Brookdale Senior Living (NYSE: BKD) vastly expanded its ancillary services following its acquisition of Emeritus, but the company plans to take this segment of its business above and beyond what has traditionally been offered in senior living.
For senior living providers, expanding their services to offer programs like home health, hospice and therapy extends their brands well outside the walls of their communities. The goal is to expose one’s brand by providing services to seniors still living independently at home, with the prospect of eventually converting them to a resident when they finally need to make the move into a senior living community.
But while it has been common practice for providers to execute this strategy by expanding service offerings closely related to senior living such as home health care, Brookdale now says it is setting its sights more broadly with plans to offer a wider array of healthcare—and even financial services—to its current and future residents.
“The exciting opportunity that Brookdale has is to expand the portfolio of services we provide both inside of our walls and outside of our walls,” said CEO Andy Smith during a company presentation Tuesday at the Bank of America Merrill Lynch Healthcare Conference 2015.
With about $4.5 billion spent on Medicare-reimbursed services by Brookdale residents on a combined basis each year, Smith said he thinks the company is well-equipped to provide additional services on top of the ancillary services it currently offers.
“Just like we did with home health, therapy and hospice, we think we can add healthcare services to what we already do, either on our own or in partnerships with others,” he said.
The list of these potential services is long, Smith said, but may include audiology and dentistry services, transportation, nutrition services, adult day care, as well as providing durable medical equipment and even pharmaceutical offerings.
“Pharmacy is the biggest nut,” Smith said. “It’s also the toughest nut to crack, but that is a huge opportunity for us.”
There is also a second set of similar opportunities Brookdale sees that are not healthcare oriented. The company is currently working on pilot programs in partnership with others to provide Medicare Advantage plans—that are branded for Brookdale—to its residents.
Brookdale also believes it can offer financial services such as annuities or other products that would help allow for residents to move into its communities, according to a march 2015 Research Note from Barclay’s.
“There are a host of financial services products that we are earnestly working on right now to pilot and to develop new products and new services that we can offer to our residents, or to our prospective residents to make it easier for them to move into our communities,” Smith said during the Bank of America conference.
Brookdale is currently in the process of rolling out its ancillary services platform into the Emeritus portfolio it absorbed following last summer’s merger between the two companies. The merger also further expanded Brookdale’s home health offerings with the addition of Emeritus’ Nurse On Call platform.
The integration of Nurse On Call into the company’s ancillary services platform, Brookdale Healthcare Services, helped boost the Brookdale’s home health census during the first quarter and contributed to producing revenue of $115.4 million during the period, an 82% increase from the first quarter of 2014.
Overall, Brookdale fell short, a reflected in its quarterly earnings report last week. The largest senior living provider reported a net loss of $130.5 million, or $0.71 per share, attributable to common stockholders for the first quarter of 2015.
Integrating various Emeritus processes (electronic medical records, sales, CRM systems, etc.) onto its own systems has been an ongoing challenge for Brookdale post-merger.
The first quarter showed the company has begun to turn a corner in these efforts, particularly now that all of its ancillary services businesses are running on the same financial system, said Brookdale President and Chief Financial Officer Mark Ohlendorf during the first quarter earnings call Friday.
As the largest senior living provider in the U.S. with approximately 1,150 communities in 47 states, Brookdale sees a huge market opportunity for its ancillary services business to reach the boasted 6.5 million seniors age 80 and older living within 10 miles of their communities.
“The differentiation of our brand is the real magic behind that, because other senior housing providers can’t emulate that strategy,” Smith said during the conference.
As for a timetable on when Brookdale might begin to expand its ancillary services, the company is taking the long view.
“We’re very excited about that,” Smith. “It’s not going to happen tomorrow. It’s going to take years to build those verticals out, but we think they’re scalable and are going to be a meaningful differentiator as we move down the road.”
Written by Jason Oliva