Rockland Berg

Today’s senior living communities are boasting taglines such as “senior living like you’ve never seen before,” or “we’re here to shake up your paradigm of senior living, it’s not like the nursing homes you envision from years past.” These and other similar claims insinuate that the industry has progressed far from the original institutional-type nursing homes. It would almost seem as if skilled nursing is a dying sector. We have to ask ourselves, is it really dead? Or is skilled nursing making a comeback?

Current trends in the market

Many of our clients within the senior living industry are steering away from developing communities that exclusively serve skilled nursing, or are building skilled nursing neighborhoods within communities serving all types of care. Most new developments with beds for acute care are being built by non-profits that are working to achieve CCRC status, and they are merely setting aside space for the required percentage of skilled nursing beds in relation to independent living and assisted living residences. For-profit companies are diving into the independent living, assisted living and memory care spaces intentionally steering clear of the nebulous care environment of skilled nursing. So why this shift?

Why not skilled nursing?

  • For-profit clients feel they can hire operators who understand the other areas of care with ease, and that it is more difficult to find operators who can be profitable by specializing in skilled nursing.
  • Skilled nursing is not viewed as a profit center because it is uncertain when residents will require care, how long they will need it and if they will be able to afford it. While some seniors have long-term care insurance plans or life care, others will rely on Medicare until that runs out and then who will foot their bills? Operators are wary of taking on unpredictable and additional expenses.
  • Legislation pertaining to healthcare and Medicare can and will change over time. Not only that, but providers are worried that with the influx of boomers on the horizon of retirement, Medicare won’t be able to cover healthcare needs for seniors in this generation. Preparing financial plans will be difficult as it is impossible to predict which seniors will be private pay, which will use Medicare and what will happen if Medicare cannot support them.

How do we make skilled nursing relevant and profitable?

Despite these disconcerting views, our firm has observed ways in which a smaller number of companies are seeking to make skilled nursing a profitable and relevant sector within the industry now and in the future.

  • To make acute care profitable, companies are using the occupational therapy and physical therapy teams to connect with the larger community by inviting nonresidents to use therapy services and equipment during a short-term stay. Local residents of all ages may have been in a car accident, fallen and broken a hip or had a knee replacement surgery. Offering them short-term housing with therapy builds an informal relationship and helps the provider stay top-of-mind down the road.
  • Skilled nursing providers are working to look and feel less institutional by making accommodations more residential. They achieve this by breaking down the number of beds in a given area, similar to the layout of the small-home concept, in which clusters of rooms are centered around an open common space or living room. They’re designing overnight visitation spaces in the rooms, like sleeping nooks near bay windows or reclining chairs. They are also opening floor plans so spaces seamlessly spill from one place to the next. Building aesthetics are fusing a modernized look with a welcoming charm, and finishes, room sets and décor are fresh and vibrant.
  • Providers are also tailoring a wing or floor to the specialties of nearby hospitals. If the local hospital focuses on cardiology, the skilled nursing facility will have a special wing dedicated to cardiac rehab for continued support of patients exiting the hospital. This way the patients are receiving care at a lower cost, and the hospitals are not having to readmit.
  • Many providers are moving toward private-pay models to help disperse the cost of skilled nursing services. Those who have long-term health insurance and who can pay out of pocket help alleviate costs accrued from seniors who do not have the means to pay it for themselves. While many nonprofits’ missions are to provide charitable care, it is still imperative to make sure financial stability is in place for operations.

As the baby boomer population enters skilled nursing, we face a shortage in the development of skilled nursing professionals. Will the industry be able to handle the boomer population as they hit end-of-life stages and need long-term extensive care? Will communities expand down the road to include skilled nursing sectors? These are questions that we need to be asking ourselves as we prepare for the influx of aging seniors and devise plans for meeting their needs.

Rockland Berg is the principal and director of business development at three: living architecture.