key trends in an evolving aging services field · staffing challenges rapidly emerging 15.6% 53.0%...
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KeyTrendsinanEvolving
AgingServicesField:StayingCompetitiveand
PreparingfortheFuture
October31,2016
Presenters
RobLove
Love&CompanyPresident/CEO
JimHudgins
THWDesignPresident
TadMelton
ZieglerManagingDirector
Agenda
v Theseniorlivingfield:Todayandtomorrow
v Today’strendsandchallengesv Disruptors:Tomorrow’strends,and
howtoprepareforthemv Financingnon-traditionalgrowth
strategiesv Q&A
TheSeniorLivingWorldToday
TheLongAwaitedAgingofAmericaHasArrived!
MarketsDiscountTheFuture-
DemographicsAreDestiny!
Source:U.S.DepartmentofHealth&HumanServicesNationalCenterforHealthStatistics;PewResearchCenter
Today’s80-yrold
Today’s70-yrold Willpeakat81.1million
Impactofimmigration
EvenWithATailwind,ItWon’tBeEasy
SeniorLivingToday:Ziegler’sObservations
v Occupancylevelsareveryhighthroughouttheindustryandwaitinglistsaregrowing,despitewhatappearstobeadecliningtrendintraditionalskillednursingoccupancy
v NFPdevelopmenttrendsaccelerating:§ Re-emergenceofnewcampuses;Positioningofexisting
campuseswithmajorinvestmentsinagingfacilitieslikeskillednursing,expansionofindependentliving,andadoptionofcontemporaryprogramminginareaslikewellness,rehabandhospitality
v Pressureinformofstaffingcostsandavailabilityandtechnologicalinnovation
SeniorLivingToday:Ziegler’sObservations
v Significantconfusionaboutultimateimpactofhealthcarereformbuteffortstoanticipatethefutureleadingtoinnovativestrategiesandcollaborativerelationshipsoff-campus,albeitusuallynotmovingtheneedleonnetincome
v AbundanceofcapitalandacceleratingdemographicsfuelinganhistoricamountofdevelopmentintheformofFPcompetitors
v Anybusinessorproducttiedtoseniorlivingissubjecttointenseinvestorinterest,beitfacilities,homecare,serviceproviderstechnology,etc.
OccupancyIsGenerallyVeryHigh
Sources:ZieglerNationalCCRCListing&Profile,LeadingAge,NICMAP®DataandAnalysisService,TheNationalCenterforHealthStatistics,CentersforMedicareandMedicaidServices
84%
85%
86%
87%
88%
89%
90%
91%
92%
93%
94%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Seniors Housing Occupancy by Profit Status; MAP314Q05 – 2Q16
Not-For-Profit
For-Profit
2.68%
NFPCCRCOccupancyAboveFP
Sources:ZieglerNationalCCRCListing&Profile,LeadingAge,NICMAP®DataandAnalysisService,TheNationalCenterforHealthStatistics,CentersforMedicareandMedicaidServices
81%
83%
85%
87%
89%
91%
93%
95%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
CCRC Occupancy by Profit Status; MAP314Q05 – 2Q16
Not-For-Profit
For-Profit
5.91%
SkilledNursingOccupancyAtFiveYearLow
Source: National Investment Center for the Seniors Housing & Care Industry | Skilled Nursing Data Report; data through June 2016
NewCampusesRe-emerging
Source:ZieglerNationalLPC(CCRC)Listing,8/29/16
6
21
46
51
43
51
70
92
69
65
74
81
29
80
28
52
85
70
74
93
81
89
54
46
33
20
8
12
0 20 40 60 80 100 120 140 160 180 200
1950-1954
1955-1959
1960-1964
1965-1969
1970-1974
1975-1979
1980-1984
1985-1989
1990-1994
1995-1999
2000-2004
2005-2009
2010-2014
2015-2019
Loca
tions
LPC Incremental Growth, By CCRC Type1950 to Present (Year of Opening)
Purpose built Non-purpose built
PROJECTED(+17fromlastyear)
ExistingCampusesGrowing,Evolving
HealthcareReformDrivingPost-AcuteStrategies
v Providersarespendingincreasedtimefocusingonpost-acuteactivities
v For-profitcompetitionhasbeensignificant,particularlyinmetromarkets
v Scaleandsophisticationareprovingtobekeydifferentiators
v Post-acutenetworksareevolving(frombricks&mortartoHCBS)
v Thecustomerischanging(acuity,lengthofstay)
Non-ResidentialActivitiesEvolving
Source:2016LeadingAgeZiegler150(preliminarydata)
70%oftheLZ150withHCBSarebelow$10millionannuallyinHCBSrevenue
StaffingChallengesRapidlyEmerging
15.6%
53.0%
0% 10% 20% 30% 40% 50% 60%
Limitadmissionsb/cofstaffingshortages
Workw/tempagenciestofilldirectcarestaffvacancies
Hasyourorganizationhadto…
Limitadmissionsb/cofstaffingshortages
Workw/tempagenciestofilldirectcarestaffvacancies
Source:ZieglerCFOHotline,June2016
ChallengesLeadingtoIncreasedAffiliationActivity
Complexities of Healthcare
Ability to Attract Talent/Workforce
Management
Ø Neededlarge-scalevisibilityinlocalmarketØ Greatermarketpowerw/consolidationØ Healthcareconsolidationelevatingsophisticationoflocalhospitals/healthsystems
Ø NeedtoinvestinEHR/EMRplatforms
ØNeedlarge-scalebrandingtofacilitaterecruitment
ØScaleleadstogreaterprofessionaldevelopmentopportunities
ØGrowthinfor-profitsleadingtogreatercompetitionforstaff
For-ProfitDevelopmentRobust
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Con
stru
ctio
n vs
. Exi
stin
g In
vent
ory
Senior Housing Construction by Profit Status; MAP314Q05 – 2Q16
Not-For-Profit
For-Profit
Source: NIC MAP® Data & Analysis Service, as of 6/30/16 © National Investment Center for the Seniors Housing & Care Industry | www.NICMAP.org
ILDevelopmentExploding
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Construction vs. Inventory; MAP31Seniors Housing | 4Q05 – 2Q16
Independent Living*
Assisted Living*
Not-for-Profits
Source: NIC MAP® Data & Analysis Service, as of 6/30/16 © National Investment Center for the Seniors Housing & Care Industry | www.NICMAP.org
• HighpercentageofALmemorycare;someIL
• Ofteninmarketswithhighbarrierstoentry
• Educatedmarketslackingupdatedproducts/services
• Hospitalitylifestyle:“Theygetit!”
• Multiplediningvenues
• Expandedwellness
ForProfitCommunitiesFor-ProfitCommunities
ForProfitCommunitiesFor-ProfitCommunities
Pub
Bistro
Dining
Entry
Lobby
RehabGym
Kitchen
Activity
“Catered”LivingProducts• 54Units- 90,000sfapprox.
• Commons• Fullkitchen• Diningroom• Pub(Opentocommunity)• Residentactivityspaces• PT/OTsuite• Wellnesssuite
• Carebaseateachfloor
• Unitssizes: 525sf– 1,200sf
ForProfitCommunitiesFor-ProfitCommunities
“Catered”LivingProducts• 54Units- 90,000sfapprox.
• Commons• Fullkitchen• Diningroom• Pub(Opentocommunity)• Residentactivityspaces• PT/OTsuite• Wellnesssuite
• Carebaseateachfloor
• Unitssizes: 525sf– 1,200sf
Don’tCountSNFMarketOutYet!
v SNFmarketisbifurcatingintonewerphysicalplantsw/STMedicarerehabfocusvs.olderSNFsfocusingonlong-termMedicaidpatients
AlmostAnythingRelatedtoSeniorLivingIsTakingOff!
Today’sTrendsandChallenges
forNot-for-Profits
v Oldercampuses/“product”
v Highproportionofsmallresidences
v Uninspireddiningprograms
v Outdatedfitnessandwellnessspacesandprogramming
v Institutionalhealthcare
v Limitedcontractoptions
PrimaryChallengesforNot-for-Profits
27
PrimaryChallenges
Smallresidences=Olderresidents=
Fewercouples=Loweraffluence=
Lowermargins
SmallerResidencesProduceLowerMargins
v Lifecareactuarialsurplusprojections,singleresidents*
Comm A Comm B Comm C§ Studio: -12% n/a -18%§ 1BR: 4% 7% 0%§ 1BR/Den: 19% 22% 9%§ 2BR: 28% 31% 19%§ 2BR/Den: 37% 41% 28%WeightedAvg,Single: 10% 15% 3%
*Goalis>10%
WellnessInitiatives
• Newwellnesscenter• Aquaticcenter• Fitness/aerobics• Multipurposeroom• Spaservices• Cafedining
• Outsidememberships• Over500+members• Age55+qualify• Highschool
swimming events• CreatebrandID
Wellness Renovation
WellnessLobby/GroupExerciseStudio
WellnessInitiatives
Wellness Renovation
WellnessLobby Fitness/ExerciseEquip
WellnessInitiatives
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