Like senior living providers across the nation, Belmont Village has been tested by the coronavirus pandemic. Yet, despite increased costs and operational complexities, Covid-19 is also spurring innovation and could present growth opportunities for the Houston-based provider, according to President Mercedes Kerr.
After a decade with Toledo, Ohio-based real estate investment trust Welltower (NYSE: WELL), Kerr shifted to the operations side of senior living by joining Belmont Village last year. Needless to say, she was not expecting her first year on the job to be defined by a global health crisis.
“I could have never imagined, when I decided to join Belmont Village, what we were about to all go through,” she said Thursday on a webinar organized by the National Investment Center for Seniors Housing & Care (NIC).
Still, Covid-19 has not upended all of Belmont Village’s plans. Its development pipeline remains active and projects are proceeding, Kerr said. And she remains focused on how Belmont Village can adapt to an evolving market, including through creative responses to Covid-19 that could continue to pay off well after the pandemic ends.
‘Crisis breeds innovation’
In terms of its operational model, Belmont Village has implemented a variety of Covid-19 response protocols across its portfolio of 31 communities in seven states.
Many of these changes — such as limiting non-essential visitors and shifting to virtual tours — have already become the new normal across the industry. Belmont Village did go further than some other providers by halting all move-ins for a period of time. Now, new residents are starting to move in, mainly in markets where Covid-19 infections are not as widespread, Kerr said.
In another now-familiar scenario, Belmont Village struggled at first to find and purchase personal protective equipment (PPE), before finding more reliable ways to access the supply chain. PPE pricing still presents a sticking point, as costs are “all over the map,” but Kerr estimated $45 a day as the cost for one caregiver to be in full PPE.
PPE is just one of the additional expenses being incurred by Belmont Village and other providers when a resident is diagnosed with Covid-19. Having positive cases in a community results in about a three-fold increase in expenses for Belmont Village, Kerr said.
Covid-19 could result in permanent changes to senior living cost structures, she acknowledged. Providers will likely want to have larger stores of PPE on hand, for example, which would lead to increased expenses going forward. However, she believes that these costs will come down from their current levels as operators are able to purchase further in advance. And, she anticipates that in spite of occupancy erosion, Belmont Village and other providers will hold the line on rental rates during Covid-19, helping to support higher expenses.
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Belmont Village is also getting creative to find new, more efficient ways of operating. Many of these changes should also endure after the immediate crisis, and help keep costs in check while enhancing care and services for residents going forward.
“Crisis breeds innovation,” Kerr said.
She singled out telemedicine as one example. Covid-19 has spurred several telemedicine initiatives at Belmont Village. Given that health care providers were interested in “meeting their patients where they live” even before the coronavirus crisis hit, Kerr thinks telemedicine will have legs well into the future.
Other innovations are coming from Belmont Village’s close collaboration with its various partners before and during the pandemic. The organization has worked with the University of California, San Francisco on infection control protocols; with the University of Southern California on “leadership and longevity” matters; with Baptist Health South Florida on wellness programs; and with Vanderbilt University on memory care research.
In particular, Kerr is interested in addressing social determinants of health in order to promote wellness and quality of life, which she views as a key value proposition of senior living and a way to build on the sector’s consumer appeal coming out of Covid-19.
Leveraging experience, relationships
In addition to finding new operational practices, Belmont Village is also continuing to pursue innovative development projects in the midst of the pandemic.
The provider last year announced a first-of-its-kind development partnership with Baptist Health to build senior living communities in Florida with a strong wellness component. Belmont Village is also known for finding creative ways to build in dense urban environments, and recently announced such a project in Los Angeles, which involves converting a former church.
Covid-19 has not thrown a wrench in these endeavors, Kerr said, noting that the provider has longstanding relationships with patient capital partners such as Welltower and private equity firm Harrison Street.
Covid-19 has disrupted capital market activity, but senior living providers like Belmont Village are still able to secure financing in this environment thanks to its experience and existing relationships, according to Kerr.
“I always used to say, ‘Not everybody’s money is equally as green,’” she said. “ … What I meant by that is that you can look at cost of capital and some of those metrics when trying to decide who to partner with, but at the end of the day, what might matter most is what happens in a time of crisis such as this.”
Belmont Village’s experience and connections will not only help the company weather Covid-19, but could also create opportunities as the competitive landscape shifts. The last several years have seen a flood of new capital into the space, but the complexities of operating in the current environment will — and should — deter new entrants, Kerr said.
“This is not a time, I believe, that those who are not well-versed in this space should be attempting to come in,” she said. “And I don’t believe it’s a time when they will be financed by a lot of capital providers.”
While bullish on current developments and the potential for future opportunities, Kerr also emphasized the many challenges and uncertainties related to the coronavirus crisis. Covid-19 testing in particular is a thorny issue, she noted. Belmont Village does have access to test kits, but there are still major questions to be resolved, including how frequently tests can realistically be administered, given logistical and cost considerations.
Still, she praised the performance of the company’s staff — particularly health care workers — and noted that the vast majority of residents and family members have been supportive and appreciative of Belmont Village’s efforts.
“We have been very fortunate,” she said.