benefits, however, if it costs Avamere more to provide its services against its historic benchmark, then it will be responsible for paying CMS back the excess amount.

“You have to have good data, good information systems and great relationships with provider partners, as well as a clinical protocol and clinical pathway,” Morgan says. “Info systems and the ability to share data are very important. You need to look at making those investments in the future so you can share info most effectively with your partners.”

Building for the ecosystem

Post-acute care providers who don’t realize the importance of building relationships and partnering with other healthcare entities actually run serious business risks without an ACO strategy, says David Komet, CEO of Alternivest Healthcare.

A San Antonio, Texas-based investment and development company that has historically been involved in the hotel and multi-family sectors has extended its footprint into the healthcare space in recent years.

Alternivest is in the process of developing a mixed-use senior housing property positioned across from Tenet Healthcare’s (NYSE:THC) new Resolute Health Hospital in the San Antonio suburb of New Braunfels, Texas.

The 350,000 square-foot hospital, which opened in June, consists of 128 beds on a 56-acre “wellness” campus that will feature a fitness center, health-oriented restaurants, walking trails, and an integrative medicine center, which will provide therapies such as nutrition counseling, fitness instruction and lifestyle coaching. Additionally, a retail shopping component and women’s health center are scheduled to open on-site in the fall.

Alternivest plans to add some senior housing flavor near the sprawling hospital campus through the development of Health Commons, a 30-acre parcel that will include a skilled nursing facility, medical office building, assisted living and memory care community.

“We’re positioning a medically-integrated lifestyle community across from the [Tenet] campus,” Komet says. “It’s really an effort to address the change coming in healthcare.”

A relationship five years in the making with local area physicians enabled Alternivest to score the real estate near Tenet’s newest hospital. Back then, the concept to develop something in the area that wasn’t just an acute care platform but also a wellness community began to take shape, Komet says.

“It became obvious that multiple needs were not being addressed,” he says. “We wanted to develop something that was more integrated—a whole new ecosystem.”

Essentially, Alternivest’s role in this ecosystem is master developer for the New Braunfels project. Though the company is currently in the site planning and engineering stages, it’s also in the process of courting senior living operators and developers in bringing them to the master-planned site.

Even though Health Commons isn’t slated for a groundbreaking until sometime in the first quarter of 2015, Komet says his company is already experiencing synergies with Tenet’s Resolute Health Hospital.

“ACOs are going to be a much bigger part of the landscape in the future. It’s important that we bring operators that dovetail that,” Komet says. “We have several groups at the table now, but we haven’t made final selections just yet.”

Looking ahead, Alternivest plans to bring a similar vision like that of the New Braunfels project to other areas that lend themselves to ACO partnership opportunities.

“We’re working on a more expansive vision to get this ecosystem to co-locate and fit together in a way that makes sense, with the vision of replicating this in other markets,” Komet says.

Ground-up strategies

This year has already seen major announcements from several senior living providers, large and small, that are also tackling ACO strategies from a development standpoint by positioning themselves in locations either near or adjacent to health systems.

In March, Mich.-based developer Granger Group revealed plans to invest $180-$200 million to build what it calls “Health Care Villages.” The concept incorporates assisted living, memory care and skilled nursing and offers the proximity of hospital care, as well as other components in the post-acute care space. The company’s latest project, the $26 million Metro Health Village, sits yards away from Metro Health Hospital in Wyoming, Mich.

St. Paul, Minn.-based Presbyterian Homes & Services is also underway on plans to help a hospital in Hudson, Wisc. plug its onsite care gaps. In May, the company stated it is preparing to develop a $41.8 million senior living community on land adjacent to Hudson Hospitals & Clinic—a collaboration that has also invited national dialysis provider DaVita to develop a facility onsite as well.

Up North, Westport, Conn.-based Maplewood Senior Living is under contract to purchase a roughly 6-acre parcel of land in Plainsboro, N.J. that is part of a 170-acre healthcare campus for Princeton Healthcare System.

Maplewood will be the assisted living and memory care provider on the site, which is anchored by the $560 million, 231-room University Medical Center of Princeton at Plainsboro hospital, says Maplewood Chairman and CEO Gregory Smith.

In addition to a senior living component, developers also carved out space on-site for a 100,000 square-foot children’s hospital, as well as a 146,000 square-foot Medical Arts Pavilion, a medical office building that adjoins the hospital. The campus also includes Merwick Care & Rehabilitation Center, a 100,000 square foot, $29 million, 200-bed skilled nursing community completed in 2011 that includes an 80-bed post-acute building and is operated by Windsor Healthcare Communities, based in Norwood, N.J.  The components ensure all aspects of the ACO will be in place from acute, to post-acute care and assisted living and skilled nursing.

All-in, Maplewood is looking to invest upwards of $20 million on the project, which Smith says will be on the luxury side like the company’s other properties.

“That’s the foundation of our brand—providing higher physical plant quality that’s more boutique-style than cookie-cutter” he says.

The company has already received its certificate of need to construct its facility on the Plainsboro campus and hopes to break ground by late fall with a grand opening possibly slated for the latter part of 2015.

“It fits the whole ACO mold in having preferred providers that are on your campus that have the same quality of care in mind and exceptional services,” Smith says. “We’re looking to continue our legacy of building higher quality assets than our competition and delivering those higher quality services and care to our residents.”

Written by Jason Oliva

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