New Players Attack Unmet Post-Acute Demand

It appears that Mainstreet has some emerging competition in the transitional care space, as a pair of new entrants embark on an aggressive pipeline to develop several short-term rehabilitation facilities primarily located in the Southwest.

National Healthcare Realty (NHR), a development company formed earlier this year with a focus on health care verticals, will build 20 transitional care properties over the next three years in New Mexico, Arizona, Colorado, Texas, Nevada and Montana as the preferred developer for Welbrook Senior Living, a 5-year-old owner, operator and developer involved in everything from independent and assisted living to memory care and, most recently, transitional care. Welbrook identified a potential partner in NHR and approached the new developer to realize a post-acute concept that had been years in the making for the provider.

The pipeline is currently valued at about $150 million, but that figure is expected to reach approximately $220 million by early 2016, NHR Principal Jecoah Byrnes tells Senior Housing News. Ground-breaking on the first project in the pipeline is slated to begin in December in Las Cruces, New Mexico, with doors opening for patients around November 2016. The remaining facilities will enter development over the course of 2016 and start to accept patients throughout 2017. Each of the 20 facilities will consist of 50 to 55 single-occupant units.


The overall goal with the pipeline centers on providing a post-acute product that goes unmatched within a selected market, Welbrook Principal Doug Brawn tells SHN.

“The options right now for residents and patients out of an acute setting are really not up to par,” he says. “We’re attacking what patients are looking for.”

As such, Brawn says Welbrook extensively assesses each market before development begins. This involves forging partnerships with area hospitals and specialized medical groups upfront, as well as establishing relationships with physicians, who have the opportunity to invest in the real estate. It also means finding regions that don’t have recently erected facilities.


“An ideal market for us is one that has four or five older model nursing homes, and we come in as a state-of-the-art construction for transitional rehab,” Brawn says.

The upcoming Las Cruces facility, for example, is situated across from a hospital, Byrnes says. Choosing locations near assisted living communities has also been deemed essential.

“That’s really where the patient flow is coming from, those two drivers,” Byrnes says.

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Determining what a facility contains is equally as important as selecting a market, Byrnes and Brawn agree. In this regard, the pipeline veers away from an institutionalized setup to focus on more of a hospitality experience for patients, with natural design elements incorporated for maximum sunlight throughout each building and optimal outdoor spaces.

Beyond design, the pipeline differentiates itself further from the traditional post-acute product in that Welbrook has a 24/7 admissions policy and provides physical therapy every day of the week. On average, patients should be healed, rehabbed and back to their homes within a 10- to 24-day window, Byrnes says.

“Welbrook is set up nicely to be a strong partner with the hospitals in each of these markets,” he says.

The pipeline isn’t Welbrook’s first play at transitional care, either. The provider partnered with Embree Healthcare Group in June for a facility in Flagstaff, Arizona, and Embree and CNL Healthcare Properties in September for another in Grand Junction, Colorado. Welbrook Centennial Hills, located in Las Vegas, Nevada, is the company’s first transitional care community developed on its own, which will open its doors by early 2016.

Given that both NHR and Welbrook’s leadership has extensive experience in the skilled nursing sector—Welbrook COO Mark Wimer, for instance, spent eight years as district vice president of Kindred Healthcare (NYSE: KND) managing skilled nursing facilities across the Northwest—Byrnes and Brawn indicate a shift in demand for high-end transitional care.

“All of the demands for this product type are being driven by health care reform,” Byrnes says. “Hospitals have to be responsible about where they discharge their patients, driving higher utilization of these beds. That’s why we think there’s long-term viability in this property type.”

Written by Kourtney Liepelt

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