New Welltower Report Highlights ‘Payvider’ Opportunities for Senior Living

Meeting the health care needs of older adults will be a major challenge in the months and years ahead and already is leading to increasing integration across the continuum of care. This is creating opportunities for senior living and skilled nursing operators — and their real estate partners — as health systems, payer groups and blended “payviders” consider new ways to form and tighten relationships with post-acute providers.

That’s according to a new report from Welltower (NYSE: WELL) on some of the hot trends in the rapidly changing health care real estate industry. The report, which the Toledo, Ohio-based real estate investment trust (REIT) released Monday as the first in a series of updates, details integration between health systems and post-acute care settings.

The report also lends context to Welltower’s $2.2 billion acquisition of HCR ManorCare’s skilled nursing and memory care properties in a joint venture with nonprofit health system ProMedica.


“The push towards consumer-centric and cost-effective health care models is leading acute-care providers to care-delivery venues that extend beyond the hospital,” the report reads. “This expansion of the health system care-continuum, which has included post-acute settings like skilled nursing facilities, is enabling better control of health care costs and user outcomes.”

One trend the report notes is the evolving attitude of health systems that sponsor health plans, which are commonly referred to as “payviders.” While the model is nothing new, it is seeing a renewal in both scope and size under evolving risk-sharing arrangements, according to the report.

“Lives covered under fully-capitated risk models, where a provider controls spending over a patient’s total health journey, are expected to increase to 17 million from 9 million by 2020,” the report notes. “This presents an opportunity for health systems to prioritize costs beyond the acute-care hospital, and makes skilled nursing more front-of-mind.”


Some major health systems that offer such plans include Kaiser, University of Pittsburgh Medical Center, Intermountain Health, Johns Hopkins, Catholic Health Initiatives, Partners Health and ProMedica.

Health systems are also looking to gain more control in post-acute settings through vertical integration, according to the report.

“If enhanced connectivity and control involves the acquisition of a skilled nursing or post-acute care provider, ownership of the real estate underlying the operations may not be a strategic fit for the acquirer,” the report explains. “Instead, providers may be willing to lease this real estate, applying their credit backing, because of the strategic importance of post-acute care in the patient’s health episode.”

Read the full Welltower report on the REIT’s website.

Written by Tim Regan

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