Juniper Communities has set a goal to increase care revenue by three percentage points on a company-wide basis in 2023. Welltower (NYSE: WELL) worked with one of its operators to drive a 74% increase in care revenues between Q4 2021 and Q4 2022.
As these examples demonstrate, companies are getting creative in finding new ways to maximize care revenue to boost the bottom line as the senior living industry faces sustained headwinds of margin compression and labor pressures.
It’s no secret there’s been a paradigm shift toward value-based care in recent years, and a growing number of operators understand they must evolve to capture as much revenue as possible to combat rising expenses. Some providers are getting creative through efforts based on membership or tied to wellness, but there’s an area within the industry some believe is a continued blindspot: properly capturing care revenue.
If they live in a senior housing community long enough, a good number of residents are likely to need an escalating number of care services. But senior living operators aren’t always paid as much as they would like to offer or coordinate these services.
At the same time, residents are arriving in communities with more needs for assistance, and staffing shortages are forcing senior living companies to do more with less. This has prompted operators to adapt operating models and business strategies to better capture care revenue amid a changing senior living resident customer profile.
From integrating new technology to ensure accurate resident health data, to establishing programs that enhance Medicare Advantage (MA) plans, operators are creating new revenue streams for resident care. For some operators, like Bloomfield, New Jersey-based Juniper Communities, doing so has resulted in a boost to the bottom line.
“We weren’t actually charging effectively for the type of people and the time that it takes to do things and we were able to increase our care revenue appropriately,” Juniper Communities CEO and Founder Lynne Katzmann told Senior Housing News. “We redid our whole system and it’s proving very valuable.”
Spurred on by that success, Juniper has set somewhat ambitious goals for more revenue in 2023. The company is not the only one aiming to do so. Other operators looking to maximize care revenue this year include Cogir USA and Lifespark Communities. And real estate investment trust Welltower (NYSE: WELL) is harnessing its newly developed operating platform to help its providers in these efforts.
Evolving health plans, optimizing care structures
In 2019, Juniper — along with Christian Living Communities and Ohio Living — formed the Perennial Consortium, an operator-owned MA network. At the outset, the companies’ goal was in part to maximize the revenue upside of MA. The move represented a sea change in the way operators were approaching maximizing care revenue across the senior living continuum.
Juniper coordinates and integrates care through a model called Connect4Life. Since its launch years ago, the program has helped Juniper improve workflows, wield new technology and better allocate staffing resources to keep residents healthier and happier.
“That has an impact on length of stay and care changes and the percentage of our revenue that comes from care-related services,” Katzmann said. “We think the Perennial Consortium and Connect4Life revolutionized how operators are able to access care revenue in new ways.”
But Connect4Life pre-dates the pandemic, and Katzmann now believes such models must include components of hospitality, engagement and wellness in what Katzmann termed “lifestyle management.”
Juniper has aimed to achieve that through its Catalyst membership program, which launched last year and focuses on resident “wellspan.” The operator also reshaped how staff interacted with its care assessment tools because they “didn’t capture everything that was going on now,” Katzmann said.
New resident care charge structures were put in place in 2022 after some communities were inaccurately not charging for certain care-related services. By tracking resident care changes and documenting accordingly, operators can more accurately bill residents for the care provided.
Care revenue makes up about 13% of Juniper’s overall revenue, Katzmann said. That percentage varies by community, with some having as much as 50% of revenue derived from care. In the remainder of 2023, Katzmann said Juniper aims for a three-percentage point gain on care revenue to bring that overall mark to 16% care-based revenue companywide.
“It’s an aggressive goal, but I do think we can do it,” she added.
Juniper is chasing that goal by looking more closely at ancillary charges, fine-tuning MA plan reimbursement and by gaining occupancy, Katzmann said. Given the new cost of senior living operations, Katzmann says margin compression is here to stay. That underscores the need for finding new ways to maximize care revenue in the meantime.
“The only way to mitigate it over the long-term is to think differently about revenues,” Katzmann said.
As promising as the prospect of more care revenue is, at the end of the day, Katzmann believes this is only “a short- to mid-term strategy,” for the industry that must evolve over time.
“We need to transition our product from a lifestyle product to an integrated hospitality, engagement and support product,” Katzmann said. “Long-term, we’ve got to change the product mix.”
Juniper isn’t the only operator adapting to a new cost landscape by looking for added revenue.
Leaders with Saint Louis Park, Minnesota-based Lifespark Senior Living Communities last year revamped the organization’s method for resident payment with an eye on charging a fair rate for services, according to Molly Toulouse, senior vice president of senior living.
“It requires that we have the correct price and the appropriate level in our charge structure so that we can both care for that person and ensure that we’re charging correctly for that level of care,” Toulouse said.
Thanks to the refocus on care revenue structures, Toulouse added Lifespark is able to audit its new system frequently to account for care-level changes. This relies on staff and more thorough training of clinical service teams.
“It’s important that everybody understands that concept and how critical it is that we have that appropriate level in place,” Toulouse said.
The change at Lifespark was due to rising acuity and rise in staffing costs. By having the new revenue structure in place for care, the company is now receiving additional care revenue while being able to offer competitive wages across its portfolio, Toulouse said.
Lifespark and Juniper are both big believers in the shift away from fee-for-service models and toward value-based care through efforts such as Juniper’s wellspan approach or Lifespark’s movement, eating, sleeping and healing (MESH) approach.
“There are revenue opportunities in [value-based care] yet to be tapped into,” Toulouse said. “The revenue opportunities are less about what we might be able to charge for care, but more about ensuring that we have strong occupancy.”
A larger shift to value-based care will ultimately help with turnover and retention, both factors that could help trim expenses, Toulouse added.
Data equals dollars
Some of the industry’s largest companies are also identifying care revenue gaps to boost the bottom line. The use of business analytics and data is playing an outsized role in those efforts.
Welltower (NYSE: WELL) earlier this year noted that care revenue in its portfolio of senior living communities was “underperforming” compared to its broader portfolio, and conducted a case study of one of its operators to dig into the issue.
In 2023, the Toledo, Ohio-based real estate investment trust (REIT) is wielding a data analytics platform that management has touted as helping the company’s partners improve operations. That is exactly what Welltower did in this case.
The REIT focused on enhancing the operator’s resident assessment tool to more accurately measure employee time spent on care, improving staff ability to use the assessment tool and more accurately recording changes in resident care needs.
Doing so ultimately resulted in a 74% increase in care revenue between the fourth quarter of 2021 and the fourth quarter last year, translating into a roughly $6.3 million increase for the operator.
To continue the trend, Welltower reported the operator in question now conducts biweekly reporting that identifies communities under the operator’s purview where revenue opportunities exist, the report states.
“Data-driven approach to service delivery lead to significant care revenue growth,” Welltower reported. “New metrics and processes ensure the sustainability and scalability of the efforts.”
Cogir USA, the U.S.-based subsidiary of Montreal, Canada-based real estate company Cogir Services, uses a point system in conjunction with an electronic health record (EHR) reporting system to track care services and revenue. Without operators tracking care levels of residents, they can’t confidently report accurate assessments of care revenue — and thus, can’t properly tweak it, according to CEO David Eskenazy.
“We look at care as its own department and we measure revenue based on acuity and costs,” Eskenazy said. “We have a separate profit and loss statement for the care department.”
By detailing care levels and tracking costs, operators can find ways to find those gaps in their revenue streams, he said.
“Operators better start paying attention to these costs in these departments because they are getting eaten alive,” Eskenazy said. “The reward for properly managing the care department is adding incrementally to the profit generated by a resident.”
By seeking MA licensing of communities and expanding care services, operators can help improve the senior living value proposition for prospective residents, Eskenazy said.
“It really helps the resident that doesn’t need care … they can be comforted by the fact that if they do need care, they can access it,” Eskenazy said.
Cogir has recently seen “double-digit” care revenue increases by properly capturing new areas of care that went unbilled, Eskenazy added.
Technology a pathway for care revenue
While operators are taking different approaches to capturing care revenue, new technology is helping to not only improve revenue, but also care.
By using the right EHR system, operators are able to track resident health data and more accurately bill for care services provided to residents, especially as a resident moves up the care continuum.
Justin Schram, co-founder of August Health, said capturing care revenue comes down to a “systems issue,” meaning that operators must take stock of their current data reporting and EHR systems in order to better find revenue loss areas.
August Health is a technology firm offering EHR reporting and other health-focused data tools in a cloud-based platform.
“You need to be able to create your assessment in a way that is easy to complete,” Schram said. “You need to have the systems in place that are reporting at the community level.”
He also emphasized the importance of health-related data in facilitating conversations with residents and their families regarding care-related costs, particularly as needs increase over time.
Yardi Senior Director Richard Nix said software integration to an operator’s EHR platform helps reduce gaps in resident assessments and improve an operator’s ability to get a holistic picture of a community’s resident care service lines and where care billing could improve.
Yardi is an EHR provider integrating accounting, resident billing and analytical reporting software for operators in senior living and beyond.
As operators move away from bundling care into overall resident rates, operators are now able to find more revenue opportunities in care services, Nix said.
“One of the biggest challenges to driving care revenue right now is that missed opportunity where there’s a change in condition and an operator is not capturing it,” Nix added. “Having any EHR that feeds into an accounting system really can streamline that process and from a revenue perspective you can shorten that cycle.”
Cogir, like most operators, relies on multiple technology partnerships to support care services. With data comes insights that can lead to better decision making across markets and implementation of specific plans to improve revenue at various communities, regardless of factors that may differ from one community to the next, Eskenazy said.
“These technologies are entering our world that really can help us a lot,” Eskenazy added. “The pandemic made it clear that residents need to have a health care answer to when they need health care.”
As operators continue to deal with the pandemic in the coming years, Katzmann said companies must interact differently with technology providers and seek to move in lockstep with them.
“Technology is an enabler for an operator,” Katzmann said. “Good technology enables an outcome.”
Technology and integration in a community is an “untapped” opportunity even today, Toulouse said, noting that management must consider integrating all of the tech partners active in a community to drive efficiency.
“The greatest opportunities we have is integration of those systems and software applications to help people better, and I don’t think we’re in a perfect spot at all,” Toulouse said, highlighting the reality that many operators have a large number of tech platforms within a single community to operate smoothly.
Integrated fall prevention systems, camera networks and wearable tech-equipped devices can easily equate to additional charges in care for an operator, Toulouse said.
“I think that’s where the greatest opportunities are going to lie,” she added.
Companies featured in this article:
August Health, Cogir USA, Juniper Communities, Lifespark, Welltower, Yardi
