A Good Hill to Try On

Seniors housing professionals seek solutions to affordability, labor shortages and more through legislative lobbying and legal means.

By Jeff Shaw

The challenges of owning and operating seniors housing are not news to anyone in the industry, but the solutions may be.

Lawyers, lobbyists and industry experts are finding a variety of ways to try and surmount the increasingly difficult issues facing the sector — including labor shortages, affordability, increased acuity and changes to government funding. Efforts are underway at a local, state and national level.

Reports from Capitol Hill are that we may see positive changes in the near future.

“It’s been very exciting on the Hill the past year,” says Maribeth Bersani, chief operating officer of Argentum, an Alexandria, Virginia-based trade association dedicated to supporting companies operating professionally managed senior living communities. The association has over 400 company members.

“For many years our voice on the Hill was to educate the federal members and agencies that we’re regulated at the state level, and the unspoken message was, ‘Don’t regulate us like you did the nursing homes.’ But under CEO James Balda’s leadership, we’ve started with a more proactive agenda.”

Some good news may already be on the way. The federal appropriations bill, passed in January, directed the U.S. Department of Housing and Urban Development (HUD) and the Centers for Medicare & Medicaid Services to explore how Medicare and Medicaid funds could possibly be used toward senior care services in affordable housing properties.

Another association, Washington, D.C.-based LeadingAge, which advocates for nonprofit providers of services for older adults, including housing, helped promote the language in the appropriations bill forward through a partnership with the LeadingAge LTSS Center @UMass Boston. The partnership provided policymakers with research on the benefits of housing-plus-services models for residents and healthcare providers, including strategies to develop financially viable programs. (LTSS is an acronym for long-term services and supports).

A primary focus of the LeadingAge LTSS Center is to serve as a catalyst for the development, adoption and support of innovative, affordable housing solutions that allow adults with low incomes to age safely in their homes and communities, including HUD-supported housing. The center conducts research on possible solutions, particularly involving HUD, Medicare, Medicaid and Low Income Housing Tax Credits (LIHTC).

“We’re focused on the lack of affordable housing and the need to create additional options for the expanding segment of older adults,” says Alisha Sanders, director of housing services policy research with the LTSS Center. “The question is how seniors will maintain their housing — both cost and maintenance — and their ability to age in that home as needs change.”

LeadingAge also sent a paper to Congress outlining a series of proposed legislative changes for workers and immigration, including a temporary guest worker program for certified nursing assistants (CNAs) and home care aides.

A labor crisis

The seniors housing industry will need 1.4 million new workers by 2025 to meet increasing demand, says Bersani. This challenge is compounded by historically low unemployment rates, meaning few people are looking for work.

“There is not one silver bullet that will solve or even make a huge dent in addressing the growing demand for workers in senior living, but we feel strongly there is a role for Congress on several fronts,” says Jeanne McGlynn Delgado, vice president of government affairs for the American Seniors Housing Association (ASHA), a Washington, D.C.-based organization supporting the seniors housing industry.

“Research suggests that if you live to 65 there is a 70 percent chance that you will need some form of long-term care,” continues Delgado. “Couple that with a lower birthrate in the U.S., fewer family caregivers and aging care workers, we now have a caregiver shortage. There are simply not enough workers for the number of jobs available.”

Of the issues that could be solved at a government level, “immigration reform is at the top of that list,” says Delgado. “Nationwide, 1 million immigrants work in direct care — as CNAs, personal care attendants or home health aides — according to the Paraprofessional Healthcare Institute.”

“The most interesting proposal I’ve seen yet for the labor shortage was to try and hire refugees,” adds Pamela S. Kaufmann, partner with law firm Hanson Bridgett LLP. “I’m sure there are obstacles to overcome, but it seems like a really interesting solution. It addresses the humanitarian issue and the labor issue at the same time.”

One potential change that caught the attention of both ASHA and Argentum was a bill by Rep. Lloyd Smucker, R-Pa., that proposes a new visa category that would allow year-round, low-skill, non-agricultural immigrants to work. Named The Workforce for an Expanding Economy Act, the bill would immediately open up 85,000 new visas if passed, according to the National Immigration Forum. The bill is still working its way through Congress.

“The Smucker bill sets criteria to allow foreign workers to apply for positions that employers are unable to fill in times of low unemployment such as the current conditions,” says Delgado.

“While the political climate is not exactly favorable to comprehensive immigration reform, ASHA is marching ahead and highlighting the Smucker bill as a reasonable platform to make the case for reform,” continues Delgado. “If nothing else, it offers us the opportunity to talk with members of Congress and their staff about the workforce shortage and associated senior living issues.”

Rep. Smucker himself recently visited Country Meadows of Lancaster, an independent living, assisted living and memory care community in Lancaster, Pennsylvania. He discussed the workforce challenges facing the community, helping refine his proposed reforms. Similarly, Rep. Lori Trahan, D-Mass., recently visited Benchmark Senior Living at Robbins Brook in Acton, Massachusetts, where about 40 residents at the Benchmark community visited with her and asked her questions.

Bersani suggests that it’s important to make sure that seniors housing stays in the conversation when it comes to labor and immigration issues, which is why lobbying is so important. “Congresspeople think about hospitals, they think about construction. We’re trying to make sure the members know we’re an industry that needs workers as well.”

Bersani also notes that there are multiple bills currently proposed in Congress related to loan forgiveness, often tied to a college graduate staying active in the workforce for several years. This could also encourage workers to try new industries. “We’re finding those existing vehicles and making sure senior living is included.”

Affordability concerns mount

“There are a lot of things that states and communities need to think of in terms of the housing needs of their older adult population,” says Sanders of the
LTSS Center. “There’s no one solution to create an affordable and supportive housing opportunity for everyone. We’re going to need a lot of different options.”

More and more government-subsidized affordable seniors housing communities need to offer services, if the goal is to keep seniors out of the emergency room or avoid lengthy hospital stays, Sanders believes.

A service coordinator will soon be a necessary employee at affordable communities, says Sanders. The tasks of this position include helping seniors apply for and maintain benefits such as Medicare, Medicaid and SNAP (food stamps); arranging transportation to medical appointments; supporting access to food through food banks or delivery services; and acting as liaison between the resident and supportive service providers such as home care or pharmacies.

Affordable seniors housing communities should also coordinate with community organizations to help provide on-site programming such as fitness programs, health education, vital sign monitoring, flu shot clinics, meal programs, transportation and social activities.

There are several successful models in place for providing senior services with government reimbursement, such as the Supportive Living properties in Illinois and Support and Services at Home (SASH) program in Vermont. Funding lower levels of service can save Medicare money, says Sanders, by keeping seniors in their homes instead of sending them to the hospital. Unfortunately, many of the local models simply don’t have the funding to succeed.

“There’s no good central funding source for sustaining these models and scaling them,” says Sanders. “This is a mechanism for supporting older adults who are potential high users at high cost to Medicare. How can we scale these models up and sustain them for over 2,000 affordable housing communities across the country?”

The LTSS Center has the data to back these concepts up. According to the organization’s research, residents at a community with an onsite service coordinator were 18 percent less likely to have a hospital stay during the year. One study of a service coordinator program found a reduction in hospital stays, and that length of stay in the hospital was a full day shorter on average. 

Participants in Vermont’s SASH program experienced slower growth in Medicare expenditures compared with those outside the program. Participants in Pittsburgh’s Staying at Home program were more likely to use preventive, non-emergency medical care such as visiting the dentist.

Delgado notes that there’s a flip side to the affordability coin as well. In addition to making housing more affordable by reducing costs or increasing government reimbursement, there are also ways to make sure seniors have more money to spend.

“It is really important for Congress to consider proposals to incentivize retirement savings,” says Delgado. “We have also been working with Congress on some draft legislation to create an incentive for the purchase of long-term care insurance.” 

As an example, Sen. Pat Toomey, R-Pa., recently introduced a draft bill to allow penalty- and tax-free retirement fund withdrawals of up to $2,000 per year to pay the premiums of a long-term care insurance plan.

Argentum’s Bersani notes that one in three Americans has less than $5,000 saved for retirement, “which is very scary.” She also supports finding ways to incentivize individuals to save more for their golden years.

Bersani suggests a variety of legislative changes that could help the industry, such as allowing seniors to delay drawing on their retirement savings until they’re older, adding a Medicare Part E that would fund long-term care, and adding a “Medigap” policy that would cover what Medicare doesn’t. Further, the industry needs to find allies in the government who see why these proposed changes are vitally important.

“Five years ago, nobody was talking about this on the Hill; they didn’t want to talk about getting older, help with activities of daily living and who’s going to pay for it,” says Bersani. “We’re always looking for champions for senior living. We need to find the people who are really embracing aging as an issue.”

Operator swaps, legal tangles

Owners transitioning properties to new operators has been a noticeable trend in recent years. For example, HCP, the REIT now known as Healthpeak, transferred operations of 12 of its communities from Brookdale to Life Care Services in October. In 2018, Welltower turned operations of 37 of its communities over to a newly launched operator, Pegasus Senior Living.

“The last decade has made clear that the quality of the operator/manager is key to a successful community,” says Michael Okaty, a partner at law firm Foley & Lardner LLP. “Poor operators need to be transitioned. In such cases there is resulting friction from a licensure standpoint and from changes in the service delivery model for residents, employees, referral sources and vendors.”

“In 2019 many operators found themselves in a distressed situation and needed to restructure their lease or exit,” adds Hedy Rubinger, chair of the healthcare practice of Atlanta-based law firm Arnall Golden Gregory LLP. “Of course there are regulatory and other legal implications involved in that.”

Not only are regulators looking closely at the transfer of the operator, many states now vet the ownership and financing behind a community, says Rubinger.

“If you’re applying to be an operator of certain types of facilities in New Jersey, you must submit information about your ownership to the regulators, and then they want to know what else those owners own in other states. We’re seeing an increasing amount of that type of process throughout the country.”

Owners can help protect themselves by putting provisions into leases that allow the owner to easily replace an underperforming operator.

“Contractual provisions should allow for ineffective managers to be removed,” says Okaty. “Great concern for continuity of care for the residents should be given in any such transition.”

Additionally, transitions go much more smoothly when the new and old operators communicate well with each other.

“Cooperation between the existing operator and incoming operator goes a long way. When we’re working on a lease, we make sure there’s strong cooperation language,” says Rubinger. “We have to make sure the residents stay safe and are properly cared for. In some states they’re requiring the incoming operator to go through training sessions before the new license is issued.”

Kaufmann of Hanson Bridgett says working closely and collaboratively with regulators can also pay dividends because it builds trust.  Before implementing big changes, owners should budget plenty of time to obtain government approvals.

“In California, if a nonprofit proposes to sell its assets, affiliate, or merge, it must first obtain Attorney General approval. You definitely need to build in time for that. The pace can be frustrating because the approval process is thorough and includes one or more public hearings. Our firm has worked with our state agencies to streamline various approval processes, and our experience has been relatively smooth.”

Many legal considerations

The changing world has led to a host of new legal considerations for seniors housing owners and operators. Topping the agenda are these hot-button issues:

 With marijuana legal in multiple states, how do operators handle residents and employees who use it?

™ With calls for an increase in the minimum wage, how can operators stay competitive for top caregivers?

™ How do operators prepare for rare but frightening events like active-shooter situations or major natural disasters?

™ How do operators deal with mental health issues, as well as residents who resist seeking help?

™ How do operators handle “death with dignity” laws, allowing people a right to die where and how they wish?

“From a legal standpoint, the issues keep expanding and changing,” says Rubinger.

Owners and operators must consider all the issues and adopt solid legal policies that suit them best. A talented communications department or agency, and skilled in-house or third-party legal representation, is more important than ever, says Kaufmann.

“There is increased scrutiny on seniors housing — fair housing laws, elder abuse claims, federal regulation. It’s becoming increasingly important to get your board involved on an oversight level, to make sure your board has, among other policies, corporate compliance policies to address your key legal risks and challenges.”

“It’s important to have a relationship with a communications organization,” adds Kaufmann. “It’s essential to identify at least one person in-house to serve as a spokesperson. This is a key element of any plan to respond to emergencies.”