Editor’s Take: Senior Living at a Tipping Point

I was happy to hop on a plane for Palm Springs recently. I left behind a gray day in Chicago and landed in the oasis of blue skies, hazy peaks and shimmering water. Yet, the vibe there was not exactly serene; I would describe it as an atmosphere of excited anticipation.

There might have been an obvious reason for this atmosphere. I was at the PointClickCare Summit, and the electronic health records company is preparing to go public, with a proposed maximum offering of $100 million. That’ll set the nerves on edge.

But I think that there’s something larger going on, and PointClickCare going public is only part of that bigger story. I get the sense that senior living is at a tipping point.


Specifically, it’s at a tipping point with regard to health care reform.

Palm Springs. Not a bad place to work.
Palm Springs. Not a bad place to work.

Last May, we ran a story about why senior living and accountable care organizations (ACOs) don’t get along. (ACOs, as I’m sure our readers know, are those networks of providers that are supposed to coordinate care and share in the upside if they save Medicare money. And some face penalties if they don’t.)

We’ve run other versions of the “why senior living providers can’t gain traction with ACOs” story ever they were created under the Affordable Care Act, and it’s a topic that I’ve discussed with industry leaders at various events. The upshot has always been something like this:


The senior living industry has a lot to offer ACOs. A senior living provider can help keep seniors out of the hospital, lowering costs (and helping hospitals and physicians avoid Medicare readmission penalties). And senior living has something to gain by being in an ACO—namely, a strong referral stream. So why hasn’t it worked out? Let me count the ways. The incentives haven’t lined up correctly, because predominantly private-pay senior living companies don’t have much Medicare revenue at stake. Medical providers have seen senior housing more as a hospitality product than a health care setting. The necessary technology pieces for collaboration haven’t been in place, because the government didn’t offer senior care providers the dollars for electronic medical records that were available for acute and primary care.

And on and on, a litany of reasons why this key part of health care reform has been happening at a remove from senior living.

But that story might not be true anymore.

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It Won’t Be Long

Take Juniper Communities. Founder and CEO Lynne Katzmann is a self-described “policy wonk” who dug right into the ACA after it passed, and immediately began implementing changes in response. Juniper added service lines, such as therapy and on-site primary care, and developed its Connect 4 Life program to collect and utilize data to drive outcomes. So far, the focus has been on increasing length of stay and putting the pieces in place for future partnerships across the care continuum.

“At some point in the future, we believe that assisted living will have to look at bundled payment and contracts with ACOs,” Katzmann told me at the PointClickCare Summit. “Right now, we don’t have to do that, but it won’t be long.”

The phrase that stands out to me: It won’t be long.

I interpret that to mean that the years-long period of senior living building up the necessary infrastructure and relationships to participate in ACOs is nearing its end, and for providers that have made it a priority, the next phase—actual contracted participation—is imminent. Although she believes that the biggest opportunity on the horizon is to potentially ally with Medicare Advantage plans, Katzmann says that Juniper already is showing its data to ACOs, among other referral sources, to drive its business.

And on the ACO side, consider that one of the event’s general session speakers was Karen Vanaskie, care management program director for Scottsdale Health Partners. One of her professional specialties is helping ACOs build clinically integrated care programs, and Scottsdale Health Partners in 2013 teamed with Cigna to create a sort of informal ACO. She was impassioned about the importance of the whole post-acute spectrum in accountable care:

“Take to heart how much you’re in the light right now,” she said. “Whether skilled, assisted living, home health, there’s not one I’m not doing a deep dive on. Ring your bell, that’s what I’m waiting for.”

Motion in the Market

Further evidence of a tipping point: I heard from a source that some ACOs are opting to send patients from the hospital straight to assisted living, whereas in the past they would probably have gone to a skilled nursing facility. We’re looking into this and hopefully will be able to share more details. But I think this is notable, because the SNFs have had an edge with ACOs. In part, this is because they have been ahead of private-pay senior living in adopting EHRs to gather the data needed to demonstrate they will be good partners.

But tech adoption in private-pay senior living now is gaining steam quickly. PointClickCare alone counts five of the 10 largest U.S. senior living chains among its customers, including Brookdale (NYSE: BKD), Sunrise Senior Living and Five Star Senior Living (NYSE: FVE). Brookdale will begin implementing PointClickCare’s product in its assisted living and memory care settings in 2016, starting with medication management functions, Senior Vice President of Clinical Services Kim Estes told me at the Summit.

Other giants in the industry also are in talks with PointClickCare, according to chatter in Palm Springs. And the increased access to capital that a public offering should afford may give a boost to the company’s growth plans, which are focused in large part on expanding into the senior living and even home health settings. From the company’s F1 filing:

“We have expanded the capabilities of our core platform to better meet the specific requirements of the senior living market. Approximately 600 of our customers use our solutions in both skilled nursing and senior living facilities. As our customers continue to expand into adjacent markets across the senior care continuum, such as in-home care, we believe we are well positioned to continue to grow in these markets.”

PointClickCare’s competitors, such as Yardi, also are seeing an uptick in senior living interest and are pushing to offer a single platform across the whole care continuum. That was behind Yardi’s acquisition in September of Optimus EMR.

“We’re seeing a lot of success and motion in the market in terms of senior living providers looking for systems,” Yardi Director of Healthcare Solutions Fil Sutherland told me in an interview last month.

All of this reinforces the notion that private-pay providers are becoming more integrated with those that get their revenue from the government.

Write Your Own Ticket

It might seem there’s a straightforward new story emerging, that senior living and ACOs finally appear ready to take the plunge. But here’s the twist: Just as senior living might be looking most attractive to ACOs, the ACO movement itself might be stalling.

This point was made in Palm Springs by Mark Parkinson, president and CEO of the American Health Care Association/National Center for Assisted Living.

“As people have started to run ACOs, it’s harder than people thought, so some people are dropping out, so the growth doesn’t appear to be as dramatic as we had thought,” he said.

It’s a phenomenon we’ve reported on. And Parkinson cited projections recently released by Avalere, an independent data analysis company, showing ACOs currently account for 14% of Medicare reimbursements. This number will grow only slightly through 2020, according to Avalere, although ACOs will likely continue to be important players in certain markets.

However, even if ACOs don’t come to dominate the landscape, the overarching goals of health care reform—tying payments more to quality outcomes and/or patient characteristics—will continue to drive changes. This is in part because, Parkinson said, in the waning days of the Obama administration, regulators are promulgating numerous rules. One example is the newly finalized, mandatory bundled payment initiative for joint replacements.

So, even if senior living providers find that they’re not becoming part of an ACO, the work (and capital) they’ve put into being able to capture and share data, increase care quality and options, and build up relationships with referral sources should not go to waste.

But rather than going out and trying to woo ACOs to accept them, it may be a moment for senior care providers to take the lead themselves and write their own ticket to the future of health care, in which providers are being asked to collaborate and bet that they can deliver high quality at a low cost.

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“[AHCA/NCAL] members are now thinking about, how can they take on some of the risk?” Parkinson said. “Some of them are out there forming their own managed care companies. Some are collaborating with other groups of providers and saying to plans, hey, we are together and if you want to have providers in this area, you’ve got to play ball. They’re creating their own networks.”

For leading senior care companies, possibilities such as these must seem empowering but anxiety-provoking, the future exciting but uncertain. So, I think it was a good call by PointClickCare to offer palm readers at a Cirque du Soleil social event at the Summit.

Unsurprisingly, many attendees wanted to have their fortune told.

Written by Tim Mullaney

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