A new product category starts to emerge in response to the rising level of frailty among seniors and their changing needs
By Jane Adler
Hybrid apartments that offer independent living along with some assisted living services could be the latest product type to emerge in the seniors housing market. The experiment comes as building owners and operators grapple with how to meet the needs of older and frailer residents.
So-called hybrid units allow the senior to start out in independent living and add services as needed without having to move to the assisted living wing of the building. Residents can age in place and forgo the disruption of a move.
The hybrid trend is playing out in other ways, too.
Assisted living and independent apartments are not always segregated into separate wings. Residents of all types may share dining and activity spaces. Assisted living buildings are also beginning to look more like those for independent residents with fancy amenities such as bistros and well-appointed wellness centers.
For operators, the hybrid approach can help boost income. Seniors who prefer independent living units that provide more space and upscale finishes are willing to pay a higher rent for a better unit. The addition of services on top of the higher rent adds to the bottom line.
“We see a blurring of the lines between assisted living and independent living,” says Richard Hutchinson, president at Discovery Senior Living, an owner and operator based in Bonita Springs, Fla. “We are bringing services into independent living apartments.”
Product evolution spurs confusion
In the early 1980s, stand-alone assisted living buildings emerged as an alternative to nursing home care. Since then, developers have continued to experiment with different housing and service models. Today’s products range from single-site properties for a specific type of resident, such as memory care, to sweeping campuses with a variety of offerings for all types of elders.
For the last 20 years or so, seniors housing has typically been divided into specific product types — independent living, assisted living and memory care. Lately, however, the lines between assisted living and independent living have become less distinct. And properties are combining services and real estate in new ways.
No consensus has yet emerged of what to call these new product types. Some developers use the term “hybrid” to describe independent living with services. Others prefer terms like “supervised” or “enhanced” independent living. Yet other developers are marketing buildings as both independent and assisted living, even though the entire building may be licensed for assisted living.
To add to the confusion, some developers use the word “hybrid” to describe independent living apartments that combine the features of a single-family home and an apartment (see sidebar, page 21).
“We’ve always offered a hybrid product,” says Patricia Will, founder and CEO at Belmont Village Senior Living, a Houston-based owner and operator with 24 communities in its portfolio. She explains that the average age of assisted living and independent living residents is the same, about 85. The only difference is whether the individual needs assistance. But chances are that the independent residents will need help at some point. “Circumstances are more likely than not to change,” says Will.
Couples are another consideration. Partners typically do not age at the same rate, and one may require more help than the other. “We want to be able to accommodate couples in a meaningful way,” says Will.
Belmont’s approach is to license the entire building for assisted living, even if the property includes a significant number of independent living units. “We allow people to live where they are as their needs change,” says Will. The only time residents are required to move is if they must live in a secured dementia unit to remain safe.
Independent living units are not segregated from assisted living apartments. For example, the independent living units are located at the ends of each floor at the Belmont Village property in the Westwood neighborhood of Los Angeles. The units in between can be assisted or independent living, whatever is in demand.
Belmont residents in assisted and independent living units share common areas, such as the dining room.
In general, Belmont’s independent living units are larger than the assisted living units. Independent living units include full kitchens and laundry equipment.
Entry-level pricing for a one-bedroom assisted living unit at Belmont Village at Turtle Creek in Dallas is $6,700 a month. A one-bedroom independent living unit starts at $4,210 a month. Assisted living services account for the price difference, notes Will.
Not all Belmont properties include independent living. But the ones that do outperform the assisted living-only properties, says Will. She attributes the stronger performance to the fact that the buildings with independent living units draw on a broad pool of residents who can stay in their apartments and add services as needed.
The construction and licensing of an entire property as assisted living is more expensive than developing an independent living-only property, say developers. To qualify for a license, assisted living buildings must meet certain life-safety standards that add to the overall cost. The licensing process also adds time to the development schedule.
Also, assisted living requires an investment in staff training to implement policies monitored by the state.
Marketing a hybrid
Autumn of Sarasota, a memory care and assisted living community in Florida, plans to offer an “I-Lite” or “Independent Lite” option at a new 120-unit building slated to open in 2017. The building will be licensed as assisted living, but it will also be marketed as independent living so that residents can get help when the need arises.
The community also offers “bridge” units. These are designed for couples, one of whom needs memory care services. “We’ve had so many couples looking for housing. We didn’t want to separate them,” says Jill McGraw, marketing director at Autumn of Sarasota, which is owned and operated by Autumn Senior Living.
Taking a similar approach, Greenbrier Senior Living, an offshoot of Chicago-based multifamily property owner Evergreen Real Estate Services, has two assisted living/memory care buildings underway. The buildings are located in the Chicago suburbs of Bloomingdale and Prospect Heights. The building in Prospect Heights, which will include 70 assisted living units and 30 memory care units, is scheduled to open in March 2017.
Though the properties are licensed for assisted living, the units are being marketed as independent living, assisted living and memory care. The idea is to capture couples, for example, in instances where one partner needs help and the other does not.
The initial feedback from consumers has been positive, according to Steve Rappin, president at Greenbrier. Adult children like the idea that their parents can stay together, he says.
The units are larger than those generally found in standard assisted living buildings. The units feature full-size kitchens, plus washers and dryers. Amenities are more like those found in independent living buildings and include a bistro, salon and generous amounts of activity and outdoor space.
Home health fills gap
Some operators are meeting the hybrid challenge by launching home health services. Independent living operators recognize that residents who age in place will eventually need more help. That means many residents may have to move — which would be a drag on census numbers — or bring private caregivers into their units.
Independent living residents who need help can hire any outside provider they choose. These third-party care providers can be difficult to manage and may put building operators at risk of being held responsible for their work.
Discovery Senior Living, which owns and operates more than 6,000 units in 12 states, launched a home health service in 2010. Another 1,000 units are under construction. About 65 percent of the company’s units are independent living.
Looking back, Discovery’s Hutchinson says independent living units were hard to market during the Great Recession. As a result, building owners did whatever they could, such as offering home health services, to keep existing residents as they aged in place. “They had to make sure the back door was closed to reduce turnover,” says Hutchinson.
Residents often choose Discovery’s home health service instead of an outside provider because the workers are vetted by Discovery. The home health service has an on-site office at each Discovery building that offers the services. Home health revenue represents about 30 percent of management fee revenues.
“We created home health services in order to control quality,” says Hutchinson. Each building also has a care concierge who follows residents through the course of health events to make sure they get the help they need.
In markets where Discovery does not offer home health, the company has created a home health network that screens potential providers.
In addition to home health, Discovery is launching a product line called “supervised independent living” at some of its new developments. Branded as Discovery Village, the properties offer 30 units of supervised independent living, 60 units of assisted living and 30 units of memory care. Using an approach similar to other developers, the entire property is licensed for assisted living.
The “supervised” units have the size and feel of a larger, and more upscale independent living apartment, according to Hutchinson. “Everyone wants supervised independent living at first because the units are so nice.”
A popular model
Discovery Fort Myers, which opened in 2012, was the first community to offer supervised independent living and those units leased quickly, says Hutchinson.
Apartments in supervised independent living command a small price premium. Rents start at about $3,500 a month. Residents add services a la carte as needed.
Residents in supervised independent living who receive a full package of assisted living services pay about $5,000 a month. That compares to about $4,500 a month for a traditional assisted living apartment with services.
Like other senior living providers, Discovery is beefing up common areas and amenities at its new buildings. Wellness centers feature therapy rooms for residents undergoing treatments after an illness or surgery. Healthcare suites are available for nurses and visiting doctors to care for residents.
Other amenities include bistros, multiple dining venues, movie theaters, game rooms and therapy pools. “When you go down the list of amenities, it’s more like the list you’d find at an independent living building,” says Hutchinson.
Where’s the hybrid market headed? Expect more experimentation, say experts.
Discovery Senior Living no longer plans to build stand-alone independent living properties, says Hutchinson. The company will continue to develop senior apartments with limited services, but new seniors housing projects will include multiple product offerings to meet the changing needs of residents.
Discovery plans to develop large, 250-unit projects known as Discovery Commons in select markets. The properties will include assisted living and memory care units, as well as units for truly independent seniors that will not be licensed for assisted living. A Discovery Commons project is now underway in West Palm Beach, Fla.
Local market conditions will dictate what product type or unit mix to build, says Hutchinson. “The product lines have blurred, so we have a blurry product.”