Pandemic Prompts CCRCs To Diversify Services, Refocus On Value Prop to Consumers

Nearly seven months into the Covid-19 pandemic, continuing care retirement communities (CCRCs) are assessing their financial positions and operational practices, and are beginning to execute on longer-term strategies in response to new market conditions and consumer expectations.

For example, some CCRCs — also known as life plan communities — are expanding non-campus services and launching new segments during Covid-19, as a way to diversify revenue streams while meeting a potentially larger demand for services delivered to people in their own homes.

On campuses, providers are finding ways to normalize operations as best they can while waiting for a vaccine. The size of CCRC campuses affords providers better opportunity to implement and maintain social distancing guidelines, and provide a semblance of a pre-pandemic lifestyle in the form of smaller group activities and services, Kendal Chief Marketing Officer Colleen Ryan Mallon told Senior Housing News.

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The Kennett Square, Pennsylvania-based company oversees 13 affiliate CCRCs in its portfolio. Mallon believes that the resident populations within the affiliates allow for better social engagement between each other, and with staff.

“Living in a Kendal community is really no different than living in your own home in many ways,” she said. “[Residents] they know one another. They’re really able to stay engaged.”

Overall, CCRCs are well-positioned to rebound quickly once therapeutic treatments and vaccines for the coronavirus are available. Occupancy rates, particularly among independent living segments, have held up well, National Investment Center for Seniors Housing & Care (NIC) Chief Economist Beth Mace said last week at the Ziegler Senior Living Finance + Strategy Virtual Conference.

Consumer sentiment remains positive, and CCRC staffs have risen to the occasion, providing care to residents and showing loyalty to providers, Greystone Communities Co-CEO John Spooner said during the panel .

“If you ask 50 random people, ‘Why do you like living in a CCRC,’ 48 will say ‘It’s the staff,’” he said.

And, Spooner believes that the CCRC value proposition will be even more appealing to older adults as a result of Covid-19. CCRCs have always appealed to individuals who are thinking ahead to their future needs, and the pandemic has shown the value of having a built-in support network in times of crisis.

“The ‘be a planner’ message is probably more powerful than ever, since people are taking a little longer and considering at a much different level the processes of why they’d move in,” Spooner said.

Financial pressures

Like the industry as a whole, CCRCs have been hit with financial pressures – namely higher expenses and lower occupancy rates among higher care segments. Des Moines, Iowa-based LCS — the largest operator of CCRCs in the nation — estimated a financial hit of nearly $100 million in lost revenue and expense increases across its portfolio of 139 rental communities and CCRCs, President and CEO Joel Nelson told SHN.

Covenant Living Communities and Services estimates a $7 million spike in expenses during the pandemic, including paid time off for employees who contracted Covid-19, pay bonuses for front-line employees and health care workers, and additional PPE, President and CEO Terri Cunliffe told SHN. Additionally, Covenant reports nearly $5 million in lost revenue. The Skokie, Illinois-based nonprofit owns and operates 18 communities in nine states.

“Some of these impacts were offset from the financial support we received through government funding,” she said.

Kendal did not share financial impact numbers, but Mallon noted that 12 of its 13 affiliates received payroll protection plan funds, affiliates with skilled nursing wings received Medicaid provider relief through the CARES Act stimulus, and communities with assisted living cohorts filed for provider relief funds when the U.S. Department of Health and Human Services (HHS) expanded the fund to private-pay providers in September.

Testing continues to be a pressure point, from a capacity as well as an expense perspective. Clark Retirement Community, a nonprofit CCRC in Grand Rapids, Michigan, received a shipment of cheek swab testing kits from HHS, which have higher degrees of accuracy and faster turnaround times for results than the more common nasal swab tests. But at a cost of between $30 and $35 a pop, the expense accumulates over time, President and CEO Brian Pangle told SHN.

Clark Retirement’s finance and supply chain teams are casting a wide net to secure funding for the tests, researching grant opportunities and stimulus sources that are available. HHS’ shipment of the new Abbott Laboratories BINAX Now rapid antigen testing kits are another option.

“If we can get a test like the NBA bubble has today – at a cost that’s affordable – you could do immediate testing to get the results in just a few minutes,” Pangle said. “It will create a much safer environment, [and instill] more confidence with residents and families meeting and spending time with each other.”

Expanding other service lines

But despite the deep and ongoing financial impact of Covid-19, strong CCRC providers have been able to draw on cash reserves as well as the government support programs, according to analyses from credit rating agency Fitch. And CCRC providers are now taking steps to both regain revenue and build new service models for the future in light of the pandemic.

LCS, for example, is financially stable and on an upward trajectory as more communities accept move-ins, Nelson said. Covenant has pursued a variety of initiatives in the midst of the pandemic, including investments in workforce and technology — and, like some other CCRC providers, believes that its diversified service lines has been a strength to build on.

Covenant Living is looking at ways to strategically expand its home health and care and hospice segment, CovenantCare at Home, into new markets. Additionally, the company is introducing private duty nursing care in all of its communities, Cunliffe said.

The pandemic is opening opportunities for other CCRC operators to expand off-campus services such as home health, as more seniors delay move-ins until they and their families feel safe doing so. Others — such as Immanuel Lutheran — are investing in existing service lines or entering joint ventures with providers to launch new business arms.

Ohio Living realized growth in its home health and hospice segments, which have helped mitigate operational pressures on skilled nursing nursing wings across its 12 campuses, CEO Larry Gumina told SHN last month. The provider is also a new physicians services line.

Kendal’s home health arm, Kendal at Home, recently entered the Massachusetts market through its Lathrop Retirement Communities affiliates in Northhampton and Easthampton, with further plans to penetrate the greater Boston area.

Another program receiving renewed interest is Vitalize 360, a wellness-focused joint venture between Kendal and Hebrew Life Services that determines what individuals prioritize in their personal wellness, then applies coaching techniques to achieve those goals. The two companies are considering options to scale the program, which is offered to residents at Kendal affiliates, to a more economically diverse group of customers.

A few years ago, Clark Retirement’s board decided to diversify its business lines, via partnerships with other nonprofit providers. The company now owns minority stakes in hospice, home health and care management arms which have seen growth as the pandemic persists.

“They’re strengths for us, going forward,” Pangle said.

Permanent infection control changes

The coronavirus will lead to lasting changes in operations, notably infection control protocols.

CCRCs were able to leverage existing infection control plans used to respond to other outbreaks such as influenza and norovirus in their response to Covid-19, but there was still a scramble to stock up on masks and face shields, PPE and other safety equipment in the outbreak’s early weeks. As the industry settles into a management phase of the pandemic, front-line workers will continue to don safety equipment moving forward.

Additionally, sanitation and disinfection practices will increase in frequency. Combined with maintaining compliance with fluid guidelines from the Centers for Disease Control and Prevention (CDC), as well as state and local public health departments, will contribute to a permanent increase in expenses, Pangle said.

Moorings Park, a entrance-fee based CCRC in Naples, Florida, already had strict infection control procedures in place before the pandemic, Vice President Tom Mann told SHN. Moorings Park charges entrance fees ranging from $1.5 million to $5 million per resident, providing a financial foundation for health care and wellness-focused innovation that is incorporated into services.

Moorings Park’s services include a geriatric medicine partnership with Johns Hopkins University, as well as affiliations with the Mayo Clinic and NCH Healthcare System, a health system in Naples. These affiliations allowed Moorings Park to craft its infection control protocols, resulting in only one positive case across its campuses to date.

Those procedures have evolved as more information is gleaned about the virus. Moorings Park implemented spray guns for disinfecting hard surfaces. Staff undergoes refresher training on hand washing and sanitation procedures, as well as isolation scenarios in the event that a worker tests positive and is kept separated from the larger census.

Heightened infection control guidelines have the added benefit of reductions in other viral outbreaks, and will prove beneficial as flu season approaches. Masks will play an important role in controlling future outbreaks, Covid-19 or other.

“We’re hopeful that masks are actually going to help prevent the spread of the flu, as well,” Kendal’s Mallon said.

Providers are also emphasizing the importance of vaccinations as winter approaches, simply to eliminate influenza and other outbreaks when determining what makes residents ill in the future.

Until there is a vaccine in place and available for everyone, these procedures will remain in place for the foreseeable future.

“I think we’re looking at things for the next 24 months, for sure,” Pangle said.

But while there is no short-term solution to the pandemic, CCRCs’ good track record on resident safety should be a selling point to consumers, Spooner believes. Providers would do well to promote the positive stories about staff dedication and resident safety, and to share how communities have adapted to current challenges and plan to keep evolving in light of lessons learned.

“We have to be bold enough to suggest change to our residents, our prospects, and most likely, they’re ready to accept it,” he said.