Life Care Services Gains Traction with CCRC ‘Navigators,’ Expands Rental Brands

Life Care Services has continued to hone its focus on wellness throughout its large portfolio of continuing care retirement communities (CCRCs), also known as life plan communities.

That effort appears to be paying off, according to findings from the Age Well study. Results from the first year of the five-year study were released in January, and showed that life plan community residents generally have higher levels of wellbeing than a demographically similar group of older adults in the general population.

About 80 CCRCs/life plan communities participated in the study’s first year, and roughly one-third were LCS properties, according to Rick Exline, executive vice president/senior managing director of life plan communities at the Des Moines, Iowa-based company.

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The Age Well study was conducted by Mather LifeWays Institute on Aging in partnership with Northwestern University and a variety of senior living industry organizations, including Life Care Services. With nearly 30,000 senior living units, Life Care Services was the third-largest U.S. senior living provider in 2018, and has a particular focus on life plan communities. It is part of the LCS Family of Companies, which also includes development, real estate investment and other business lines.

For Life Care Services, a holistic approach to wellness has long been a part of the culture at its communities, and a “navigator” program has been a more recent enhancement, Exline told Senior Housing News at the recent Senior Living 100 conference in Laguna Niguel, California.

Exline also reflected on the future of the life plan community model, new flexibility in pricing, rising competition and concerns he has about the housing market a decade down the road.

Highlights of the interview below have been edited for length and clarity.

Findings from the Age Well study reflected well on life plan communities. Do you think that life plan communities have been focused more on fostering resident wellness — rather than caring for people’s health needs — than in the past?

I think there’s been a movement toward that for, I’m going to say the last 10 years, as we’ve worked to know and understand health care and focus in on having a long quality of life. I think that has been part of our culture for a while.

We talk to seniors. Their retirement vision is to stay in their own home. That’s the No. 1 priority that they have. So I think our job is to make our market more aware of what true community living can be like. I think the Age Well study helped us do that. It gave us some great tools to use in talking with prospective residents and adult children about the quality of the lifestyle.

My mother is a great example. She was by herself on the farm after my father passed away. She moved into a smaller type of retirement community, but it changed the dynamics of her life in terms of social interaction, intellectual stimulation, exercise, nutrition. She resisted going in, and then [made] the typical statement about, why didn’t I make this decision sooner?

Within Life Care Services, has there been an operational strategy to move toward a wellness model?

Several years ago we put an initiative in place, which we call our Navigator program.

In the Navigator model, it’s how we staff on site to help our residents and families navigate various care, service, health and wellness needs throughout their time at the community. The navigator model has gone a long way in our ability to individualize the program, and to take responsibility and ownership of that. It can be as detailed as helping people with third-party insurance billing, if they have a long-term care insurance plan. So, that’s been an initiative.

We’ve always been focused on what we call our eight dimensions of wellness, and we caution people not to think of wellness as fitness, because that’s kind of the default. So we want to make sure we’re addressing the holistic area, whether it’s volunteer opportunities, it’s the spirituality, connection with family and friends.

On the fitness and wellness and side, we’ve collaborated with a national institute of fitness out of Indianapolis, and they, at a number of  our communities, provide the in-community personal trainers who have been really trained to understand the needs of seniors. That’s been extremely popular.

So the Navigator model involves a person known as a “navigator” at each community?

It does. It’s a designated position. And we’ve branded it and put in place the different protocols on how that position is going to effectively interface with our resident. It’s something we’re proud of and is getting really good traction.

You brought up spirituality, which was one of the surprising findings in the Age Well study. It was the one area where life plan community residents did not have higher levels of wellbeing than people in the general population. That seemed puzzling to the Mather researchers I spoke with.

I have a theory.

Typically, people might have their spirituality connected to a community church that they were a part of, that their kids went to, [where they] attended church, Bible study.

Within their historical religious foundation, it was very homogeneous. You were with people who thought like you did, believed like you did, worshipped like you did. Now, within this community setting, that’s been disrupted. It’s more diverse, which I think is very positive, but I think that connectivity on that “same-thinker/same-believer” level gets disrupted. I think at the end of the day, it’s a good thing that it’s getting disrupted a little bit. Maybe people can push through it to become better versions of themselves, or to be open to a different view and perspective.

Any other changes you’ve made operationally within your life plan communities?

I think we’re probably doing more in terms of creative dynamic pricing. Some of that is driven by demand, but some is driven by an individual who may be asking for a lower entrance fee in exchange for a higher monthly fee, because that fits into their financial planning a little better.

In the CCRC universe, there’s not a lot of new product coming online. There are a few expansions and renovations, but true greenfield properties, I’ve been told … are less than 10 at the moment. So I think the demand for this product is going to increase at a much higher velocity than the supply, which I think even fits with when [Ziegler] did their assessment of tax-exempt bonds. They were pretty bullish on the market because of the supply being very limited. It takes very patient capital. It takes a real understanding of the refund liability and contracts, and so much of the current capital flowing into senior housing is REIT-based. And typically, those REITs don’t want to sign up for that.

The other issue in the REIT universe is the monetization of the assets. CCRCs, life plan communities, are difficult to monetize. Most of them are not for profit. For example, if we have a rental asset we want to sell, we probably have 20 or 30 interested parties. If we have a life plan property that, typically, we want to purchase, we’re competing with one or two other firms.

And last year, we did acquire two life plan communities that were not for profit, that we brought into our for-profit portfolio.

Are you looking to do more acquisitions this year?

We are. The right ones. We’re about growth but we want the right kind of growth. We want the right partners with similar values.

Are there particular markets you’re looking at?

I think our appetite is typically more for what I call the NFL [National Football League] cities and surrounding suburbs.

There are selected secondary and tertiary markets we might have an interest in, particularly if it aligns with existing business in a given state or geographic area.

What’s activity like on the development side?

We’re doing a lot on our Delaney product, which is assisted living/memory care/independent living rental concept. We’ll continue to do that. We’re doing quite a bit of development work for existing clients, both for-profit and not-for-profit.

You’ve got your Delaney rental model, and we’re seeing concepts like Avamere’s micro-CCRCs, without skilled nursing. What do you make of this evolution in continuum-of-care models?

We advocate for senior housing assets to have a built-in continuum of care. That doesn’t necessarily mean they need to have skilled, and based on the given state and regulatory environment, the way you can provide care in assisted living, that pathway’s gotten broader. With that comes some risk, but it has gotten broader.

What I’m seeing with independent living/assisted living/memory care is, there’s no barriers to entry. There’s no regulation, for the most part. There are a few states that have CON [certificate of need] on assisted living. Most don’t. And so, the capital’s available, everyone’s talking about the growth market of senior living. There are some markets where we’re already seeing competition issues.

My aunt lives in Orlando. She left a community to go to one of ours, and they offered to lower her rent — her monthly service fee — by $800 a month to keep her there. So, there’s a lot of pricing pressure in some of these competitive markets, which means — that’s not sustainable long term. The debt capacity wasn’t modeled on those lower rates.

Do you have a philosophy on preferring an entrance fee versus a rental continuum?

We believe in consumer choice. We’ve been [known as] the life plan or CCRC company, we’re proud of that and will continue that. I’ll live in one, one day.

We think rental products bring a lot of value. We’re doing a collaboration with the Ryan Companies on the Clarendale assets, several of those. We like the product. In that universe, you’ve got to be the best in class operator, because there’s so many competing product types.

We hear about a lot of consolidation happening in the nonprofit space.

There is. I think Ziegler reported that out of their 200 largest life plan community companies, something like 100 had been through a merger or affiliation. I think the low-hanging fruit is probably gone on those. But I still think there’s going to be velocity in that area.

Has this changed your business at Life Care Services at all?

I don’t think we’re seeing quite as many third-party management opportunities coming to us. We still see some really solid opportunities, because some of these not for profits no longer have scale — operating a CCRC is a complicated business, particularly with a skilled care component. And it has with it a lot of risk. So a single-site CCRC, unless they have the bandwidth and financial resources to deliver the scale to operate, is increasingly challenged.

We’ve bought on some new assets last year in terms of management, and that was exciting because they’re single site, and they had the opportunity to affiliate, but they didn’t want to lose their identity. The Methodist church didn’t want to join the Baptist church, whatever it might be … so there’s still opportunities out there.

Big-picture, it appears to be a boom time for life plan communities, but there are also rumblings that a recession is on the way. What are you anticipating the climate to be like in the years ahead?

I think it’s a robust time for life plan communities. And while life plan communities are not recession proof, by any means, I think that there’s still the supply and demand question and there will still be seniors that are affluent enough, even if there’s a dip in their investment income or their portfolio, to afford the product.

I think the last time we went through [a downturn], the housing values were so dramatically impacted, people couldn’t sell their homes to move in. That’s always a concern, in any recession. So, you hear tidbits on what the depth of the recession might be, and hear things about housing values kind of remaining flat, more than what I’ll call the dip that some markets like Las Vegas and Phoenix had back in 2007 and 2008.

I think an issue to address is probably eight to 10 years out. That’s when the boomers really start considering a senior living community. I will say we’ve gotten a little hysterical about the boomers and meeting their needs, because they’re not moving in for 10 years. [Then], there’s going to be a burst of home sales with not enough potential buyers. So, millennials are living differently, the next generations are living differently, there may not be the need for the house in the suburb to raise my family. So, 10 years out, I think we’re going to have an issue with individuals who want to retire and move to senior living, and where’s the market to buy their homes?

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