The combination of convenience and cost savings is gaining the attention of operators looking for new revenue streams
By Bendix Anderson
Home health services is big business for Brookdale Senior Living. More than half of seniors living in the communities that it operates are served by Brookdale Home Health, which operates more than 75 agencies across the United States serving over 15,000 patients a day.
Home health services can help seniors stay healthier for longer — potentially reducing turnover and boosting occupancies at seniors housing communities.
Seniors housing operators that provide home health services help seniors navigate their healthcare, avoiding slip-up and duplicated services and providing value to their residents.
But home health services is a complicated, highly regulated business. Seniors housing operators carefully weigh whether to create or acquire their own home health agency or to partner with an outside agency in each geographic area in which they operate communities, even if they have already successfully created home health agencies in other areas.
Driving factors
Home health agencies provide medical services to seniors in their own homes. Seniors housing communities such as licensed assisted living or independent living communities often cannot provide all of the medical services that their residents need.
Home health services can bring this care to residents without forcing them to check into a hospital or move into a skilled nursing home. Services range from injections and nutritional therapy to wound care and monitoring serious illness.
“Home healthcare is usually less expensive, more convenient and just as effective as care you get in a hospital or skilled nursing facility,” according to Medicare.gov. Medicare often covers part of the cost of home health services. Private insurance can also help cover the cost.
Elderly people often stay healthier for a longer period of time if they can access home health services. That can result in less turnover at seniors housing properties, according to operators like National Church Residences. Seniors who receive home health services after they return from the hospital are significantly less likely to be readmitted.
Seniors value home health services as a way to get the medical services they need without having to move to a skilled nursing facility or check into a hospital. Home health services can help seniors stay in their current abode, whether it is an independent living community or a single-family home.
“People do want to stay in their homes as long as they can,” says Beth Burnham Mace, chief economist for the National Investment Center for Seniors Housing & Care. “Seniors housing operators are recognizing that.”
In most parts of the country, seniors can choose from multiple privately run agencies that provide home health services. Nationally, 11,062 home health agencies submitted more than 6 million claims for over $18 billion in Medicare payments in 2013, according to the Centers for Medicare and Medicaid Services. Each agency is licensed by Medicare to provide services in a certain geographic area.
Many seniors housing operators allow outside agencies to provide home health services to their residents. However, confusion can set in when multiple agencies provide services.
“At some independent living communities, you see ten different health providers coming in,” says Peter Notarstefano, director of home and community-based services for LeadingAge, an organization made up of non-profit seniors housing and service organizations.
Leading seniors housing operators like Brookdale, which purchased Emeritus Senior Living in 2014, have expanded rapidly in the home health services business. At the end of the third quarter of 2015, residents of 66,000 of Brookdale’s seniors housing units lived at properties served by Brookdale Home Health. That’s up from 49,000 the year before.
Brookdale Senior Living owns, leases or manages a total of about 100,000 units of seniors housing. About half of those units are in Brookdale’s owned assisted living communities. The rest are split between independent living and continuing care retirement centers that Brookdale owns and the 27,000 units of seniors housing where Brookdale provides third-party management services.
Now, Brookdale is offering its home health services to seniors living outside of its communities. Offering these services helps operators like Brookdale build relationships with seniors who do not live in seniors housing, but might one day move in. Only about one-quarter of all elderly people now live in independent living, assisted living or skilled nursing facilities.
“More than 75 percent of seniors don’t live in seniors housing,” says Mace. “You have an opportunity to create a relationship with those individuals.”
CCRCs take the lead
Operators of government-subsidized affordable housing for low-income seniors have helped lead the way in providing home health services.
“We have a lot of residents who could really benefit,” says Terry Allton, senior vice president of home and community services for Columbus, Ohio-based National Church Residences. Eight years ago, the company started to offer home health and hospice services to the 25,000 residents of its seniors housing communities.
So far, National Church Residences has created three licensed home health agencies to cover its 96 seniors housing communities throughout Ohio. In the dozens of other states where the nonprofit has communities, National Church Residences forms strong partnerships with local home health agencies and coordinates the health services they provide. This helps the seniors remain in the company’s communities for a longer period of time.
“The services prevent unnecessary moves to nursing homes or emergency rooms,” says Allton.
Several leading operators of continuing care retirement communities (CCRCs) have also created their own home health agencies. “A lot of our CCRC members are taking the lead,” says LeadingAge’s Notarstefano.
CCRCs typically include skilled nursing as well as independent and assisted living. The skilled nursing facility can potentially provide some synergies with the agency that provides home health services.
Erickson Living has established Medicare-certified agencies to provide home health services at several of its CCRCs throughout the country. At the rest of its CCRCs, Erickson has formed strong partnerships with outside home health agencies.
“Erickson Living provides an innovative and person-centered approach to senior health care services that drives substantially better health outcomes,” says Jeanne Potter, vice president of ancillary health services for Erickson.
The home health services are woven into the other services in the community. That creates a seamless coordination of services for the residents, which helps avoid needless duplication of care and helps ensure that seniors who need help getting the care that they need.
Home health services create enough value for Erickson’s residents for the company to consider creating new home health agencies as Erickson continues to grow. However, it has not announced any plans to start any new home health agencies this year.
Unique challenges of home health
Running a home health agency is a complicated, highly regulated business. Creating or acquiring a home health agency is a long, expensive process. Each new agency needs to be certified by government inspectors. “It may be a nine- or 10-month process,” says Potter.
Seniors housing operators have also learned that running a home health agency is not simply an expansion of the services they might already provide.
“We tried to run the home health care out of the skilled nursing facility business model we had developed,” says Allton of National Church Residences. But the nonprofit found it difficult to take nurses out of the skilled nursing facility and place them in a homecare setting where the software, medication records, budget templates and other aspects of care are not the same.
“The operations are so fundamentally different. It’s best to treat home health like it’s a completely different business,” says Allton. “It can’t be a happy little sideline business.”
The business of running a home health agency also depends on decisions made in Washington, D.C. The U.S. Congress passed the Affordable Care Act in 2010, which aims, among other things, to reduce Medicare spending.
Although home health services are less expensive than services provided in hospitals and nursing homes, they still often represent Medicare spending that can be cut.
Medicare now projects a profit margin of 13 to 16 percent for home health agencies, compared with 18 to 22 percent a few years ago, according to home health experts.
Additionally, not every new seniors housing property generates enough demand for home health services to support an agency as soon as the community opens.
For example, when Erickson opens a new CCRC, the first residents are typically young seniors who move into independent living. As these residents age, they will require more health services, but that might not occur for several years down the road.
“When a new community starts, there is not the volume of residents who need either private duty or home health services,” says Potter.
Even home health leaders like National Church Residences and Erickson do not have their own home health agencies in every geographic area in which they operate seniors housing communities. In those instances, they usually pick a single outside home health agency to be their lead partner (see sidebar, page 40).
“We have established relationships with outside home health agencies that provide care as close as possible to our own standards,” says Potter. “If the relationship is strong enough, a seniors housing operator may not need to create its own home health agency.”
Cutting confusion, coordinating care
Home health agencies can also coordinate the services that seniors receive. US CareNet net offers healthcare navigators to help seniors understand the complicated world of healthcare.
National Church Residences hires full-time service coordinators at its affordable seniors housing properties.
Currently, National Church Residences employs 375 enhanced service coordinators. A program from the U.S. Department of Housing and Urban Development funds 70 percent of the cost of the coordinator’s $35,000 salary and other expenses. The rest of the funding comes from the property’s operations budget.
Sanborn Place, a 73-unit affordable seniors housing community in Reading, Mass., launched Sanborn Place, Home Care & Day Services in 1998 to provide services and help coordinate the care for its residents.
Before the launch, residents were not getting the care they often needed. “In theory and on paper, it would look as if home healthcare services were in place,” according to Sanborn Place. “Gaps and sporadic care were issues.”
Sanborn Place, Home Care & Day Services coordinates the health services that seniors receive to make sure they are getting the proper care. Sanborn Place also offers personal care services, housekeeping, respite care and even grocery shopping.
The agency quickly expanded into the community at large, offering many of the same services to people on its waiting list and those who chose to remain in their own homes.