5 Ways Lifesprk’s Tealwood Acquisition Could Drive Senior Living Transformation

The senior living industry appears to be recovering from the Covid-19 pandemic, judging from positive occupancy trends reported by public companies over the last two weeks.

The inflection in occupancy is a relief, but I’ve been giving even more thought to the news that Lifesprk, a company that provides value-based care largely through home- and community-based services, is acquiring Tealwood Senior Living.

I think this transaction shows that the industry is not only rebounding — it’s transforming.


The Lifesprk deal could indicate that acquisitions of providers by population health companies and insurers, up to now mostly a theoretical possibility, are about to become more commonplace.

And if the transaction lives up to the expectations of Lifesprk Founder and CEO Joel Theisen and his team — including senior housing and care visionary Dr. Bill Thomas — it could create the template for a new operational model of senior living that is more integrated across the continuum of providers and payers, while also challenging the typical way that real estate-based investors view value creation in the sector.

Potential for transformation

Founded in 2004, Lifesprk’s model is rooted in home- and community-based services; its clients are assigned a registered nurse “life care manager,” who acts as a coordinator to help older adults tap into the company’s various offerings, such as primary care; home health; hospital at home; transportation; hospice; programs to address social determinants of health — and now, senior living.


Lifesprk contracts with health systems and payers, such as Medicare Advantage plans, assuming financial risk and reward for driving better outcomes — and lower costs — for their patient populations.

Going forward, Lifesprk Senior Living will test several of the key assumptions about how senior living can function as part of a larger population health company — and, at least on paper, I believe that the model could prove successful in addressing some of the key shortcomings and challenges in senior living today, evolving the product for the future.

1. Enhance consumer appeal

The consumer of tomorrow will not be content with the prevalent senior living product of today, many industry leaders believe. And even the current product has not been widely embraced; penetration rates are only about 9% at best, “if you squint really hard at the data,” Discovery Senior Living CEO Richard Hutchinson recently said.

One consistent pain point for consumers is that despite paying high monthly rates, family members or even residents themselves are still doing a lot of work in coordinating their own care and services, ATI Advisory Anne Tumlinson routinely points out. She has a window into the consumer landscape through her Daughterhood initiative.

The Lifesprk model addresses this issue by assigning residents with life care managers, and maintaining an extensive network of service providers. Short of surgery or an extended hospital stay, there will be almost no reason why a resident would have to leave the senior living community for care, Theisen told me.

2. Affordability

Serving middle-market consumers is a major challenge — and opportunity — for senior living. By controlling the health care dollar, Theisen believes that Lifesprk will be able to drive affordability without compromising quality of care.

Other leaders in the senior living industry have made a similar case, usually focusing on the potential for Medicare Advantage to play a role in a middle-market product. With MA plans gaining more flexibility to offer benefits related to chronic care management and other services that are common in senior living, there’s the potential for residents to pay for rent and some care out of pocket while having other services paid for through an MA plan.

Theisen thinks this framework could apply not only to Medicare Advantage but other payment sources, including Medicaid. There are signs that the Biden administration could broaden Medicaid benefits, perhaps expanding the potential for assisted living coverage.

Furthermore, Lifesprk is one of just a few direct contracting entities (DCEs) in a new payment model rolled out by the Centers for Medicare & Medicaid Services (CMS) in 2019. Under this program, Lifesprk can receive capitation payments to provide its services to Medicare fee-for-service beneficiaries, with upside and downside financial risk.

“We think with population health and being at global risk, we can use some of that money — I hope, in the future — to actually help fund housing,” Theisen said.

So, Lifesprk Senior Living could potentially have what Theisen terms a payer-agnostic model, in which residents are all receiving similar services and benefits even if they are enrolled in various MA plans, traditional Medicare or Medicaid, and paying some expense out of pocket.

“We think we can use both sides of a person’s wallet, their insurance or their Medicare/Medicaid benefit as well as their private pay, and put those together under one experience versus one butchering the other,” he said.

3. Aligns with the rise of health, wellness

Even before the Covid-19 pandemic, “wellness” was one of the hottest concepts in senior living. Providers such as Watermark Retirement — which is pursuing a “precision wellness” model — are staking their future on this concept, which meets consumer desires for engaging and healthy lifestyles while also driving population health goals such as reducing hospital use.

Lifesprk’s model dovetails with this trend. The company places a premium on knowing and supporting older adults’ long-term lifestyle goals, and is leveraging technology and its health care service capabilities to help achieve those goals. For example, the company is developing an “electronic life record” that will record not only medical but lifestyle-related information.

“What do they hope for, how do we get them reengaged in not only the building, but outside the building — that whole experience is really what we’re after,” Theisen said.

4. Drives capital structure changes

There are several reasons why insurers and population health managers have not been more acquisitive in senior living, but Theisen and Tealwood Principal and President Howie Groff both point to one major factor: the role of real estate.

“Why hasn’t it happened before? Because these REITs and all these real estate people are making tons of money,” Theisen said. “They haven’t really been put into a position to have to reinvent, because they’ve been making really, really good returns on the enterprise value of their real estate.”

While it’s true that real estate investment returns have been high in senior living, according to NCREIF data, capital structures were under pressure pre-pandemic. Oversupply and other headwinds put some triple-net leases underwater, and traditional management contracts were also under fire from some quarters. Meanwhile, private equity ownership of senior living and care companies recently has faced blistering criticism from federal lawmakers.

So, there is a need to refine capital structures and arguably more pressure than in the past to innovate. Theisen acknowledges that REIT leaders are smart and he predicts that they and other ownership groups will get on board with population health plays and find new structures to maximize value.

“I think they need to get on board or we’re going to eat their lunch, because our value proposition is going to be so much better — hello, Blockbuster,” Theisen said. “The real estate REITs don’t understand total cost of care and medical loss ratio and all the things that go along with it, but they’re going to figure that out.”

Some REITs have taken steps in this direction. Welltower (NYSE: WELL) is one example, with its joint venture acquisition of HCR ManorCare with health system ProMedica.

Private equity investors also often have lumped senior housing into their real estate businesses, even if they understand the operational intensity of the product. But look for more PE groups to start backing innovative models and driving value in new ways — with Formation Capital being one example.

In a recent interview, Formation Executive Chairman Arnie Whitman told me about the firm’s new strategy, which bears several similarities to the Lifesprk model. He and his partners in a new fund are aiming to create expansive senior housing and services locations that blend housing with lifestyle amenities and health care services. Payment for some of those services would be covered by partnered Medicare Advantage insurers.

“It’s an approach where we’re leaning into a little bit different view of where value gets created, within the walls and outside the walls of senior living,” Whitman said.

5. Reframing the home care ‘threat’

At-home care providers — both Medicare-certified and private-duty agencies — have seen demand boom during Covid-19, and enormous amounts of capital are flooding into that sector.

Senior living provider executives often cite home care as their major competition, but Groff is dismissive of this viewpoint.

“A decade ago, I was chair of NCAL [National Center for Assisted Living], and back then the whole discussion was, the assisted living [sector] is taking all of our rent and taking all the residents out of the nursing homes, and then assisted living said home health is taking everybody out of out of our assisted living,” he observed. “You can be insane and have your foot in both camps and be successful at it.”

As I observed recently, the lines are blurring between senior living and home care, and Lifesprk was interested in acquiring Tealwood precisely because Theisen and his team view senior living communities as a home- and community-based setting. In other words, senior living providers are right to be thinking about how to address consumer demand for at-home care, but jealously trying to protect their market share may not be a wise move.

Instead, senior living providers should emphasize that they are HCBS settings, while also finding ways to extend their services beyond the walls of their buildings.

For Theisen, the whole debate about senior living versus home care is basically a distraction from the bigger issue, which is innovating to better serve the massive aging population.

“The acute care is worried about the post-acute care, the post-acute care is really worried about the home care, and who knows what home care is worried about, I don’t know, but this is ridiculous,” he said. “I mean, holy mackerel, there are so many seniors, and there’s so much need to do it better.”

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