The future’s bright for nonprofit senior living, or at least those providers that are executing on some key plays to remain competitive in a marketplace that’s changing quickly.
Operator sophistication, size and scale were frequently discussed topics at the 2016 Ziegler Annual Senior Living Finance + Strategy Conference, which took place late last month in Ponte Vedra Beach, Florida, according to Lisa McCracken, Ziegler’s senior vice president of senior living research and development. In short, not-for-profit providers are actively preparing to be more aggressive, especially when it comes to keeping up with for-profit providers.
“The pace of change is pretty rapid with everything going on around us,” McCracken explained to Senior Housing News. In order to best position themselves for the future, it’s time not-for-profit providers think seriously about consolidation, increase the sophistication of their workforce, and focus more on the post-acute space.
It’s time to merge
Chatter at the Ziegler conference confirmed that not-for-profit senior living providers are increasingly considering consolidation, or even entering into conversations around it, McCracken said.
“There are ongoing conversations around joint ventures and partnerships,” McCracken said, noting that some providers are considering affiliations as an option, too. The idea is that these initiatives better position not-for-profits for success in the long-run, especially facing added competition from for-profits.
“It bolsters the ability of not-for-profits to compete in competitive markets, and to compete with the growing supply of the for-profits,” McCracken said.
There are a number of big-picture trends driving not-for-profit providers to consolidate, Dan Hermann, Ziegler’s senior managing director and head of investment banking, told SHN. The No. 1 driver is the increasing complexity of health care service delivery—but leadership turnover, technology demands and financial pressure are also contributing to providers’ willingness to partner or merge.
Additionally, not-for-profits are facing more competition from home- and community-based options, McCracken said. But not-for-profits are known for being “heavy players” throughout the care continuum, and that may benefit them in the grand scheme of things.
“Not-for-profits really do span the spectrum, and we have a continued commitment to evolving that,” McCracken said.
Boosting workforce sophistication
There’s been plenty of talk in the for-profit senior living world around the front-line workforce as providers scramble to reduce caregiver turnover and successfully cope with minimum wage and overtime requirements. But not-for-profit senior living providers are thinking even bigger in terms of workforce development.
To increase their sophistication, the nation’s largest not-for-profit senior living systems have added a slew of new corporate-level positions in 2015, Hermann said.
“System sophistication continues to grow by adding more senior-level employees with expertise in different areas,” Hermann explained.
In 2015, the most-added senior living position among the providers in the LeadingAge Ziegler 150 was chief clinical or health officer, McCracken said, citing data Ziegler presented at its conference in September.
“This is clearly in direct response to health care and payment reform,” she explained.
The second most-added position was chief information or technology officer, McCracken said.
“That’s somebody with a strategic hat on, who understands the selection and deployment of electronic health records, and what’s in alignment with their organization’s goals,” she explained.
Many not-for-profit senior living providers also added chief talent or human resource officers, showing a greater commitment to staffing and workforce issues, McCracken said. Beyond that, providers added more business development/strategy officers, chief compliance officers, and philanthropy or foundation directors.
Not-for-profit senior living providers are also spending more time on post-acute activities, according to the latest Ziegler CFO Hotline report. Ziegler surveyed more than 110 CFOs and finance professionals for the August 2016 report.
Nowadays, providers spend approximately 34% of their time on post-acute activities, the survey found. That’s up from 21% of their time three years ago.
Post-acute is a burgeoning segment of the senior living industry, with innovators like Mainstreet offering high-end products where people receive rehabilitation and other services after a hospital stay. In addition, an increasing percentage of skilled nursing facilities are starting to offer post-acute rehab. For these facilities, Medicare-reimbursed services are an important revenue source.
Not-for-profit providers are also attempting to better understand the post-acute space, the survey showed. Within the past two years, 69.2% of providers have increased focus on measurement and data to better understand and navigate the post-acute health care space. Another 62.6% have attended educational events focused on the post-acute space for the same reason.
On the whole, though, providers feel good about their post-acute capabilities. About 70% of the survey respondents reported they were somewhat or very optimistic about their organization’s ability to effectively compete in the post-acute space, with multi-site organizations more likely than single-site organizations to be somewhat or very optimistic.
Written by Mary Kate Nelson