Senior living providers tackle a low-margin business with a variety of approaches.
By Jane Adler
By one estimate, the home care and home health market generates annual revenues of $93 billion. That explains why senior living providers want to provide those services. After all, they house a population likely to need home care and home health, and senior living providers are experienced at delivering services.
Jumping into home care and home health seems like it might be an easy call. But the approach of senior living providers to these ancillary services varies widely, as does their ultimate success.
Partnerships with outside agencies are common. Some senior living communities launch their own services, though success often depends on local market dynamics. Other communities only offer the services to their own residents, preferring to “keep it simple.”
Meanwhile, new technologies are changing the way home care and home health is delivered. For example, San Francisco-based Honor now provides services in some cities that allow consumers to order home care on their mobile phones.
Holiday Retirement and industry pioneer Dr. Bill Thomas recently introduced Milo, a home services platform available in a handful of cities that blends in-person attention and technology. Connecticut-based Maplewood Senior Living introduced Maplewood at Home last March.
“Home and home healthcare takes a different mindset for operators,” says Peter Notarstefano, director of home and community-based services at LeadingAge, the association that represents nonprofit senior living and care providers. “You’re no longer just the house on the hill for old folks. It expands your touchpoints in the community.”
It’s important to draw a distinction between home care and home healthcare, two different businesses. Home care provides services such as housekeeping, companionship and assistance with activities of daily living.
Home health is Medicare-certified and provides medical services that might otherwise be delivered in a hospital or nursing home. As such, home healthcare is subject to more rules and regulations than home care. In 2015, the Centers for Medicare & Medicaid Services (CMS) launched a star rating system for home health agencies similar to the one used to rate nursing homes.
Some states require home health agencies to obtain a certificate of need (CON), which may be difficult to obtain. Senior living providers say Medicare billing procedures are also an impediment.
Both home care and home health are highly competitive businesses. Many agencies provide the services. Franchises such as Home Instead and Comfort Keepers advertise heavily to consumers.
Meanwhile, staffing is an ongoing challenge. Worker turnover rates are high. According to the Private Duty Benchmarking Study, the median caregiver turnover rate for the home care industry was 53.2% in 2013.
On the plus side
Home and home health services do offer senior living providers a way to manage the care of frail seniors as they need additional or specialized services. It’s also a way to expand a business.
Two years ago, Van Dyk Healthcare launched a home care service, Van Dyk at Home. It does not offer home healthcare.
The company owns and operates two skilled nursing facilities and an assisted living and memory care property, all located in New Jersey. An adult day center for those with dementia is scheduled to open early next year.
“So many hospitals are discharging people directly home,” says Bob Van Dyk, president and CEO of Van Dyk Healthcare based in Ridgewood, N.J. “We felt we needed to provide home care.”
This isn’t the company’s first foray into home care. It jumped into the home care market about 10 years ago, but then abandoned the effort. “It just wasn’t the right time,” says Van Dyk, who chaired the American Health Care Association, the industry group that represents nursing homes, from 2009-2011.
Like other senior living providers, Van Dyk jumped back into home care, in part, as a way to offer a seamless experience for those transitioning from the hospital or skilled nursing to home. Also, the home care agencies in the area were not providing good care, recalls Van Dyk. “Families were unhappy. So we decided to do it ourselves.”
Today, Van Dyk has about 134 home care clients, most living in their own homes. The company also owns a physical therapy service that works with local home health agencies.
Belmont Village Senior Living takes a different approach. The Houston-based assisted living provider owns and operates 25 buildings nationwide and one in Mexico City. Another five properties are underway. Home care is offered, but only to building residents who need extra help, commonly after a hospital stay or illness. Called “private pals,” the aides are Belmont employees.
Instead of offering home healthcare, Belmont, like many other senior living companies, forms alliances with home healthcare providers. The Houston hospital TIRR Memorial Hermann opened a physician and therapy outpatient clinic last year at a Belmont Village campus in Houston. Belmont also entered into an agreement with the hospital to provide services to several of its Houston communities.
In other locations, Belmont typically works with preferred home health agencies. Though residents can choose the agency they want, they typically pick the agency recommended by Belmont. “We like to have a close working relationship with our health agencies,” says Sheri Easton-Garrett, senior vice president of clinical services at Belmont, whose office is in Nashville.
Belmont meets with its home health providers once a quarter to review resident outcomes data and coordinate case management details. “We are ultimately responsible for the resident,” says Easton-Garrett.
Nonprofits lead the way
Senior living nonprofit providers have a longer track record with home care and home health services than for-profit companies.
“These services are a natural progression for our members,” says LeadingAge’s Notarstefano. Nonprofits have been gradually expanding into home care and home health over the last several decades. About 75 percent of the LeadingAge membership offers some kind of home and community-based services.
Home care is the most popular offering among LeadingAge members and adult day care is the second most popular service. Home health is third on the list.
Nonprofits see the services as a way to expand their mission and serve the community. It’s a way to offer a kind of one-stop-shop by providing housing as well as services in a variety of settings. It can also help build a particular brand.
“Home care is the fastest growing segment of our service line,” says Steve Fleming, president and CEO at the Well Spring Group, a nonprofit based in Greensboro, N.C. “We have been able to parlay our brand from our life plan community into the wider community.”
The organization operates two life plan or continuing care retirement communities (CCRCs). It also owns Well Spring Solutions, which provides home- and community-based services, including home care through Home Care by Well Spring Solutions. Adult daycare services are also available.
Launched in 2009, Well Spring Solutions serves about 1,300 older adults, including some CCRC residents. The organization provides 14,000 hours a month of home care services and employs 140 aides.
“We have been able to parlay our brand from the life plan communities into the wider community,” says Fleming. Local residents associated the brand with Well Spring’s high-quality CCRCs. “People knew our reputation,” says Fleming, adding that it took time for the wider community to realize Well Spring was not just a high-cost housing alternative, but also offered a broad range of services.
Well Spring does not have home health services. “We wanted to stay in the private pay arena,” says Fleming. Also, North Carolina requires a CON for home health, and none are available.
Presbyterian Senior Living, based in Dillsburg, Pennsylvania, exited the home health business in 2000. The group had owned two healthcare agencies.
The nonprofit senior living provider owns and operates 32 communities in Pennsylvania. The organization offers home care for residents of its 12 traditional CCRCs. Two of the properties offer home care to the wider community.
“We had a lot of competition in home health,” says Diane Burfeindt, vice president of population health and affordable housing at Presbyterian Senior Living. “It was not our expertise.” The group now partners with healthcare agencies instead. “Home healthcare is so complex,” she adds. “Home care is a better fit for us.”
Operations are key
Nonprofits and for-profit owners and operators alike agree that home care and home health are tricky businesses to run.
“The toughest challenge is staffing,” says Randy Bloom, president and COO at Tutera Senior Living & Health Care based in Kansas City, Missouri. He added wryly that the second toughest challenge is staffing, and the third toughest challenge is staffing. “It’s not just finding people, it’s a qualitative issue,” he says.
Tutera owns and operates 52 senior living properties, 35 of which are skilled nursing facilities. The company owns a home health company too (see sidebar).
About five years ago, Tutera offered home care but exited the business after a year. The home care component only compounded the company’s staffing issues, says Bloom. “Home care is a low-margin, volume-based business.” He figures margins at about 3-5 percent, though they vary by market.
Others agree that time and attention is needed to turn a profit in home care.
“It’s not an easy business to manage,” says Van Dyk at Van Dyk Healthcare. He tries to keep staffers happy by providing enough hours of work so that they don’t jump to another provider. He lets the staff know he cares about them by attending employee appreciation parties and thanking them in person.
At the Well Spring Group, resources are devoted to training and scheduling. “The schedulers are of high importance,” says Fleming. Schedulers control the workflow and make sure the assignment distribution is fair. Well Spring taps nursing graduates from the local university to fill those positions, which are key to success, he says.
Much of the scheduling and tracking process is automated. The software allows aides to check in and out at their assignments using their mobile phones.
Well Spring pays well too. Wages at the nonprofit fall into the top quartile regionally, says Fleming. “You can’t pay an average wage and attract a good staff.”