Aging services providers must play a larger role in providing supports within their communities, helping with broad and basic workforce education, even before recruiting potential candidates, Hebrew SeniorLife CEO Steve Landers, MD, told McKnight’s Long-Term Care News last week. 

“I still say the workforce issues are the number one challenge, and one of the reasons they’re a big challenge is the demographic that we’re working with in our aging population. It is going to be with us, and it’s going to require incredible creativity,” Landers said. “In terms of where I’m hoping to work with our team in the coming months, it’s being leaders and innovators in workforce development, but contributing to solutions rather than just passively having to watch this situation and be frustrated.”

For Landers, that vision starts with educational programming that starts pre-hire for potential CNA and home health aide candidates, regardless of whether his organization will be the one to hire them. Boston, not so long ago one of America’s whitest cities according to the Census Bureau, had become the sixth most diverse by the late 2010s. That means Landers’ local labor pool is hugely diverse, shaped by immigrant communities and first-generation Americans.

“We need to provide even earlier, more formative educational support that might involve things like language training, basic jobs skills, and tech literacy,” Landers said. “We’re trying to develop some resources to go that far ahead in the process to try and really get people interested in long-term care and support them in their development at an earlier place.

“I think it’s more about, can we make a big, broader impact on the workforce, not just for ourselves, but also make a community impact in terms of the broader continuum,” he added. “It’s a topic I’m really excited about for the future.”

Hebrew SeniorLife serves seniors across six campuses ringing Boston, through its multiple outpatient and home-based service lines and with prolific research produced through its Hinda and Arthur Marcus Institute for Aging Research, focused on geriatrics and gerontology. In addition to housing and skilled care, it also runs two long-term chronic care hospitals with more than 600 beds. All together, it’s New England’s largest nonprofit provider  of senior health care and living.

Not just a Boston thing

With about 2,500 employees currently, Hebrew SeniorLife also is facing many of the same recruitment challenges as providers almost everywhere in the country.

Landers says support from Hebrew’s own medical group and access to training from some of the best academic programs in the nation contributes significantly to retention, he wants to do more to expose workers to caregiving roles, expand even more on on-the-job training, and create additional career pathways. That starts with grassroots outreach.

“We all need to find net new workers. Right? We need to find people, and we can compete with one another for whoever’s out there … but that’s a zero-sum game. Ultimately we need new entrants,” he said. “That requires casting a wider net and also [putting] support services around these workers so that they can get training and still address issues like child care and transportation. 

“And then we’re talking about people that are new to our communities. Maybe they’re not native English speakers. We need language skills support and work skills in computer literacy training. There’s all sorts of stuff we have to do to create that pipeline.”

Seeking more hospital partnerships

Skilled staffing has been problematic, and the organization’s two facilities each have a census of around 30 right now, despite their 50-bed capacity.

Landers blamed some internal “structural” challenges for those limited admissions — rather than massive staff shortages — but he also acknowledged that the organization is working behind the scenes to address nurse recruitment.

A key partner, Landers believes, will be hospitals.

“We’ve been able to work with the hospitals to try to prioritize and triage, even entertain some dialogue where the hospitals might provide us some support to expand access,” he said. “There’s a very receptive audience to that type of thinking. … I think the question is can we contract, maybe designate some of our bed capacity to a specific hospital or health system, or get some consideration with respect to staffing support. That could be financial support or what have you, but we’d be able to provide more services.”

Such partnerships could be game-changers in Massachusetts, where earlier this year a state health association estimated that roughly 1,200 patients daily are stuck in hospitals, while waiting for discharge to nursing homes or rehabilitation facilities. Meanwhile, 25 nursing homes have closed in the state since 2020, the Massachusetts Senior Care Association has said.

“I’m very optimistic that those types of arrangements are of interest and potentially can play a role in bringing more resources to help get more people out of the hospital,” Landers said.

Creative contracts and referral partnerships could pay off longer-term for the provider. Because Hebrew SeniorLife has such an extensive network of services, it’s likely to offer additional services patients might need in the future.

“There’s a lot of loyalty because the families get to know us and trust us, and we’ve got over 100 years of work in the community,” Landers said. “We’re typically not strangers to the people that we’re caring for. At the same time, it’s a very competitive environment. But some of the services we offer have some overlap with things that the hospitals and health systems offer or that other independent providers offer. We’re always having to try to differentiate ourselves.”

Training grounds

Physicians and advanced practice nurse teams affiliated with Harvard and the Hebrew SeniorLife teaching system are always available to and regularly rounding at the skilled nursing and chronic care hospital locations, noted Landers, a geriatrician himself.

“I think that the two things that I’m seeing coming in new and seeing this approach from the outside is that number one: There’s great collegiality and rhythm with the medical staff and the nursing teams around issues of quality, safety and performance improvement,” he said. “Having all these folks as part of one orchestra rather than a bunch of one-man bands, if you will, seems to be paying dividends in terms of some of the outcome measures, the star ratings, and patient experience measures.

“The second thing that is a win — although it’s more of a community impact than necessarily great business — but the contribution to education, when you have a steady group of geriatric medicine leaders on site that are committed, provides stability and a great venue for learners rather than kind of people coming in and out of the facility,” he added.

“The teaching contribution is very real and that’s helped us with recruitment ultimately, so we’ve been able to keep some of the folks that participated in the training programs.”

On the skilled side, that often means CNAs and nurses work with leaders who’ve helped train them, and they see a path forward, which promotes retention. But Landers continues to come back to the idea of unearthing new talent in ways the sector hasn’t imagined before.

“That’s a very robust and active topic here,” he added. “And of course, when it comes to the CNA training program, we’re trying to cast a wide net and reach people that might not otherwise have known about working in long-term care and elder care.”

While much of the real estate investment trust’s third quarter activity was in its much larger senior living portfolio, company officials outlined several positive developments affecting nursing home holdings.

“I’m pleased to report another strong [quarter of] operating results, which continue to exceed our expectations,” CEO Shank Mitra said during a call with investors Tuesday morning. “Our senior housing portfolio posted another quarter of exceptional revenue growth, which continues to approximate double-digit levels, driven by both strong pricing power and occupancy build.”

On the senior housing side, occupancy acceleration brought Welltower-affiliated properties to their highest level over the last two years: 81.8% for facilities the REIT operates and 80.9% for facilities the REIT leases. In skilled nursing, average occupancy hit 80.3% in the third quarter.

Ohio-based Welltower now has 258 long-term care and post-acute facilities with a combined 32,265 beds, according to supplementary information shared along with third-quarter earnings information this week.

So far in 2023, the company has purchased 24 LTC/PAC facilities, representing nearly 2,900 beds, at an average price of $140,000 per bed. Of the $2.05 billion it has spent so far this year overall, Welltower has invested $405 million in LTC/PAC.

The company is focused on buying assets with occupancy rates in the 70% to 80% range, giving those places room to build, Mitra said.

“From a capital allocation standpoint, we have never been busier,” he added. “Last quarter we spoke about a pipeline of $2.3 billion. We closed $1.4 billion in Q3, and roughly another $900 million in October. Additionally, we have another $1 billion of deals just about to cross the finish line. Beyond these billion dollars of investments under contract, our pipeline remains large and near-term actionable. But the execution of these deals will depend on our access to capital.”

Mitra said about 80% of the pipeline deals are in the senior living sector, with some “creative opportunities on the skilled side” too.

Welltower has reduced its expenses too, company leaders said. Much of that has to do with staffing, with the provider moving to eliminate agency where possible.

“Our focus on materially reducing agency labor improves both the customer and employee experience, as both are benefited by permanent high-quality employees, compared to the random agency employees lacking relationships with our customers and knowledge of the community systems and processes,” said COO John Burkart.

“Additionally, eliminating the agency or middlemen enables us to ensure the hard working people at our communities receive a fair compensation package with vacation and benefits as well as competitive pay, and our shareholders benefit from the reduced leakage to the agency company owners,” Burkhart added.

Mitra added that employee turnover is coming down “significantly.”

“We are seeing that overall availability of employees who want to be part of our business and part of the communities is increasing significantly,” he said. “And we are seeing that our operating partners are getting better using technology and other resources to attract talent and keep them in the business. … Whenever you get hit by a crisis, people figure out ways to do things better. Every crisis makes the business better if it survives, right? And that’s what we are seeing.”

One area the company has little interest in? That would be starting new developments on either its skilled or senior living sides. Mitra called any such moves too risky to consider, especially given the current price of construction.

But the Accura Healthcare CEO and founder found himself in another kind of upside-down situation in 2022. With 34 skilled nursing facilities, most of them rural and most of them serving a predominantly Medicaid population, LeNeave’s company was taking a beating by state reimbursement rates that had failed to keep up with staggering inflation. 

“For us to be a successful Medicaid provider, it starts with relationships at the facility level. We have got to be efficient and watch the dollars, watch our spending. But we’re not starving the facilities of supplies or staffing. We’re giving them everything they need to be successful,” LeNeave told McKnight’s Long-Term Care News earlier this month.

But with Medicaid rate increases coming only biennially in Iowa, where Accura does the bulk of its business, doing right by staff and residents led to hard choices about the company’s future. While all of its buildings remained operational, Accura’s journey over the last year is not unlike those of other providers whose leaders have chosen to walk away rather than take on ever more debt in a sector with crippling staffing and regulatory burdens.

“Last year was the worst year of my career from a financial standpoint, or for financial stability really,” said LeNeave, a licensed nursing home administrator who cut his teeth at  single sites before becoming an executive at Kindred in the early 2010s.

“When it got tough, I had to make a decision: Do I go borrow more money? Do I drain my life’s savings? Or do I just pack it up and sell it? I could have just walked away and said, ‘I’m done, I’ll tell the REIT companies, you can have these back.’ A lot of people are doing that. But I was chasing my tail trying to keep the doors open.”

Knowing rate increases would eventually come, and in conversation with the governors of the four states where Accura does business, LeNeave negotiated term extensions with everyone from vendors to the landlords of the Accura buildings he doesn’t own.

He also put on hold rent payments to him for the buildings he owns personally, and he declined disbursements beyond his salary. But LeNeave said he didn’t stop staff wage increases and he also added to healthcare benefits during the low point.

Recovery shaping up

Those strategies helped carry Accura through the darkest days to today. The chain has privatized some patient rooms, increased census systemwide and started to catch up on repayments. It has also cut nurse agency use by 65%, often attracting full-time staff from temporary nurses who like the company’s culture and want to be able to stay on board as LeNeave continues to phase out agency reliance.

In all, the company has about 2,500 employees, including in the company’s typically co-located assisted living locations.

Accura is often the biggest employer in a community it serves; it therefore holds a link to employees’ personal and professional lives that is unique, or at least more apparent in rural communities.

“For us, our company is all about culture,” said LeNeave, whose white board reminded him not to sacrifice that as it considered cost-cutting strategies. “It’s all about relationships.”

Often, it was local leadership that found ways to reduce costs without impacting patient care, or identified new ways to drive revenue, LeNeave said. In the midst of his borrowing spree, one facility leader talked him into expanding an Alzheimer’s unit into an entire building. The real estate investment trust that owned the building agreed to share the $1 million-plus renovation fee, and the building was approaching full census after reopening this summer.

Between July and August, the company as a whole saw an average census uptick of 30 patients per day. Supplying a needed service has empowered LeNeave in his conversations with local and state governments. 

National leadership

It’s governmental relationships he’s focused on to sustain the company and the broader sector’s fiscal recovery. 

Already the regional multifacility representative on the American Health Care Association’s board, LeNeave is running for board chairman in the election to be held at the organization’s convention early next month.

“The vote for the next chair will be one of the most important that states [association leaders] have cast in many, many years because of all the challenges in front of us,” LeNeave said. “We know we’re eventually going to get a new CEO at AHCA. We also know that mandated staffing is here … and for the next couple of years we’re going to be having discussions with legislators and CMS about how we manage through this.”

And while he wants to continue his advocacy at the national level, LeNeave doesn’t plan to let up on the local governments responsible for critical skilled nursing lifelines. Strengthening relationships with state lawmakers may help providers like him avoid another round of daunting financial challenges.

“We’re called when things are getting hard for the sector, and we bring a lot of credibility. We’re very realistic,” he said of his Accura leadership team’s work with state officials. “We understand why you’re asking for these regulations, but let’s be transparent. We want to show you where we are financially and how hard it is to run a facility in these rural areas.”

The move appears to be paying off with the second-quarter acquisition of 12 new facilities, including seven nursing homes and one skilled nursing/assisted living campus; six of those properties are being run by operators new to CareTrust.

“For CareTrust, the choice of operator has always been the most important consideration for new investments,” President and CEO Dave Sedgwick (pictured) said during an earnings call. “We are thrilled to welcome six new operators in the quarter. That deeper bench opens up new markets, new opportunities for investment. We are eager to help grow these relationships and continue to expand our existing operator relationships as well.”

Among the new operators is Links Healthcare Group, which is managing a four-property Southern California portfolio that CareTrust picked up in June. It includes 450 skilled nursing beds and 20 assisted living units.

Links, which operates 16 skilled nursing and senior housing communities, signed a 15-year master lease with two, five-year extension options. CareTrust said it expects to collect $6.8 million in rent from the operator in year one, $7.6 million in year two, and $8.9 million in year three.

More new operators could likely be called into deals, Sedgwick added later, noting that staff had been tasked with looking for off-market deals and additional “best-of-breed” operators.

Overall revenue was up $1.6 million to $47.7 million in the second quarter, and the REIT made about $200 million across seven property packages and a mortgage loan.

“Investing roughly $200 million at our historic yield across eight transactions with six new operators in one quarter represents some of the best work done in that short amount of time in our history,” Sedgwick said.

Sedgwick said the latest best of investments were strongly influenced by lending activity the REIT took last year, when there were fewer desirable acquisition opportunities. Of the roughly $200 million invested in the quarter, Sedgwick said $128 million was an indirect result of last year’s lending activity.

“The first half of the year was extremely busy,” Sedgwick said. “We are going into the second half of the year with ample dry powder to continue to grow the business and set up the company for a return to growth in 2024.”

Chief Investment Officer James Callister said the REIT had planned to put $215 million out this year, but leaders “don’t feel like we are done.”

“Overall deal flow remains strong, with a pace relatively unchanged from last quarter,” he said. ”We continue to opportunistically pursue deals where we feel our access to capital, low execution risk and reputation as a quality transaction partner make us a particularly attractive buyer.”

The investment pipeline includes about $150 million in additional skilled nursing options, CareTrust said in a statement announcing its financials.

Sedgwick also said the REIT had internally listed a delinquent operator that accounts for approximately $5 million in annual rent as “held-for-sale,” and is currently negotiating a sale of the properties.

For additional coverage of this earnings call, see McKnight’s Senior Living and the McKnight’s Business Daily.

Designing the program falls to American Senior Communities’ senior adviser Donna Kelsey, a 26-year navy reservist and long-term skilled nursing leader and ASC’s top executive for the last seven years. Having stepped back from the CEO role this spring, Kelsey will stay on into 2024 to focus on leadership and government advocacy.

Instilling values and badly needed skill sets into the overworked LTC workforce is a passion for Kelsey.

“We take care of very sick people, we have a challenged workforce and we expect them to be experts in so many things,” Kelsey told McKnight’s Long-Term Care News last week. “That’s why I’m excited about this program, to take them out of the building and say, ‘Yeah guys, you do a great job with the resources that you have now. Let’s take a look at your leadership styles here.

“We can make it easier, better for you so that you are managing your people with maybe a little less conflict with a little more passion, a little more enthusiasm.’”

The program began with a survey asking executive directors, directors of nursing and home office staff what qualities they want to see the company develop in its rising leaders. Key themes included motivating employees, building effective teams and developing others — important factors as sector turnover continues to reduce the pool from which companies can advance internal candidates. Others asked for help with more effective communication, whether that’s talking peer-to-peer, supervisor-to-peer or through language barriers.

The effort to build those skills will pick up this summer, as Kelsey presents the concept organization-wide. By late this year, the first cohort of 12 to 20 leaders should be in place.

Creating places for better leaders

While ASC already offers career ladders, tuition reimbursement, preceptor training and a healthy administrator-in-training program, the program Kelsey is working on is role agnostic. While some cohorts may be predominantly for building leaders, she sees a place for culinary managers and others who, thanks to staffing shortages, may have risen through the ranks too quickly to learn all the good stuff.

One critical requirement will be that participants are committed to doing the work, some of it in-person and out of their home building, and to being a support to others in the cohort. There also will be readings and assignments that require time and critical thought, a skill Kelsey said is often overlooked in the day-to-day business of running a nursing home.

“If you want to improve, you have to understand why we do the things we do, and then, how it can be different,” Kelsey said. “How can you do it better? And if the person doing the job, if we give them time to think about how you can improve, how to take five steps down to four … that will be one of the things in our program that we will talk a lot about. How do we really critically think through the problems? Because we are fixers of problems.”

With enough attention on these skills, Kelsey hopes to see a program that lifts struggling buildings, giving them a better shot at attracting and keeping strong leaders who grow loyal, hard-thinking employees. That, she said, should result in better retention organization-wide.

“You work for your boss. You don’t work for the company — you work for the boss,” Kelsey said. “You don’t leave because of the company. You leave because of your boss. And the stronger buildings have great leaders in them.”

To hear more of this interview, check out McKnight’s Newsmakers Podcast with Donna Kelsey, coming Tuesday.

The 54-year-old organization has built its reputation on clinical outcomes and customer service excellence with a consistent, systemwide approach that has netted it a total of 95 AHCA Quality Awards. That represents 91% of its 104 skilled nursing facilities.

One key to his organization’s efforts to maintain quality across facilities post-COVID has been increasing staffing — and holding true to a no-agency policy, PruittHealth Chairman and CEO Neil Pruitt told McKnight’s Long-Term Care News.

The chain put in place a strict no-agency rule early in COVID, which meant closing parts of buildings or putting a “cap and hold” on admissions when staffing levels at given buildings fell below internal thresholds. While those cap-and-holds have all but gone away with small-but-steady staffing gains, they could come back into play if a federal staffing mandate is imposed in a “strict, harsh, immediate way,” Pruitt warned.

Unlike many providers who say they will be forced to hire on more agency (at higher costs) to comply with a tough mandate, Pruitt said he isn’t willing to put care quality into the hands of contracted workers who do not know the patients, policies or procedures and “often hop from job to job.”

“It’s very important culturally for us that we avoid agency at all costs,” said Pruitt, who noted that stopping admissions caused significant financial hardship and drove census from 89% down to 67%. The organization is now approaching 81% across all its facilities.

“We’re feeling very good about our momentum, our ability to hire staff and to retain them. But that has taken hand-to-hand combat to get there. We spend a good portion of company time looking at our staffing needs,” he explained. “The bureaucrats in Washington would have to be blind if they don’t see what’s happening in the economy.”

“To impose [a mandate] in a very strict, harsh, immediate way … it would be almost impossible for any provider to implement. So we have to evaluate all options,” Pruitt added. “But agency would be toward the very, very bottom of that list.”

Pruitt said he is hoping for a reasonable minimum staffing interpretation, one that doesn’t burden providers who strive for quality, while targeting the sector’s bad actors.

“Instead of taking this regulatory approach, I’d recommend a commission that looks at staffing, which brings industry people together, along with folks in the academic field along with folks in the advocacy field,” said Pruitt, who served on the White House Coronavirus Commission for Safety and Quality in Nursing Homes. “Let’s look at the real data: What’s out there, what can be achieved and how we can maximize quality. Is there a way we can incentivize the good behavior, while disincentivizing those bad actors? I think there’s a better way to do it than regulation and mandates. They almost never work, and they won’t work this time either.”

Introspection drives fresh innovation

As an organizational leader, Pruitt says COVID has “taken years off my life.” But he and his leadership team have used the challenges of the past three years to institute new policies and identify opportunities to innovate from both customer service and technology standpoints.

PruittHealth’s approach to sustaining and improving quality is based on rigorous internal controls and immense data checkpoints, including real-time building-level stats that allow leaders to compare their performance against peers while also identifying areas of need. PruittHealth’s own consultancy arm monitors quality improvement initiatives with on-site visits and education, and Pruitt himself shifted clinical reporting from the operational side to the executive leadership time to increase accountability. Almost all of PruittHealth’s nursing homes are also certified by the Joint Commission.

Pruitt honed his quality chops as chair of the American Health Care Association board, where he helped develop the group’s first set of quality benchmarks. He wants to see the sector return to such goals post-COVID as a way of demonstrating that high-quality leaders can shape improvements without mandates.

Creating a steady stream of data and assigning staff to drive quality improvements isn’t without costs. But Pruitt notes providers are empowered when they spend the money up front versus on the back end of a performance issue. 

“Any time you have a building that goes into trouble, the amount of resources you have to devote to correct a problem is about 10 times the investment you have to prevent a problem in the first place. We think the ROI on investing in quality is really pretty simple but more importantly, with our outcomes, it allows us to be a preferred partner with hospitals with our customers,” Pruitt said. “We also are fortunate to count many non-related organizations as customers of our ancillary services, which allows us to use our expertise to assist them and enhance the quality care that they provide as well.”

That’s helping Pruitt continue on a growth course. Even as the company expands service lines that support community-dwelling seniors, Pruitt said he remains bullish on skilled nursing.

And on combining the company’s quality marks with a full slate of services. They range from its roots in pharmacy to its new lab capabilities. It makes for an attractive one-stop shop for other provider types.

“Pre-COVID, nursing home care and post-acute care was an afterthought to hospitals. I think what COVID did for us as a profession is, it put us at the table with our partners in acute care,” he said. “And what PruittHealth is able to do is pretty much something that no one else can: We offer all the services after you leave the hospital. We have our own Medicare Advantage plan. We’re able to offer therapy services, medical supply services. We talked about our lab services. We have home health, hospice, a physicians services plan and nurse practitioners. So we’re having conversations with hospitals every day about preferred partnerships where we can integrate into their clinical systems and really streamline the time it takes to be admitted to our system and we can be one shot.”

Whole-spectrum approach

And PruittHealth is also investing in changes that promote quality in the eyes of another key customer base: its patients and its families.

The company has morphed its approach to “radical transparency” about COVID data into the My PruittHealth app. It allows family members to view their loved one’s real-time medical conditions, monitor their vitals and see their medications on a smartphone. 

And a new feature will allow them to communicate directly with the administrator and facility staff. It’s a tool almost exclusively used by primary and acute care providers.

“We’re light years ahead of others, and we’ve had good adoption and it’s a great tool for our partners, as well to utilize and stay in touch with the organization,” Pruitt said.

Another COVID-inspired addition is PruittHealth’s own lab service. The first lab launched when nursing homes couldn’t get tests back quickly enough. Now about 60% of the company’s facilities are using Pruitt labs, with plans to move the rest into the system shortly.

As with its consulting arm, PruittHealth will then make those services available to non-Pruitt customers, creating an additional revenue stream. But already the lab is speeding up results and helping clinical teams reduce administrative time with results that feed directly into the EHR and help  improve diagnoses and care quality.

Next up: PruittHealth is continuing its efforts to further integrate with acute partners, 

including operating some post-acute beds for acute care partners.

“Our theory of owning the whole spectrum allows us to be nimble and move quickly to meet our referral sources’ needs. I also think that as we’re seeing some of these inexperienced operators coming to the market, it really highlights our ability to shine in the quality arena. Not only were we able to keep their quality outcomes for our key care partners, we’re able to streamline the process and then maximize their outcomes to make sure they’re not ending up back in the hospital,” Pruitt said. 

“So we’re very bullish on the sector. It’s still going to take some time to recover. We’re hoping that the government doesn’t hit us with too big a blow, and that we can continue the positive momentum with our partners.”

“We anticipate much of the same for 2023,” Simpson said in kicking off a fourth-quarter earnings call.

The seniors care and housing-focused real estate trust also reported higher rent and interest income for the final quarter of 2022, with momentum carrying over into 2023. LTC Properties has committed to more than $172 million in deals so far this year, already eclipsing its 2022 total.

On the skilled side, leaders said their confidence had been buoyed by operators’ improving performance and the ability to bring average SNF occupancy closer to 80%.

“Census in long-term care has been more challenged than it has been in shorter stays,” said Clint Malin, co-president and chief investment officer. “In skilled nursing, taking on higher acuity patients, especially now with the implementation of PDPM. That’s been beneficial to the industry through the pandemic. I think you see reaching up into higher acuity is where a lot of operators are going.

“That’s reflective of the investments we made last year, both with Ignite Medical Resorts, as well as Pruitt in Florida. Operators are focusing on that higher acuity model and being able to take on patients that are in hospitals and other higher-acuity settings. We think that has traction,” he added.

As the REIT braces for potential impacts of the May 11 end of the public health emergency, Malin said Medicaid increases in Texas and Michigan, where LTC has core skilled nursing assets, would be a critical offset.

“We’ll have to see if that rate increase comes about,” Malin said. “Everyone is hopeful that will happen in Texas, but we won’t know for certain until the legislative session ends.”

Michigan lawmakers are pursuing a rebasing effort, and Malin said LTC’s local operators are expecting about a 9% rate increase in October, with retroactive payments. 

He and Simpson noted that the REIT also renewed a lease with two skilled nursing facilities in Florida, which saw a large rate increase last year.

New Welltower developments

Welltower also held its fourth-quarter earnings call on Thursday. 

The real estate investment trust announced it had $412 million of gross investments late last year, including $223 million in acquisitions and loan funding, as well as $188 million in development funding. 

It opened several new development projects, mainly in the senior living sector.

Welltower also began transitioning skilled nursing properties that were formerly part of its ProMedica joint venture to new operators. Overseeing the transition is Integra, a little-known management firm that has also begun acquiring a stake in the properties.

In December, Welltower sold Integra a 15% stake in 54 skilled nursing assets for approximately $73 million. Last month, Integra paid about $74 million for a 15% stake in 31 additional skilled nursing assets. The transactions, Welltower said, represent the first two tranches in the formation of an 85/15 joint venture. The stake in the remaining facilities is expected to be sold in the second half of 2023.

Integra entered into master leases for the entire portfolio and will bear financial responsibility for all assets, including assets where it has not yet acquired an ownership stake, according to a press release detailing fourth-quarter results.

“Integra’s business plan entails entering into sub-leases with approximately 15 regional operators with strong performance track records in their respective markets,” the release noted. McKnight’s Long-Term Care News previously reported that a sizeable share of those properties in Pennsylvania and Colorado had been assigned to Genesis.

But on Thursday’s call, Tim McHugh, Welltower executive vice president and chief financial officer, said that about a quarter of the portfolio remains in limbo.

“As for the underlying operations, the subleasing of the portfolio is progressing,” McHugh said. “Seventy-five percent of the beds have already transitioned management, with the remainder of the portfolio waiting state-specific approvals.”

For more earnings call coverage, see the McKnight’s Business Daily.

In a variation on the idea that you have to give up power to gain strength, regional skilled care provider Guardian Healthcare is actively working to decentralize its operations.

In doing so, Guardian’s leaders hope to see specific facilities better serve referral sources, increase their capabilities and improve patient care. Operators around the country are keeping an eye on the move, which is about six months underway.

“It’s really the desire to break down those barriers that are sometimes created inadvertently by a centralized model,” said Michael Herald, president and CEO of Guardian Healthcare 

Founded in 1995, Guardian has grown to 35 skilled nursing communities in Pennsylvania and West Virginia. Overall, it has more than 3,800 skilled nursing personal care and independent living units, as well as an in-house pharmacy that serves people inside and beyond the company’s patient base.

“We are one of the largest providers in Pennsylvania. We tend to have sites that are within a close radius of each other. Sometimes it’s 10 miles, sometimes it’s 20 or 30 miles,” Herald told McKnight’s Long-Term Care News. “When you have a large, centralized model, we saw that sometimes our sites weren’t collaborating, communicating and working together as effectively as possible. This approach is really meant to be a strategy to help us to work more effectively with our referral sources. It also helps us to ultimately provide better care at higher levels of acuity care to meet all of the varying needs of residents within these communities.”

A big challenge in devising the new operational structure was creating clear expectations and ways to route information.

“It’s really making sure that we all understood what accountability would look like for this type of model, what our expectations were for our site leaders and for our regional team members, who support those sites,” Herald explained. “It’s really being ready to clearly communicate those expectations and setting that level of accountability, really focusing in on communicating to our sites that a lot of their preconceptions or prior thought processes and ways of doing things could be set aside as we focus on collaborating together.”

Empower local leaders

Better empowerment of site leaders is a major goal. That has meant creating procedures and operational and clinical policies within a common framework. Regional support teams are currently being fine-tuned to mentor leaders and help them make their own decisions.

Herald said he thinks his company’s moves will allow sites that focus more on short-term residents to do a better job with them, and likewise for those who may have a larger long-term population.

“This is really meant to be a way for those sites, those two sites in particular, to be communicating and collaborating and focusing on how they can ultimately process the referral that they might both get. That’s really how we see this sort of playing out in terms of that collaboration and making sure that our sites see it’s not necessarily about their individual outcomes, but it’s about the clusters’ outcomes.”

The model should prove beneficial for referral partners and payer partners, Herald feels. It also should increase overall operational efficiency.

“Our organization over the last year has made a tremendous investment in technology. We’ve developed a really effective referral management platform. It’s an SAS-based system that we rely upon to help process all of our referrals and ultimately convert our admissions.”

Special considerations for the 3,400-strong company workforce include making sure there is a dedicated clinician for each of their designated regions and also focusing heavily on personal development.

“That could include putting them on career paths within their site to help them grow and develop into ultimately a site CEO or a path where they might want to get some multi-site management experience,” Herald explained. “Now we’re focused on working with our existing leaders to develop a talent pipeline of site leaders for the future to ultimately bring them into the organization. We’re looking for leaders who really embrace our vision and the culture that we’re attempting to create of leadership and workforce development.”

Partnering with local colleges and universities in Pennsylvania and West Virginia to build more educational tracks for healthcare administration and leadership has been a standing strategy for Guardian. Slippery Rock University is perhaps the best example of a school partner.

“Our HR team is really committed to building out that professional development program and creating those opportunities for additional education,” Herald said.

A leap of faith

He acknowledged that taking up this model requires a leap of faith and trust.

“An organization has to be ready to let their leaders make mistakes along the way,” Herald observed. “They have to do it, within certain bounds. It can’t jeopardize anyone’s health or safety in the process, but as long as it doesn’t do that, as long as it’s not illegal, unethical, immoral or puts someone in harm’s way. One of the things that we’ve worked really hard to talk to our leaders about is that under this model you have to be given that ability to try something new. 

“Try a different approach, even if it’s not the way you might traditionally do things and know you’re going to make mistakes along the way. And that’s OK because we have subject matter experts and we have operational clinical leaders who are there to support you, help you identify the ways in which, you know, your approach maybe didn’t work as best as we had hoped and ultimately to get us back on track.”

In that vein, lessons learned by one cluster might be transferable to others so successes can be replicated.

Implementation of the new model may take as long as a year total. The Guardian leadership team hopes to start seeing solid results by the fall of this year. By that time, it should start to be clear whether key metrics from the referral and hiring processes are improved, and whether staff retention rates rise.

Herald recommended that any organization interested in possibly creating such a model first speak with its site leaders. Changes could be the perfect tonic and a catalyst as the nation emerges from its pandemic hangover.

While still a work in progress, the decentralized model has already met with success and been embraced by staff, the company CEO noted. The enthusiasm has been contagious, from senior executives down through regional and local leadership, and ultimately front line employees, Herald said.

 “They’re really focused on helping to make this strategy work,” he said. “I think it’s because of the fact that we’re all focused on really creating a team atmosphere and making sure that we have a team-centered approach to the way that these clusters of sites will approach their operations. So people seem excited about that. They’re engaged around it, frankly more so than I think we had even anticipated.”

With more than 9,000 beds in four states, Michigan-based Ciena isn’t focused on size alone, but rather on programmatic additions and building design innovations that will attract new partners, residents and staff, says Senior Vice President Amy La Fleur.

“My personal opinion is we’ve been regulated for quite some time to have home-like environments. And we got lambasted for having COVID in the nursing homes, where we have congregate meals and group activities,” says  La Fleur, who joined Ciena early in 2021 after years at SavaSeniorCare, Trinity Health Senior Communities and HCR. 

“Now with new construction, with HVAC and what we know now about better ways to manage [infections], it’s really going to influence design. We probably will take more time to think about how we work with our architect and our physical plant folks to try to have a home-like environment but also be able to manage infectious disease more efficiently. Any new construction will have to take that into consideration.”

While La Fleur says Ciena leaders are eager to bring new concepts to the market, regulatory changes and economics will need to combine to give the company and the broader sector room to improve.

Ciena is planning to expand its behavioral health and substance abuse disorders programs in the year ahead. Those services will complement the kinds of clinical services Ciena has become known for, including in-demand dialysis and ventilation programs that have spurred physical expansions at multiple nursing homes in its network.

But while regulators have been promoting changes such as private rooms, there’s been some early conflict in trying to build programs and facilities with behaviorally diagnosed patients in mind. Design for those patients includes more elopement and egress prevention and other considerations.

Serving behavioral patients in a traditional nursing home, as the Centers for Medicare & Medicaid Services has insisted must be done in policies that promote trauma-informed care and access to substance abuse treatment, isn’t necessarily an easy sell to state officials.

“In some markets, nursing homes are the solution for a lack of low-income housing for people that have chronic mental illness. They wind up living in the nursing home at the age of 50, which isn’t really appropriate,” La Fleur acknowledged. “It’s not every facility, but that definitely leans into regulatory issues when you’re caring for that nation’s grandparents and the nation’s homeless folks in the same location.”

New techniques to staffing

Another huge hurdle in caring for complex patients is, of course, staffing. It’s a major area of concentration for Ciena, La Fleur says.

When the company created an agency elimination taskforce, it learned through staff feedback that many frontline workers felt unprepared to care for patients with increasingly complex needs, whether those patients had COVID diagnoses, dementia or substance use disorders.

“We really took that very seriously and started pursuing staff training with our partners. We were doing dementia training, and we were doing a lot of clinical training. But there were definitely some pockets where we needed to beef up our staff training so they felt more prepared,” La Fleur says.

“We’ve worked through that to a great degree. Then pivoting that to recruiting around that expertise, it’s something we have some opportunities to do in 2023.”

The company is now 90% out of agency. It has increased wages and taken a new approach to recruiting, one using internal recruiters who base their approach on census-building techniques.

“When you think about census, you have liaisons out in the market to keep it flowing. We needed to do the same thing on the recruiting side, to manage Indeed and to manage Apploi and all of those things most effectively,” La Fleur says.

In addition to increasing wages to remain competitive, the company also listened to worker feedback and added OnShift for daily pay access and to digitize scheduling and make it more flexible.

Ciena also built more career pathways and tracks in everything from phlebotomy to dietary and beefed up its corporate grant writing capabilities to go after fresh funding opportunities.

“We’re really having to build up our workforce capital system around grants that are available,” she said. “The states have a lot of money for those grants and we need to figure out how to operationalize it.

“These are the kinds of changes we’ve made systematically to not just get out of agency one, time but to get out and pretty much stay out,” she adds.

Staffing dictates growth 

Ciena is also taking a closer look at local labor markets as it explores potential deals.

“Our process of looking at them has changed a little,” she says. “There may be a lot of upside on the performance enhancement that you can do, but if you can’t staff the building because the labor market just isn’t there, then obviously you’re going to be more conservative on that. I don’t know that that weighed as heavily in an acquisition pre-pandemic as it does now.”

Even with locations that have almost-guaranteed volume, such as on a hospital campus, if there’s not enough staff, acquisitions will be tough to optimize, La Fleur adds.

Facing economic and regulatory headwinds, more providers will leave the sector, she predicts. That will result in resizing, particularly in markets that are overbedded, such as Ohio. That state is home to the majority of the Laurel Health Care facilities Ciena picked up in 2016.

In other markets, though, particularly in Michigan, Ciena sees opportunity for growth and new construction. That includes wings and additions needed to serve higher-acuity patients in niche programs, but also big, new buildings meant to appeal to partners and patients.

“We’re excited to do new construction because we feel like so many of the limitations that affect how well you operate are, in part, physical plant,” La Fleur says.

In Detroit, the company moved licenses from two other locations to create a new campus, the Regency of Shane, in 2020.

Pursuing similar projects, after completion of the building in Troy, will depend on several key factors: staffing, reimbursement and demand.

“We love new projects, and our CEO, Mohammad Qazi, loves to do new things,” La Fleur says. “But projects are taking a long time [due to ongoing COVID- and supply-related constraints] and costs are rising…. The economy’s going to have to change a little bit.”

Idaho-based Cascadia grew from 16 facilities to 37 in a 2½ year-period ending this August and remains growth-oriented. It has now become the largest operator in Idaho with 22 buildings there, eight in Washington, and a handful sprinkled across Arizona, Montana, New Mexico and Oregon.

After launching in 2016 as a turnaround operator for CareTrust, the chain today owns 10 of its own buildings and is looking to grow as an owner-operator. Where it does that, and how quickly, will be driven largely by the willingness of the states it serves to fund skilled care at reasonable levels, and by local and federal regulatory outlooks.

The company shelved recent plans for what would have been its third new construction project because of rising construction and interest costs. Negotiating for troubled buildings with low occupancy or checkered compliance histories is also becoming more challenging as Medicaid rates flounder in many parts of the country.

“We’re still looking to grow and have a more stable base,” says LaForte, Cascadia’s director of corporate affairs and general counsel.  “We see a ton of deals, and we turn down the super-duper majority of them. We don’t get into bidding wars on deals. If that’s what’s going to happen, we don’t play that game. We try to find off-market deals. We try to find deals where we can craft something that works.”

Cascadia’s model is to then pour leadership resources into a building. But LaForte said the company doesn’t want to overextend at the front end of a deal, nor be unable to collect payment to stabilize a building for months and years ahead.

The two key factors in that: Ensuring that Medicaid rates are healthy enough to cover investments in staff and needed facility upgrades, and a culture good enough to attract and retain local leadership. 

“When we look at acquisitions and look at turnarounds and value-adds, one thing that’s important is … can we make a difference in a community? Can we save access? Can we save jobs?” he adds. “Part of that equation is, do we have the leadership to put in the building, and part of the equation is, can we make it work on a pro forma basis. Is this something we’ll be able to turn around?”

Capitalizing on cast-offs

Cascadia has made a habit of finding underappreciated buildings, or those that might be outside their owner’s core focus. It did so in picking up one Montana building from the troubled Lantis family portfolio and three Consulate buildings, including a Special Focus Facility designee close to being decertified. It also assumed operations of several former Kindred buildings as that company looked to shed some skilled assets.

In another case, Cascadia picked up a former Orianna building that included the only ventilator unit within 300 miles in Idaho. It was on a federal watch list, close to replacing another Cascadia building that was just about to graduate from the Special Focus Facility list.

“At one point in its history, it had been a really respected building in the community and it was the only vent unit, so there was a way to fulfill a need and to fulfill access in that building,” LaForte noted.

Idaho, despite being challenging on the regulatory side, offers Medicaid rates that have previously made provider turnarounds doable. Similarly, LaForte said that Montana has reimbursements averaging around $210 per patient day and a regulatory and legislative environment that has been receptive to providers’ concerns. That take, despite closures representing 10% of the state’s beds this year.

The picture is darker in other states.

Cascadia’s business strategy is to weigh opportunities west of Colorado’s eastern border.

Many of the deals it sees include troubled rural facilities, many of which might be on the federal watch list. With the Centers for Medicare & Medicaid Services announcing last month that it was beefing up scrutiny of its Special Focus Facilities, many providers may be less likely to consider investing in SNFs that might be headed for program inclusion. 

“It’s going to make you think not twice, but three times or four times,” LaForte explains. “It’s frustrating to me that CMS doesn’t look at this in a more holistic way, not just, how do we punish bad actors? Nobody at Cascadia is going to argue that bad actors shouldn’t be weeded out of the industry. They should. [But many of these buildings], they’re in rural areas.

“You’re going to lose the access, and there’s no way to do new builds right now. They’re cost-prohibitive. So you’re losing care in those communities, and home health in those communities is not going to pick it up.”

Cue more collaboration

A policy wonk who started in healthcare as a SNF deal-maker, LaForte said the government should be focusing on collaboration rather than retribution to keep the sector healthy.

He points to lessons learned from the pandemic that have brought skilled nursing facilities closer to each other and to their hospital partners as they looked for solutions.

In Idaho, for example, Cascadia was the only skilled operator to create a designated COVID unit. The company took over a Boise building closed in early 2021 by Good Sam and extended a license from another building under a PHE waiver. The local hospital then had a place to send recovering patients. Cascadia also tapped into hospital nursing staff to cover some open shifts as labor shortages became more dire.

“That led to a lot of really good collaborative conversations with the hospital systems,” LaForte said. “There’s been so much collaborative discussion, it’s maintaining. Even on workforce, it’s maintaining.”

So, why, he asks, isn’t the federal government more interested in collaborative strategies? Like many providers, he feels the positioning of the administration over the last year is a cheap and easy win politically, but one that has a potentially devastating impact on the ability of seniors and others with disabilities to find care close to home.

He has worked in the past with AHCA Senior Vice President of Quality and Regulatory Affairs David Gifford, MD, to propose a new use of civil monetary penalties. Instead of holding them in hard-to-access grant programs, CMS could direct the collected funds back out to providers who then have to use them in a prescribed manner under third-party monitoring.

“Why can’t we go back to the drawing board and do this? … If what we’re talking about is quality care, benefiting residents, taking a CMP out of a building that’s already got issues doesn’t do it. It just makes (the building) weaker,” he explains.

“If what we’re trying to do is ensure healthcare, ensure access, ensure quality, there’s a way to get at it,” he adds. “Some of it is regulatory, but some of it is collaborative. “Why can’t we come up with programs that incentivize quality, that incentivize operators to take on turnarounds?”