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Chip Gabriel shared some news with me during Senior Housing News’ recent WELLNESS event: The venture he’s undertaking with Formation Capital Executive Chairman Arnie Whitman and other partners recently executed its first acquisition, purchasing a 120-bed assisted living/memory care community in Tennessee.
And Gabriel himself is stepping back from the Generations senior living management company to focus on the new initiatives with Whitman. He will continue to lead two large development projects with Generations, and the management company will continue to be led by CEO Melody Gabriel.
“I’m very proud of Generations and know that Melody and my two sons will continue that 80-year legacy it has in senior housing,” he said.
After the WELLNESS event, I caught up with Whitman to learn more about what he, Gabriel and their other partners and colleagues are undertaking.
While full details of the Tennessee acquisition won’t be public for another month or so, Whitman shared more information with me about the deal, the vision he and his partners are pursuing, and the progress they’ve made since first announcing their intentions in 2021.
In this week’s exclusive, members-only SHN+ Update, I share more details about their endeavor and offer my analysis and takeaways, including:
- Alignment of interests is becoming more critical and complex as the standard OpCo/PropCo model evolves
- The nature of value creation in senior living is shifting
- An emerging “hub-and-spoke” model could help alleviate a huge pain point faced by older adults in the United States
Beyond OpCo/PropCo
Ever since Whitman first joined the senior living sector in the early 1980s, the real estate and operations components of the business have commonly been divided between operating companies (OpCos) and property companies (PropCos). Now, he believes the status quo is changing.
“The world I came from, which was OpCo/PropCo, now goes OpCo/PropCo/health care,” he told me last week.
Of course, health care has always been provided within the walls of senior living communities. But Whitman believes that the health care component of senior living needs to become more sophisticated, involving new and different clinical, technology and payment partners than in the past.
This is a key facet of the model that he, Gabriel and their partners are putting together, with the goal of creating a “proof of concept” in their newly acquired community.
From a tech perspective, they’ve been “highly involved” in SkyPoint Cloud to create the infrastructure to support a data ecosystem, and they’ve capitalized a company called Centered Care. Centered Care is being led by Joelle Poe, whose resume includes roles with health plan providers Cambia and Alignment Healthcare, where she led product development and tech integration.
“She has product development, technology, clinical and senior living experience — it’s a very unique blend of experience,” Whitman said. “And so she will be the heart and soul of building Centered Care as a business.”
The goal of having these and other technology platforms is to gain greater insight into the senior living resident population, in order to facilitate proactive and personalized programs and interventions to foster wellness and prevent expensive care episodes. The tech also is meant to gather data about how the senior living community is saving Medicare Advantage plans money, and enable the senior living venture to go at-risk in payment models and/or negotiate with payers to gain fair financial upside.
Already, they are in talks with a “payvider,” Whitman said, and he and his partners are contemplating how to deliver more robust care within the community’s walls to prevent unnecessary hospitalizations or other expensive episodes. And they are wary about ceding too much ground to other entities.
For example, Whitman cautioned about physician practices that are coming to senior living providers and offering their services on-site in communities at no charge, promising to lower hospitalization rates and increase length of stay. These groups are intent on gaining as many patients as possible so that they can approach payers with data and go at-risk to gain substantial financial upside in value-based payment models, with the senior living provider cut out of those arrangements.
“What I’m intent on doing is bringing the providers in, in a way that ultimately they will be partners in the creation of value,” Whitman said.
To achieve this goal, Whitman and his partners have created an entity they are calling SLTC.
“SLTC is our branding of Senior Living Transformation Center, Senior Living Transformation Company, Senior Living Transformation Capital — any of the above,” he said.
SLTC will serve as an “orchestrator,” he explained, bringing together all the components to drive the new value-based care paradigm in senior living. Ultimately, SLTC aims to partner with larger, multi-facility providers to more rapidly scale the model that they are about to launch and refine in the Tennessee community and in subsequent projects.
The premise of having an “orchestrator” to aid providers in adopting value-based care makes sense to me, given all the moving parts involved. But Whitman’s description of SLTC also drove home how important and increasingly difficult alignment is becoming among all the parties involved in a senior living venture.
Already, there has been much hand-wringing in recent years about the lack of alignment between owners and operators in the comparatively simple OpCo/PropCo model. Now add the health care layer that Whitman describes, with payers and additional providers in the mix, as well as organizations like SLTC, and achieving alignment becomes an even more confounding puzzle to solve.
In terms of some of the players involved in this first property involving SLTC, a large REIT is involved in the deal, as is a “young operator with deep experience” that “buys in 100% with what we’re doing.” If and when SLTC expands and seeks to work with more well-established and large-scale operators, in locations with particular managed care dynamics — given that various Medicare Advantage providers control market share in different areas across the country — I’ll be interested to see how adaptable their model is, and how the “orchestrator” is able to coordinate various combinations of players.
Getting the financial incentives right will of course be crucial to achieving alignment across the various parties involved, but I believe that a mindset shift is also necessary among some leaders and organizations in senior living. They must recognize that the typical way of doing business will not be viable in the future, and to succeed, they have no choice but to be more radically collaborative than in the past.
This is because every value-based care play involves a whole matrix of organizations. We’ve seen provider consortiums like Perennial and an effort in the Twin Cities; collaborations among REITs, payviders and operators; the actual acquisition of a senior living provider by value-based care company Lifespark; and, most recently, a new initiative of United Church Homes, Metta Healthcare and CareSource to “build and deploy integrated value-based care arrangements for high-acuity populations.”
As more senior living companies begin to engage in value-based care in deeper ways, they surely also will be involved in these types of more complex structures. Creating meaningful alignment might demand that leaders check their own egos, take a wider purview in strategic planning, and understand the new drivers of value creation in senior living.
“We believe there’s value in data, there’s value in integrating clinical models into senior living, we believe there’s value in [going at] risk, we also believe there’s value in real estate,” Whitman said. “What we hope to be able to do is create a model where all of the stakeholders — so, real estate owners, the providers of that health care piece, and the payers, all participate in the creation of value and that we’re all motivated to align ourselves in a way … that’s a partnership.”
The hub-and-spoke model
One other important aspect of the SLTC vision is to create a hub-and-spoke system, in which senior living communities are hubs of programming, activities and care for older adults who are living nearby but not residents of the building or campus itself.
In this way, SLTC and its partners can broaden their reach and affect a larger proportion of beneficiaries covered by Medicare Advantage and other managed care models. After all, MA insurers want to enroll as many members as possible, and work with organizations that can help manage their beneficiary populations at scale.
And I think the hub-and-spoke model also holds the potential to address a major pain point for older adults: the lack of care navigation. It’s a problem that Bob Kramer and his colleagues at Nexus Insights highlighted in a report released last fall, which described older adults going through a “terrifying and lonely journey filled with dead ends and hidden entrances or exits” as they struggle amid a “maze” of long-term services and supports.
The Nexus Insights authors proposed a national network of “navigation hubs” as one solution. These hubs would be places for older adults to go, where they would receive assistance in understanding and accessing their options for care and services.
I’m doubtful that senior living providers, or an organization like SLTC, can create a full-blown national infrastructure of care hubs. But I’m also doubtful that the public sector will undertake a coordinated effort to build such an infrastructure. More likely, I anticipate a patchwork of hubs serving their local communities, run by a variety of organizations, including insurers and “orchestrators.”
It’s at least worth noting that SLTC is not alone in envisioning a hub-and-spoke network. Other early movers in the effort to integrate senior living within value-based care also are taking steps to broaden their reach into their markets and turn senior living communities into hubs for older adults. Juniper Communities — one of the founding Perennial Consortium members — is experimenting with offering memberships to its Catalyst program to people living close to select Juniper properties. Such memberships would provide access to a range of offerings meant to extend older adults’ “wellspan.”
“Its goal is very simple: to promote what we call ‘wellspan,’ which is adding quality to the additional years that we want in our lives,” Juniper Communities CEO Katzmann told SHN about a year ago.
It is difficult for me to envision a 120-bed AL/memory care building — like the one Whitman’s team just acquired — becoming an appealing hub for more active, independent older adults. It’s easier for me to imagine a large, highly amenitized community or campus becoming a hub, and Whitman says that a 300- to 400-unit property would indeed facilitate the SLTC model.
“You have a larger population, you get a lot more data, a lot more insights,” he said.
He is open to investing in other properties in the same market as the recently acquired AL/memory care community, to create greater density. But in the meantime, the smaller-scale building will allow the venture to take “baby steps.”
Still, the “vision is broad,” Whitman said — and he believes that senior living leaders generally must be thinking big, given the changes that are continuing to reshape health care in the United States.
“This is a transformational period,” he said.
