At-home care providers aren’t the only organizations that have seen an uptick in business as a result of the health care system’s overarching shift to home. Adult day centers — especially those that offer a multitude of specialized services — have similarly hit a major boom period.
Propelled by an aging population, policymakers’ desire to reduce national health care spending and many of the same tailwinds that home-based care providers have experienced, the total number of adult day centers the U.S. increased by more than 35% from 2002 to 2010, industry statistics show. In 2019, there are an estimated 5,685 adult day programs.
“The benefits of [adult day services] are great,” SarahCare CEO Merle Griff said last week during a presentation at the Healthcare Innovation and Investment Conference (HI2) in Chicago. “We have decreased hospital readmissions, less emergency room visits, and improved physical and emotional care for [patients].”
Headquartered in Canton, Ohio, SarahCare is one of the largest adult day services providers in the country, providing care across nearly 40 centers in 13 states under both company-owned and franchise models. Company-wide, SarahCare reported gross sales of $16.8 million in fiscal year 2018.
In general, at-home care providers have garnered most of the attention for their ability to safely keep older adults at home and out of skilled nursing facilities (SNFs), hospitals and the emergency room. That’s starting to change, however, as payers and health care partners begin to realize the importance of social determinants of health, which include social isolation and loneliness.
Indeed, the social aspect of SarahCare is something at-home care providers will never be able to duplicate alone, according to Griff.
“[Our patients] are out of their homes. They’re not in their homes with just one caregiver, but a social setting,” she said. “They have fun — and they have friends, so they’re happier.”
The number of adult day centers nationwide has already more than doubled over the past half-decade, but there are still no signs of slowing down.
Home health and home care providers alike need to closely follow the trend, as adult day services providers can simultaneously be competitor and partner.
“I think in the next five to seven years, you’ll see that adult day services are an absolutely essential and integral part of the long-term care continuum — between the value-based design and the reimbursement models,” William Zagorski, Centennial Adultcare Center CEO, also said at HI2.
Nashville-based Centennial Adultcare Center operates three adult day centers in central Tennessee, serving 70 to 90 clients daily. The privately owned company — which also provides home care services throughout its footprint — is currently exploring additional locations through acquisition and de novos.
The ‘wraparound’ model
On one hand, adult day centers may soon become the biggest competitors of at-home care providers, largely due to affordability and workforce advantageous.
The national median cost for one day of adult day health care is about $72, according to the most recent Cost of Care Survey from Genworth Financial (NYSE: GNW). The national median costs for one day of homemaker and home health aide services, in comparison, is about $132 and $138, respectively.
“Adult day still remains the lowest-cost long-term care option. It’s about 50% less or more,” Zagorski said. “The value has been there. It’s been demonstrated.”
And as home health and home care providers have to occasionally turn away prospective patients because they lack the caregiving resources, adult day centers have the benefit of group care. Former Addus HomeCare Corporation (Nasdaq: ADUS) CEO Mark Heaney, who now serves as an advisor for Post Capital Partners, previously told Home Health Care News that both supply and demand of one-to-one care are peaking.
“We think that personal care — one-to-one care — is vital, but we believe that one-to-one care is becoming increasingly expensive, and we think the solution over the long term is group care,” Heaney said.
At the same time, adult day centers are itching to team up with home care providers — not necessarily put them out of business or steal clients. In fact, many adult day experts believe the concept of “wraparound services” — all based out of a community center or hub — is the next step in the industry’s evolution.
“Personally, I think the future of adult day care is incorporating … wraparound services,” Christopher Vito, president and CEO of Nevada Adult Day Healthcare Centers, said at HI2. “Wraparound services meaning the synergy between adult day, home care, home health and even hospice — services that would be attractive to an [managed care organizations].”
Based in Las Vegas, Nevada Adult Day Healthcare Centers has four locations, serving all of the Las Vegas Valley region. The company has an average daily census of between 260 and 270 patients.
For Nevada Adult Day Healthcare Centers, wraparound services include transportation, as the company maintains a fleet of more than two dozen vans and buses, providing more than 7,000 rides per month.
Perhaps the biggest perk of wraparound services: the ability of adult day centers and in-home care providers to refer patients to one another.
“With wraparound services, you can actually cross-refer and create better outcomes for the patient,” Vito said.
The next step
Adult day centers are typically funded by a mix of Medicaid, private-pay, long-term care insurance and other payer streams. But that mix varies greatly from center to center — even within a single company.
For example, the breakdown at one Nevada Adult Day Healthcare Centers location is roughly 90% Medicaid to 10% private-pay and other sources. At another nearby location, Medicaid makes up only 40% of the payment picture.
Thanks to key policy moves from the Centers for Medicare & Medicaid Services (CMS) over the past couple years, Medicare Advantage (MA) is becoming more relevant in the adult day space as well.
In fact, Centennial Adultcare Center, Nevada Adult Day Healthcare Centers and SarahCare have all begun working with MA plans in some way, shape or form in 2019. In her view, CMS allowing MA plans to cover certain adult day services is “the biggest change” for the industry in years, Griff said.
“I think that is going to be quite a change for us — in a good way,” she said.
“I think the one thing that takes us to the next step … is Medicare Advantage,” he said.
In addition to Medicaid, private pay and MA, some adult day providers can also participate in Medicare through the Programs for All-Inclusive Care for the Elderly (PACE) program, through participation guidelines differ throughout the U.S.
CMS issued a final PACE program rule in May — the first substantial update since 2006.