Owners, operators must change with the times, but only with careful planning.
By Kevin Madalinski and Randy Bremhorst
If you want to watch a movie at home, do you still drive to a video store in hopes that your selection is available?
When you take pictures, do you go to a grocery store photo kiosk and wait days (or weeks) to see what they look like?
Consider the fact there are 2.2 million apps available in the Apple app store alone, up from 800 at its launch in July 2008. We are surrounded by changes, and the pace of change is quickening.
The demand for enhanced services in the senior living market has changed, too. We must expect and anticipate the changes that impact our industry, and make the necessary shifts to stay relevant. Has your campus or facility shifted with the demand?
Many accommodations and services that were once progressive have become outdated and in need of examination. By monitoring industry trends and thoughtfully examining cultural swings — while appropriately shifting assets, employees, positions and mindsets — the effectiveness of a facility can be enhanced.
Consider the process followed at Woodside Senior Communities, a nonprofit continuing care retirement community in Green Bay, Wisconsin.
After performing due diligence that included intense research and study, leadership embarked on a comprehensive master planning process. This brought about the development of a two-phase, $15 million project to expand and renovate the full spectrum of care.
The decision to reposition their campus allows Woodside to enhance and expand the services it offers, positioning the community to address market demand for the ensuing 15 to 20 years.
Why the shift?
The changes that came about due to ongoing healthcare reform have impacted nearly every business in America. However, not many have been affected like the senior living market.
The model of residents-for-life (custodial care) was the mainstay of the industry for decades. Rehab-oriented care, otherwise known as transitional or short-term care, is rising significantly due to alterations in Medicare Part A, advances in medicine and the shifting mindset and demographics of society.
An evolving market opportunity is rapidly prompting transformation in how many senior living providers plan for the future.
The mentality concerning the aging progress has significantly changed with the Baby Boomer population (persons born between 1946 and 1965). This swing has created a sizable opening for those seeking to capture this market by concentrating on the replacement of hips, knees and shoulders.
For many hospitals that offer these surgical services, it is not cost-effective to correspondingly deliver rehabilitation services. Many have determined that forming partnerships with trusted skilled nursing facilities is the right solution. This is in addition to the increased necessity for reliable rehab partners due to penalties that healthcare reform has instituted for hospitals based on readmissions.
The master planning endeavor at Woodside was the result of comprehensive due diligence, which included an analysis of the existing campus and the current and future market demand. After examining past campus development decisions and reviewing the property’s current financial position, Woodside’s leadership used that information to help formulate its strategic direction.
After studying the budding market, recognizing an underserved niche, researching debt capacity and identifying onsite assets and resources, Woodside set its new course.
Setting realistic timeframes and schedules, working collaboratively with a board of directors, overcoming municipal issues and challenges and successfully partnering with a team of expert consultants to incorporate the latest and most appropriate trends in senior care were among the many project considerations that Woodside’s leadership examined.
In addition, a market study provided critical market characteristics that helped leaders make timely decisions, including valuable demographics information and data on the competition.
The results emphasized how outdated various Woodside facilities really were. This information resulted in the creation of a request for proposal (RFP) for master planning services. In addition, a pro forma was developed that helped govern borrowing capacity and identify how much capital was essential to invest in the project.
Woodside’s market research resulted in several key findings. In fact, through research, leadership made myriad discoveries.
The local market demand was declining as it related to long-term care beds. There seemed to be an opportunity to improve payor mix if private rooms were created and the physical plant were improved. Four competitors had recently taken the appropriate steps to remodel or rebuild their facilities. All indications were present that if the physical plant was improved, there were opportunities to increase short-term stay/rehabilitation days.
Woodside’s percentage of private-pay residents was strong compared with the competition, but there appeared to be room to improve. The prospect of adding assisted living was limited to the memory care market.
Studying, planning and designing
The market study helped Woodside establish priorities, as well as determine physical plant upgrades needed to remain competitive in the market and review physical plant issues related to resident care and staffing efficiencies. Moreover, financial evaluations were conducted to quantify the anticipated market share increases while also considering present and impending trends in resident care and service.
Vital programming inquiries that informed staffing decisions and drove the budget included the following questions:
- Who will we assist?
- What is our target demographic?
- Who will we not assist?
- What services will we offer?
Once these questions were answered, and data was accumulated and processed, campus programming and design commenced.
Vital components during design included: collaborating with key stakeholders such as residents, hospitals, neighbors and the community; considering project phasing; and identifying how to preserve occupancy and revenue.
The design progressed as the Woodside staff, technology consultants, engineers, interior designers and operational consultants all provided their input. Additional RFPs were dispersed to banks and investment brokers and the financial forecast was established, further solidifying the timeline.
Phased construction began in October of 2013 after a competitive bidding procedure, which allowed many area subcontractors to participate in the project. Consistent meetings and constant communication monitored contingency usage, change orders and bid package timelines, and shaped a safe construction site. Phase II of Woodside’s campus development and makeover was completed in November of 2015.
This critical, two-phase project permitted Woodside to transform its campus and set the property up for continued, long-term success by adding dementia care facilities and enhancing existing skilled nursing; unveiling a 49-unit rehabilitation center; and creating a spectacular principal entrance to the grounds.
Vital lessons learned
Woodside’s campus repositioning progression not only empowered the development to expand the services offered and positioned it well for the future, but the project also provided some great lessons that are worth sharing:
- Produce a cohesive internal team
- Sanction that your “house is in order” from an operational perspective
- Exercise patience
- Keep in mind that dollars never go as far as anticipated, so be ready to prioritize
- Choose robust allies
- Involve your staff, residents, and their families and pursue their advice
- Work as a team, but remember to lead and make choices as needed
- Appreciate the ride
By continuing to stay on top of deviations in both the trade and our culture, and by acting accordingly, your site or facility can be transformed or reconditioned to meet existing demand. Senior care providers that constantly monitor the pulse of the market and take action will obtain the benefits of outstanding referrals, a vivacious brand in the market and greater performance.
Randy Bremhorst is vice president of design and Kevin Madalinski is director of construction at Hoffman Planning, Design & Construction Inc.