LeadingAge

The nation’s leading tax-exempt senior living bond investors met in Chicago in June for the 12th Annual Ziegler National Senior Living Investor Workshop. Credit analysts and portfolio managers from leading municipal bond funds, asset managers and hedge funds participated in a daylong workshop with Ziegler banking and sales professionals to explore opportunities for senior living lenders.

Many new firms participated this year alongside traditional investors, as interest in the sector has grown coming out of the financial crisis. Generally positive total returns for high yield municipal bond funds in 2014 have helped to attract investor dollars (+6.63%); however returns so far in 2015 have been weak (+0.71%). Cash flows into high yield municipal bond funds had been strongly positive until recent weeks. 

What did we hear from the investors? Occupancy concerns have moderated over recent months with many new communities reaching stabilization. Now, investors are focused on operations at these communities moving into the next phase. 

Overall, the ramp-up of recent expansion and repositioning projects has been outperforming expectations, leading to strong interest from investors in these types of projects. We also heard heightened interest from investors in Bond Anticipation Notes (BANs), a form of seed capital financing for new communities, as these investments have been good performers recently as well.

In one of the highlights of the workshop, Greystone’s Brad Straub and Bud Green spoke with investors about the development and construction process. Greystone highlighted what investors should look for in terms of timelines and construction document processing, and answered lots of investor questions around the key risks to a project being completed on time and on budget.

Overall, investors are busy with the growing calendar of new issues expected to come to market over the next several months. However, solid bank direct purchase lending continues to draw senior living supply out of the institutional market.

This article was written by Amy Castleberry, CFA senior vice president at Ziegler.

According to Medline, today’s healthcare industry has seen dramatic changes in the patient experience. The success of our advancements in healthcare and technology has created far more complex, chaotic interactions. From simple check-ups to operating room procedures, some might argue that today’s patient has become more of a number as opposed to a human being with personal preferences, feelings and emotions. Patient Experience Week (April 27-May 1, 2015) helps us to take a moment and center ourselves back to what is truly the heart of healthcare – care and compassion.

The patients of today are not the patients of yesteryear. There are far more chronic illnesses and multi-diagnoses that must be properly managed. According to the American Hospital Association, nearly half of today’s seniors are living with two or more chronic conditions. On top of this, the pace of healthcare has rapidly increased, the length of stay has shortened and coordination of care has lessened.

All of these changes contribute to the overall problem in today’s patient experience -- patients lost in the maze of confusion and fragmentation. This issue can be largely attributed to the fact that our systems of care have been designed to aid the caregivers in their work, and not around the patient and his or her needs. Caregiving has become a task with numbers to be reached and money to be made, and there may be times we completely miss the human connection, which is the most important task of all.

Healthcare has not always been this way. It is hard work to change culture and redefine what is truly important. However, with enough discussion and education, we can gradually get back to what healthcare is supposed to be about -- providing care, support and compassion to our patients.

Everyone who plays a role in healthcare can contribute to the state of the patient experience. Medline’s latest solutions in patient experience highlight how modifications large and small can make a meaningful impact. Some examples include hospital gowns that tie on the side for added modesty, colorful, pajama-like pediatric patient gowns that are snuggly soft and clinician friendly, room design that reflects a homey feel, advanced wound and skin care products that enhance comfort and resources for post-discharge to help prevent readmissions among home care and hospice patients.

Our new CarePac™ has proven that small comfort products—such as ear plugs, eye masks, premium lip balm, and a notebook for the patient or family to jot down questions about care—can help meet a patient’s emotional needs and promote a special connection between patients and hospital staff.

A couple of years ago I needed emergency surgery. I was ill, exhausted and frightened. I was also the acting CNO at the time and being cared for by my team. It was hard for me to let go and let them take care of me. Caregivers are the worst about allowing caring actions to support them. We are used to giving it to others, so it is hard for us to let go. As I moved onto the OR table, I was anxious but didn't want to let them know that I was scared so I was joking and talking like a magpie. When I stopped to catch my breath, one of the OR Nurses quietly came over, touched my shoulder, looked me in the eyes and with love and compassion said, "It’s going to be okay. I will be your eyes and ears while you’re asleep.

I will make sure that everything goes as if you were awake and able to direct your care. I am here for you." The tension left my body and I reached up to capture her hand. Patient experience is about active listening, being mindful about the moment and conveying what human beings crave - connection, empathy and partnership. It has to be a conscious action. The OR nurse easily could have left me alone knowing soon I would be given medication that would send me off to another state of being. In her moment of mindfulness, she saw what was underlying and moved into the moment to ease my way and convey the message she wanted me to know - she cared about me.

Active listening can also make a huge difference in providing a complete, caring and compassionate patient experience. By simply listening to your patients, you will learn so much about each of their personal stories and individual needs, which will allow you to provide the best experience possible for them. When I slowed down enough to really listen, I learned so much about my patients and those they loved. We all want to be heard and acknowledged as human entities.

Medline celebrates with facilities the special human connection between healthcare professionals, patients and their families. This important week also is a reminder of the significant impact one positive interaction can have on a patient.

This article was prepared by Medline.

Ziegler recently participated in a meeting of large-campus Continuing Care Retirement Community (CCRC) executives. Generally speaking, these large-campus CCRCs are defined as those that have at least 500 Independent Living units on the same physical campus. 

These communities are few in number, but clearly significant in impact. Ranging in size from 50 acres to 2,000+ acres, these communities benefit in many ways from scale, growth opportunities, and self-sufficiency in many regards.

This peer group is also an active, sophisticated cohort of providers when it comes to growth, expansion and continued reinvestment in their current physical campus. A recent survey of this group of large CCRCs revealed that since 2010, nearly all have repositioned their large-campus, roughly 75% have engaged in expansion activities and half developed a new community or campus.

What is the typical size of a CCRC? Across the 1,930 CCRCs that are currently documented by Ziegler, the median number of total units is roughly 280. As detailed in the graph below, the vast majority of CCRCs have between 100 and 300 total units. 

Less than 8% have more than 500 total units. The map that follows visually reports on the number of estimated CCRCs in each state that have at least 500 total units. Consistent with the total universe of CCRCs, Pennsylvania leads with 24 CCRCs that have at least 500 units, followed by Florida with 20.

In recent years, the sector has not seen the development of large-scale CCRCs in the 600, 700 and 800+ total units. Looking at the current new CCRCs under development, the majority are being constructed to initially offer between 200 and 300 total units. While a number of these communities have phased-in plans for future unit growth and expansion, in general, the numbers still do not appear to be in the 500+ range as seen with today’s class of large-campus CCRCs. 

Even Erickson Living, which has a long-standing history of developing large campuses, is now developing a scaled-back version of its more sizeable communities. It should be pointed out that not all the large-campus CCRCs initially started with the hundreds of units they have today. Many of them evolved into large campuses over years of expansions and renovations.

The majority of CCRCs currently under construction are generally also on smaller geographic footprints. An examination of the total acreage of a number of current CCRCs in development revealed land area generally between 10 and 40 acres, which is inclusive of acreage that may not necessarily be built upon. 

Generally speaking, CCRC growth is being observed in metro or sub-metro markets where large parcels of land are increasingly difficult to come by or where the cost of significant acreage is prohibitive. The years of donated church or family land for CCRC development are, for the most, part behind us.

If you are a provider who has not had the opportunity to visit a large-campus CCRC and fully understand some of the unique characteristics and assets they have to offer, we encourage you to do so. They are leaders and innovators in the sector and boldly move forward to grow in their sophistication and high-quality care.

This article, complete with visuals, was prepared by Ziegler.

In this article, CliftonLarsonAllen will help you understand new payment reform standards.

In January, the U.S. Department of Health and Human Services (HHS) released its timeline for how traditional Medicare services, or fee-for-service (FFS), would be paid in the coming years. 

By 2016, it aims to pay at least 30% of these expenditures through alternative payment models like bundled payments or shared savings via an accountable care organization (ACO) model, and 85% of FFS Medicare through some type of value-based payment. The goals are more aggressive for 2018, ramping up to 50% and 90% respectively.

HHS Secretary Sylvia Burwell also noted that the Centers for Medicare and Medicaid Services (CMS) was creating a Health Care Payment Learning and Action Network made up of private payers, employers, consumers, providers, states, and state Medicaid programs. The goal of the group is to work with private payers and states to adopt alternative payment models.

Even providers that do not rely heavily on Medicare revenue currently may be affected by reforms. Recently, several large health systems and insurers formed a private coalition with the intent to follow the CMS lead. 

This coalition’s target is that 75% of their contracts will include incentives for quality and lower-cost health care by 2020.

Value-based payments prompt hospitals to consider referrals

With the hospital value-based payment (VBP) program, HHS already has a platform to help achieve some of its goals as the percentage of inpatient hospital reimbursement at risk payments continues to increase. 

In addition, hospitals have a new performance criterion this year under the VBP program -- cost efficiency. Based on 2013 performance, fiscal year 2015 payments have already been adjusted.

Essentially, hospitals are being held accountable for the average Medicare beneficiary cost across the continuum. This may make them more sensitive to where they refer patients for post-acute care (PAC). 

It may increase direct discharge to home with home health services and bypass skilled nursing facilities (SNFs) in some cases, or result in hospitals referring more heavily to lower-cost facilities. 

As they weigh these options, hospitals must keep in mind the ramifications of potential readmission penalties under VBP.

Powerful data used to negotiate new rates for SNFs

As one of the key conveners in the CMS Bundled Payment for Care Improvement initiative, naviHealth is using the knowledge gained from Medicare expenditure data and the bundled payment initiative to renegotiate contracts with PAC providers. 

Armed with extensive information and its reimbursement algorithm, it has started working with commercial plans and Medicare Advantage plans. As a result, these insurance plans are offering PAC providers contracts that no longer pay for any ultra-high resource utilization groups (RUGs). 

Though there are mechanisms to challenge this policy on a case by case basis, the implications are clear. Because the average skilled nursing facility has 40%–60% of its patients in the ultra-high category, SNFs would be in the position of having to care for higher need patients at a lower per diem rate. 

Currently, this approach is being used in several states with “Blues plans,” such as Blue Cross, Blue Shield and similar affiliates.

Picking winners with referrals

At a MedPAC meeting late last year, members began to explore whether hospitals, health systems, and ACOs should be allowed to “hard steer” patients to PAC providers that are proven to be higher quality and lower cost. Simultaneously, the proposed revisions to Medicare ACO rules are considering the same thing. 

This could allow these acute care (AC) providers to identify preferred PAC partners and shut out others from receiving any referrals with potentially dismal financial consequences. Soft steering may already be happening, but this change could essentially pick winners and losers in the market. 

A key clarification to watch for is how the criteria for referrals to a post-acute setting are defined and how aggressively AC providers will be allowed to hard steer patients.

Proposed Medicare ACO rules consider waivers for restrictions

Proposed Medicare ACO rules are also looking at providing broader waivers for some additional ACOs in the Medicare Shared Savings Program (not just the Pioneer ACOs) including:

• The 3-day hospital stay before paying for PAC requirement.
• Eliminating the homebound requirement for accessing home health services.
• Broader use of telehealth services.

In some markets, Pioneer ACOs are approaching PAC providers with payer contracts, which outline that the provider will take some percentage of Medicare FFS (e.g., 90%) and then has to meet certain performance metrics related to process (e.g., timely notification compliance), care (e.g., readmission rates), and cost (e.g., average beneficiary cost). Although the public comment period has passed, the final rules have not yet been issued.

How we can help

As you continue adapting to value-based payment, CLA can help your organization decide which metrics you should track. We can help you draft and understand your value proposition to payers and prospective partners as you negotiate partnerships, contracts, and new reimbursement methodology. 

We can also assist you in understanding the financial and reimbursement impacts of value-based payment programs by modeling new payment approaches, and illustrating the effect on your bottom line. 

Seeing your costs in new ways (e.g., by diagnosis or patient) will help you embrace new payment methodologies.

Learn more.