Every industry is susceptible to change. But in senior living, no sector needs an overhaul more than skilled nursing, both from a construction and culture standpoint, says one chief executive officer.
As the capital markets have shown an increased interest in senior living construction in the years following the Great Recession, it is time to evaluate the future spectrum of senior living products, specifically skilled nursing facilities (SNFs), says William Nicholson, CEO of The Congress Companies, a construction firm specializing in the senior living, health care and multi-family residential markets.
A number of challenges have weighed on the skilled nursing sector, not the least of which continues to be pressure on and changes in Medicaid reimbursement rates. Meanwhile, SNF operators are facing this uncertainty at the same time shifting consumer demands are calling for higher-end features and services for their post-acute care.
But while these changes force many operators to revise their approaches to SNF care, the changing landscape of the industry itself does not necessarily signal the demise for skilled nursing, Nicholson believes.
“On the contrary, those providers with the vision to understand and adapt to meet the evolving needs and the demands of their customers will continue to be successful,” he wrote in a recent analysis. “Let’s keep in mind that the demise of the 8-track tape as a medium to play back pre-recorded music did not mean the end of pre-recorded music.”
The traditional model of skilled nursing is in the midst of a fundamental transformation, not only in addressing the contemporary preferences of today’s consumers, but also in playing a new role within the greater health care services continuum.
“Nursing homes are starting to function as more of a temporary pit stop, so to speak, in the aging process, not the final resting place,” Nicholson wrote.
The new model is one rooted in wellness rather than sickness, with a focus on resident-centered care that helps patients recover quickly so they can return safely back to their homes and communities.
Being well-equipped to effectively care for an aging population with far different expectations than previous generations of skilled nursing patients will be paramount to operators’ success, Nicholson said.
“It is no longer a matter of hypothesis or conjecture; it is a fact that the physical environment influences the healing process,” Nicholson noted. “So construction and design of facilities that are conducive to rapid patient recovery and the health of the staff will be fundamental to the evolving model of tomorrow’s SNF.”
This means taking the more than 1.9 million SNF beds that were built as shared-occupancy rooms, where a lone curtain traditionally separated a unit’s two beds, and replacing them with private accommodations.
It also means designing and building SNFs with an eye toward creating more home-like environments, Nicholson suggests, even if that means sacrificing institutional size and scale, and taking on higher construction costs.
“Although the upfront construction cost of private rooms is higher, there is significant research that demonstrates costs will be lower in the long run as a result of reduced infection rates and hospital readmissions,” he said.
For aged SNFs that already exist, the decision of whether to renovate, replace or expand those facilities will continue to be an increasingly key component for operators as they evaluate their abilities to compete in a rapidly changing SNF market.
“Construction and design professionals must take the time to listen to their customers, to understand their business models and the rapidly evolving needs of their clientele,” Nicholson said. “Those that do so will survive and flourish alongside their customers.”
Written by Jason Oliva