For Senior Living Providers, Launching Home Care Service Lines Is Means for Growth and Survival

American Baptist Homes of the Midwest (ABHM) is the latest example of a senior living provider launching a home care business.

After partnering with the HomeCare Advocacy Network (HCAN), the nonprofit is ready to provide home care services to its residents, as well as seniors living services, in their homes nearby.

ABHM had been considering launching a home care service line for a few years. But now, in order to stay ahead of the inevitable shift in emphasis to care in the home, ABHM is making the move, CEO Jeff Hongslo told Home Health Care News.

“We have thought about the possibility of moving into the home care business for a few years now,” Hongslo said. “We kind of looked at what things were going to be like after COVID-19 and thought about how we need to adapt in the future. And I thought moving toward bringing services to people at their homes was just a golden opportunity right now.”

ABHM will be pursuing that opportunity via a partnership with HCAN, a franchiser that offers the resources and expertise for senior living providers to launch home care lines. Based in Omaha, Nebraska, HCAN has 11 franchise locations and six additional ones in development.

The Minnesota-based ABHM serves about 1,300 individuals through its seven senior care locations — a mix of senior living, assisted living and nursing home communities. Its first home care location will operate under its local name in Muskego, Wisconsin: “Tudor Oaks Senior Living Community.”

After the Wisconsin launch, ABHM plans to launch more home care service lines in other markets in six-month increments.

“Our mission is to serve seniors,” Hongslo said. “And this gives us the opportunity to expand that beyond the walls of our communities, and be able to go out to the greater community, which I think is great.”

Nonprofit senior living operators are more likely than their for-profit counterparts to engage in home care, as it falls under the nonprofit mission to serve as many seniors as possible. Data suggests that in 2020, many senior care providers facing COVID-19 began to diversify their revenue strategies.

For instance, assisted living communities reported a 26% increase in ancillary revenues this year, going from an average of $572 ancillary revenue per occupied unit in 2019 to $735 in 2021, according to a study conducted by the American Seniors Housing Association (ASHA).

Bickford Senior Living — another partner of HCAN’s — told HHCN’s sister site Senior Housing News in June that they worried about a future without more diversified revenue streams, particularly after seeing the effect that COVID-19 had on senior living.

“You still have some fear and uncertainty out there amongst the general population as it relates to senior housing,” Alan Fairbanks, Bickford’s EVP of operations, told Senior Housing News. “I think you’re going to see more and more people look at this as kind of a stopgap before they make a transition into a senior living community.”

Extending the brand

Part of the appeal to Hongslo of the HCAN partnership was the ability to keep its own name. Senior living providers tend to have strong brands in their markets. Launching home care services under the same name, he believes, will be helpful.

That’s part of the reason why HCAN’s business model works in the first place, its president and CEO Mark Goetz told HHCN.

“Senior living companies have really good brands, generally speaking, that are well established,” Goetz said. “What we do is help those senior living communities leverage their brand and enter into the home care market successfully. We provide a lot of franchise-based training, consulting and caregiver training systems that help them really embrace the home care model rather than just trying to force a senior living model into home care, which often doesn’t work.”

HCAN franchisees pay a one-time fee of $45,000 as well as a 7% royalty fee on growth beyond the initial business.

For senior living providers who are eager to build out the full continuum of care but are home care novices, that entrance fee is well worth it.

“You know, it’s a whole different business,” Hongslo said. “And in order to do it right, we felt like we needed somebody that could partner with us and could really help us run it the way it should be. By doing that, we can set it up so it’s the best service possible for our residents and others.”

Creating a continued pathway of care

Adding home care does not just increase diversification of revenue. For senior care providers with community living locations, it allows them to form a relationship with seniors before they may need to move out of their own homes.

“Once these folks decide they need a higher level of care, I think it’s a natural step to move into our community,” Hongslo said. “The flip side is also that we could run into folks that, for instance,  may be in a short stay in our nursing home. As they leave, there’s the opportunity that we could provide service for them at their home, once they leave our community. It goes both ways.”

Instead of waiting for either seniors to need a higher form of care, or for their families to overcome their COVID-19 concerns, ABHM can start that relationship immediately through home care.

“Especially with the pandemic lingering the way it has, many families have still been hesitant to move aging loved ones out of their homes,” Goetz said. “If you add a home care service line, that really enables companies like ABHM to connect with those families now, rather than waiting until the fear in the market is gone. It allows them to get upstream.”

HCAN’s model made sense before the onset of the pandemic, but Goetz believes senior living providers’ resistance to change mitigated growth.

Now, change has been forced on the senior living space.

“When we started the business, our fear was that we were trying to market into a senior living ethos where there was resistance to change,” Goetz said. “But not that change has been thrust on people, fortunately or unfortunately.”