Brookdale’s ‘HealthPlus’ Model Achieves Value-Based Care Goals, Wider Rollout Coming

Brookdale Senior Living (NYSE: BKD) is building momentum for future growth in part by expanding on a model that emphasizes technology and care coordination, and supports the goals of value-based care.

The growth of this model — dubbed Brookdale HealthPlus — was among the first topics that CEO Cindy Baier brought up during the Brentwood, Tennessee-based provider’s first quarter 2023 earnings call on Tuesday.

As the company previously forecast, the quarterly financial results were strong, including resident rate revenue increases of 12% in the first quarter from 1Q22, a sign of strong move-ins despite rental rate increases put in place at the beginning of the year.


Brookdale’s leaders also detailed other recent moves meant to strengthen the company’s financial position, including renegotiated leases with Welltower (NYSE: WELL), the sale of its last entrance-fee community, and its previously announced decision to exit leases with LTC Properties (NYSE: LTC).

Brookdale HealthPlus expanding

Building on the promising start to the year, Brookdale will continue its rollout of Brookdale HealthPlus, a program aimed at promoting health and wellness across its senior living communities with a goal of extending resident length of stay and health outcomes.

In the communities in which the program is already operational, Baier said Brookdale saw higher resident retention and improved health outcomes compared to residents who did not live within a Brookdale community. In the first quarter, Brookdale increased the rollout of HealthPlus from 16 communities to 31, and Baier said the rollout would expand to 18 additional communities before the end of the second quarter.


“I see tremendous opportunity from Brookdale HealthPlus,” Baier said. “I’m optimistic that we will produce favorable outcomes for residents, associates and shareholders.”

These insights appear to give a glimpse at just how Brookdale is building its senior living model that may support the goals of value-based care, something that may have reached a ‘tipping point’ in the industry as more operators are innovating on care to realize revenue growth.

Value-based health care models tie payment to outcomes. And while senior living is predominantly a private-pay industry, providers increasingly see it as a strategic imperative to have a value-based care strategy. These factors include the growth of Medicare Advantage as a payer for certain services within senior living, and the recognition of how senior living communities can help control costs and drive health care results for vulnerable and high-cost populations — with large payers and health systems also recognizing this fact.

The Brookdale HealthPlus program is not billed separately for residents, and adds to each community’s value proposition, Baier said. The model allows communities to “increase their health spans” which will lead to increased length of stay and attracts more residents.

“That really helps us drive revenue growth and I think that’s really attractive,” Baier said. “Now if you think about the transition to value-based care, we’ve demonstrated that our outcomes are better than residents who live outside of Brookdale communities.”

The program has led to fewer emergency department visits, hospitalizations and urgent care appointments among residents at participating communities.

“That will create value for the health care system overall,” Baier said. “We’re still working on how we will capture more of that value for our shareholders.”

Additional communities can expect to see a rollout of the program in 2024 and beyond, Baier said. Previously, she has spoken of the company’s interest and intentions to play a larger role in the value-based care ecosystem, and has made moves — including the large home health deal with hospital giant HCA in 2021 — that raised the potential for greater integration with Brookdale and providers across the continuum.

Recovery by the numbers

Same-store senior housing revenue per available room (RevPAR) was up 13.1% in the Q123 period and same-store revenue per occupied room (RevPOR) increased 8.5%. Compared to the same period last year, Brookdale reported a 13.1% increase in RevPAR between 1Q22 and 1Q23, and an increase in RevPOR of 8.5%.

“First quarter move-in volume remains very strong, outperforming both last year and our pre-pandemic history,” Baier said. “…We are emphasizing a growth mindset with our executive directors and field leaders.”

The increase in RevPOR was primarily a result of in-place resident rental rate increases, something Baier called “appropriate” and that translated into strong first quarter results. Operating margin for the company’s senior housing portfolio of 641 communities consisting of 51,165 units was 25.8% in the first quarter compared to 19.8% in 4Q22, an increase of 6% in that time.

Weighted average occupancy for Brookdale’s senior housing portfolio was 76.5% in the first quarter, a 290-basis point decrease from the fourth quarter of last year when the company reported 77. 3% weighted average occupancy. Company leaders pointed to the return of more normal seasonality as a contributing factor.

“We’re committed to winning locally and leveraging the benefits of scale to drive revenue growth and improved financial performance,” Baier said, adding that she felt there was “significant opportunity” for top-line growth and margin expansion.

In terms of transactions in the first quarter, Brookdale completed the sale of its one remaining entrance fee community, a 306-unit property, earlier this month and received cash proceeds of $12.3 million.

Brookdale also amended its existing triple net lease arrangements with Toledo, Ohio-based real estate investment trust (REIT) Welltower (NYSE: WELL) for a 74-community portfolio. Brookdale extended the maturity of one lease involving 39 communities and amended lease arrangements with Welltower for 69 of the communities that will expire in 2032. Welltower also agreed to make $17 million available to fund costs associated with capital expenditure projects for 69 of the communities.

RBC Capital Markets Analyst Ben Hendrix noted that the changes help Brookdale by “offering ample cushion versus the prior threshold and significantly de-risking the balance sheet.”

LTC lease exit detailed, guidance for 2Q

In February, Brookdale announced it would not renew a lease with LTC Properties (NYSE: LTC) for a 35-community portfolio, less than 3% of Brookdale’s total unit count.

Extending the lease would not benefit Brookdale, Baier said, and the company will operate the communities until Dec. 31, 2023. The move to exit the LTC lease will have “no material impact” on Brookdale’s 2023 financials, Baier confirmed.

Brookdale expects RevPar year-over-year growth of 11.5% and 12%, with an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) between $72 and $77 million. The company expects up to an additional $20 million in remediation costs after natural disasters including Hurricane Ian and Winter Storm Elliot.

“With a strong leadership team and a passionate community of associates, we are confident that our company will thrive and end the year even stronger than we started, achieving long term success in the years to come,” Baier said.

Brookdale shares ended the regular trading day at $3.95 per share, down 0.88%.

Companies featured in this article: