Nonprofits: Incubators of Innovation

Their experimentation with everything from technology to product mix could have a profound effect on the senior living industry. 

By Jane Adler

Nonprofit organizations may fly under the radar of the senior living business, but lately they’re the scene of some of the most innovative thinking in the industry, testing new solutions to old problems. 

Having rebounded from the deep recession, nonprofits are looking for ways to put their recharged coffers to good use. They’re adding services to housing, only as needed, and piloting the use of the newest technology to quickly provide appropriate care. 

Mission-driven nonprofits are forging joint ventures, sometimes with for-profit companies. They’re even tackling the knotty problem of how to house and care for the vast middle market of seniors who can’t afford private pay communities, but who have too many assets to qualify for subsidized help. 

As the industry looks ahead for new approaches, here are several nonprofit innovations to watch.

Soaring potential of technology

Most everyone agrees technology will play a large role in the future of the seniors housing business. Less clear is how to put all the gadgets to work. 

Front Porch is an organization on the cutting edge of experimentation with technology. The nonprofit group, based in Glendale, California, even has a chief innovation and technology officer. Her name is Kari Olson, who also serves as president of the Front Porch Center for Innovation and Wellbeing. “Nonprofits are getting serious about innovation and how it can help us meet the needs of a changing world,” says Olson. 

The organization owns and operates 10 market-rate retirement communities and two active adult projects. Front Porch also manages 25 affordable projects, one of which the group owns. Most of the communities are located in California. 

The Front Porch approach couples technology with evidence-based research. Several Front Porch pilot programs have focused on telehealth, which Olson defines as any digital tool that can impact the health of seniors. 

A big goal is to familiarize older adults with technology in order to achieve sustained adoption, says Olson. “It’s all about training, training, training. The more personalized the training, the more people are able to adopt the technology.”

A gradual step-by-step approach works best. For example, an initial pilot focused on video health education. Video workshops were transmitted to senior centers on 28 different topics, such as mental health, diet, diabetes and heart disease. 

About 500 older adults attended the sessions. Follow-up surveys showed that 89 percent of participants said they had a better understanding and control of their ailments after the workshops.

The next pilot program taught computer skills to seniors, primarily non-English speaking residents of affordable apartment in order to help them find health content online in their native languages. After six weeks, the seniors felt more empowered to manage their own health and wellness. 

The first two pilots were a necessary prelude to the next step: engagement of the seniors in an actual telehealth consultation with a health care professional. Follow-up research showed patient satisfaction and good health outcomes. Seniors felt the consultations were as good as an in-person doctor visit. 

Front Porch is expanding its success with telehealth into dentistry, pharmacy and emergency services. The organization is also providing mental telehealth services with iPads at several communities, after a successful pilot program. Residents meet with a mental health professional once a week for six to eight weeks via video conferencing to get help with a personal challenge they may be facing. 

Other technologies are being explored (see sidebar). Olson notes that the emphasis on technology and innovation is part of the organization’s overall strategy titled “Humanly Possible,” defined as the effort to creatively meet the needs of seniors. 

Innovation workshops held over the summer asked Front Porch staff to work in small teams to create an innovation project of their own. 

“Building an innovative culture and mindset is key to our future success,” says Olson. (Please refer to the ASHA 50 supplement that accompanies this month’s issue for the results of a study on the effective use of technology in senior living communities.)

 The middle-market solution 

Givens Communities may have come up with a solution to one of the most vexing problems of the senior living market: how to house and care for seniors with middle incomes. Givens operates two continuing care communities and an affordable project for seniors in North Carolina. 

Givens Gerber Park is a new community in Asheville with three phases meant to serve both low- and moderate-income seniors. The first and third phases of the project are designed for low-income seniors. 

The low-income units will serve seniors with incomes at or below $24,360 for one person; and $27,840 for two persons. The units are limited to those at 60 percent of the area median income.

The current median income in Asheville is $39,200 for a single person, and $44,800 for a two-person household.

The second phase, opening in the first quarter of 2018, is targeting middle-income seniors, those making from about $24,000 to $50,000 annually. It will include 82 apartments; 61 one-bedroom units; and 22 two-bedroom units. 

Rents will range from about $1,200 to $2,050 a month based on income. An entrance fee will be charged of $5,500 to $15,000, also depending on the resident’s income. 

Persons making more than $50,000 a year can also apply for an apartment. The project is not financed with tax credits or other subsidies that require income limits. The Duke Endowment, a private foundation based in Charlotte that supports healthcare and other worthy causes, provided $4 million of equity. The nonrefundable entrance fees are being used to provide additional equity. Conventional debt financing is also funding the project. 

The model works partly because the apartments are basically the same. In other words, a resident who pays a higher entrance fee or monthly rent does not get a bigger place. It’s important not to have too many residents on the lower end of the income scale, however. Those who pay more for their apartments are key to making the financing model work. 

“We believe we have found a model that will work for the middle market,” says Teresa Stephens, director of Givens Affordable Communities. “This is an underserved niche with a vast need.”

Though a $4 million gift isn’t available to help fund most projects, Stephens says the idea can work with other types of contributions. For example, the group is looking at building a project for persons with moderate incomes by using donated land to reduce project costs. “It takes some creativity,” she says. 

Supportive services are a big part of the equation, says Stephens. The goal is to provide services to the seniors in their apartments because they cannot afford to move to an assisted living building. 

Residents will have access to an on-site geriatric clinic. A resident services coordinator and a community nurse will help connect residents to local services and also provide wellness and health programs. 

The community will include a café that also serves as a senior center open to the wider community. Classes and programs will be offered. Other on-site amenities will include a library, fitness center, community room and gardens. Also, the project is located in an urban area with access to public transportation and shopping.

“We took the housing and supportive service model, beefed it up and repackaged it,” says Stephens. “We all need the same things as we age.” 

Building partnerships

Nonprofits have traditionally tried to provide all services to all people, but that paradigm is shifting. According to the LeadingAge Ziegler 150 report on nonprofit providers, a little more than half of the largest nonprofit senior living providers offer some type of home- and community-based services. 

Rather than expand those offerings, the innovative business model going forward is more likely to include joint ventures and partnerships with outside organizations and even for-profit companies. 

The push is partly the result of healthcare reform, which is shifting fee-for-service payments to bundled payment arrangements. An example of how this plays out in the market is the on-site health clinics located at senior living communities, but operated by physician groups, or local hospitals. 

“Nonprofits are looking to partner either informally or formally with healthcare providers,” says Steve Maag, director of residential communities at Washington, D.C.-based LeadingAge, an association of 6,000 nonprofit senior living and care providers.

Nonprofits are joining together with each other too, a process known as “affiliation” in the sector. Affiliations have been growing over the last few years, with 19 transactions in 2016, according to Ziegler, an investment bank in Chicago. 

“We see nonprofits growing through affiliations, driven by the complexities around healthcare,” says Lisa McCracken, who is the director of senior living research and development at Ziegler. 

HumanGood is the new name for the nonprofit organization created by the recent affiliation between the and ABHOW, two senior living providers. “Our strategic plan is to partner with the right organizations,” says John Cochrane, president and CEO of HumanGood.

An example is home care and home health services. Many nonprofits have attempted to enter those segments, though they can be difficult businesses to operate. HumanGood offers home care to residents of its buildings. These services include housekeeping and help with daily activities, but are distinct from home health, or medical care. 

Home care services were also offered to those not living at a HumanGood community, though the group is winding that business down. “It’s a high-risk, low-margin business that requires a high degree of operational expertise,” says Cochrane. “We needed to go bigger to capture more market share, or get out of the way and leave it to someone with deep expertise.” 

Looking ahead, Cochrane expects the group to pull back somewhat from the services it offers and instead curate services and goods relevant to the consumer from best-in-class providers.  

Alternative housing models

Nonprofit organizations are testing new housing and service arrangements. Covenant Retirement Communities, based in Skokie, Ill., owns and operates 15 properties in 10 states. The group offers what it calls catered living at two of its suburban Chicago communities, Windsor Park in Carol Stream, and The Holmstad in Batavia. 

Catered living is a hybrid model that is a cross between independent and assisted living, according to Terri Cunliffe, president and CEO at Covenant. Residents in independent living can receive some assisted-type services, such as housekeeping and extra help with meals. 

The model dovetails with another trend: growth of fee-for-service arrangements. Nonprofits are experimenting with charges for services, such as transportation, that traditionally were free or built into the monthly fee. For example, Covenant is in talks with ride sharing service Lyft to help provide transportation for residents 

“Revenues are challenged,” says Cunliffe, adding that the industry is short of workers, which is pushing salaries higher. “We have to be more efficient.”

An innovation by Covenant to meet these challenges is a proprietary software program that collects data on residents. The data serves as a kind of acuity-based pricing tool, so residents pay for the services they need. 

The next wave of retirees won’t want a bundled package of services, says Cochrane at HumanGood. He likens the shift to that taking place in cable television where customers are “cutting the cord” and opting to only purchase the shows they want. “Choice is important,” says Cochrane. 

As a result, he expects to see more experimentation going forward among the nonprofits with the rental model as opposed to entrance fee communities. “Rentals are better equipped to meet the needs of consumers looking for flexibility, choice, and affordability,” he says. “We’ll see tremendous growth in the nonprofit rental market.”