Home Care Offers Senior Living Providers Promising Growth
For senior living providers looking to grow their service offerings, home care has often been a viable sector to execute their expansion plans. But there are different schools of thought on how to branch into the space depending on the organization.
The dynamic health care landscape is providing the momentum for senior living providers to grow their businesses into home-based care, said Lisa McCracken, senior vice president of senior living finance research and development for Ziegler.
“As reimbursement parameters change and partners look for high-quality, less costly models of care, home-based alternatives rise up as more viable alternatives than in years past,” McCracken says.
Ziegler is a specialty investment bank serving the senior living, health care, education and religion sectors. Focused primarily on the not-for-profit senior living sector, McCracken notes that the company sees non-profit providers growing into home care in two ways.
“We observe that many not-for-profit senior living organizations who are committing resources to grow home-based services are aggressively forming joint ventures with other providers or existing home health and home care agencies, or are acquiring other established agencies,” McCracken says.
This year has already been marked by several joint venture partnerships between both for-profit and non-profit senior living and home health providers.
In January, LCS and CareSouth announced the completion of such a partnership, while more recently, non-profit Presbyterian Villages of Michigan and for-profit Homestead Home Health Care Inc. saw a win-win opportunity in forming a similar joint venture.
One such provider that recently expanded its home care offerings via acquisition is Springpoint Senior Living, New Jersey’s largest non-profit provider of senior housing and care services. The company commands six continuing care retirement communities (CCRCs), 18 affordable housing communities as well as home care services.
In March, the organization expanded its home care offerings even further with the acquisition of Senior Care Management, a privately-held home care company based in Ewing, N.J. The services the company provides are typically non-Medicare home care, including help with bathing, dressing, meal preparation, household management, medication monitoring and errands.
Combined with Springpoint’s current home care division, Springpoint at Home, the addition of Senior Care Management increases staff to more than 150 members serving more than 100 clients in New Jersey. As a result, anticipated revenues are projected to be nearly $5 million annually.
The addition of Senior Care Management, which primarily served New Jersey’s Mercer County along with parts of Middlesex and Somerset counties, gives Springpoint the opportunity to extend beyond its walls—a growing trend among CCRCs as a way to reach non-campus residents living in the neighboring community.
This “beyond walls” approach has been more characteristic of CCRCs than traditional senior living providers of assisted and independent living properties.
“In the CCRC space, we are always reaching out to people within a 10 mile radius of any of our communities,” Springpoint President and CEO Gary Puma tells SHN. “It’s an expansion of our brand into the community and a touchpoint about Springpoint Senior Living.”
For CCRCs, expanding into home care also makes “mission sense,” says McCracken.
“Not-for-profit providers have demonstrated sophistication in continuum-of-care services and senior housing options,” she says. “Expanding beyond bricks and mortar is an extension of that continuum, and in turn, a further expansion of mission.”
The continuum of care is the most defining feature of CCRCs, and it’s also what positions these communities better than other senior living providers when it comes to expanding into other service lines.
Whether CCRCs are known for their sprawling suburban campuses or their city dwelling high-rises, no one can deny the size of these communities. And it’s their size that gives CCRCs an advantage in growing their operations.
“Scale is an important factor in the success of home health and home care services, and the quicker providers can achieve these economies of scale, the better,” says McCracken.
A system that already has the infrastructure in place can move more easily into a new business line like home care versus single standalone communities, says Puma.
“Systems are going to be actively involved in home health acquisitions or development moving forward,” he says. “It just makes sense.”
Although expanding into home care organically may be a more time consuming strategy than growth via acquisition, it is not entirely out of the question.
Right place, right time
In the 116 years that Chicagoland Methodist Senior Services (CMSS) has served older adults, it didn’t have a home care program until 1997.
That was before Tricia Mullin, who serves as director of CMSS’s Covenant Home of Chicago supportive living facility, wrote a letter to the organization’s president and effectively launched CMSS’s private-duty home care program.
“The timing was right because the Board had been talking about getting into community programming and they recognized that a shift was happening,” said Mullin, who notes that at the time, CMSS only operated two low-income senior apartments along with its flagship Wesley Place nursing center.
Back then, the home care landscape was very different from what it is today, mostly because there were not as many for-profit franchises in the sector as there are today, she said.
“Being able to start it [home care] organically was terrific timing then,” said Mullin. “In the 2000s, home care just exploded. To contemplate starting to organize that program today is a little more daunting.”
Within the first decade of the millennia alone, there were approximately 12 million Americans receiving home care from more than 33,000 providers as of 2008, including Medicare-certified home health and hospice agencies as well as non-Medicare agencies, according to data collected by the National Association for Home Care & Hospice.
In Illinois alone, Mullin notes there are more than 600 licensed providers of home care services, of which only about a handful are non-profits. On any given day, CMSS serves between 50-60 clients a day.
For senior living providers looking to grow into home care organically, one of their main challenges will be having the ability to devote significant financial resources to these efforts, including hiring the expertise needed to effectively grow home-based service lines, says Ziegler’s McCracken.
Mullin can attest to that firsthand.
“The challenge from the gate is how do you start a program with the right manpower?” she says. “You have to put out ‘X’ amount of money to start any program and you can line up all of your caregivers, but if you don’t have any clients, caregivers aren’t going to stay with you.”
Armed with a phone and a desk, it was the backing of a larger organization whose reputation exceeded a century of care that provided the solid foundation from which to launch CMSS’s home care program.
Having the necessary infrastructure in place is the key to supporting any type of service expansion, not just home care. And for non-profits, especially those in the CCRC space serving a vast continuum of care, their reputations also carry weight for their prospects of success.
“The value of the not-for-profit brand is significant in many communities, and not-for-profit providers can build upon their years of success in new and different ways moving forward,” says McCracken.
Written by Jason Oliva