Skilled Nursing Operator Sees Financial Upside, Potential for Innovation in Assisted Living

Skilled nursing and senior living can seem worlds apart, with the former associated with health care and the latter with hotel-style touches like bistro dining and concierge serves.

But one operator of skilled nursing facilities sees moving into assisted living as the best way to prepare for the future of both models.

The Minneapolis-based Health Dimensions Group (HDG), which provides management services for 71 senior care communities in eight states, recently became the managers of two new assisted living facilities in Wisconsin: Angels on Arcadian in De Pere and Angels on Humboldt in Green Bay. Caraton Commons is the owner and operator of both facilities.

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Assisted living isn’t necessarily new for HDG, but the operator and consultant became focused on expanding outside the SNF arena more recently, HDG CEO Erin Shvetzoff Hennessey told Skilled Nursing News. Prior to taking control of the two facilities, HDG had been particularly active in skilled nursing management, particularly in Wisconsin.

“We see a bright future for skilled nursing, but we also know that it’s going to be part of a broader continuum, where people can receive care at different levels,” she said. “We feel that to position ourselves for the future and to position ourselves for the demographics, we need to expand our operations into other areas of the continuum.”

It’s not the first instance of a SNF operator moving into assisted living over the past few months; Symphony Post Acute Network recently acquired a batch of such facilities as it expanded into Michigan. Like HDG, the Illinois-based Symphony sees opportunity in expanding its reach along the care continuum.

In the case of HDG, while its consulting work has encompassed a range of services, its facility management operation had always been focused on skilled nursing, Shvetzoff Hennessey said.

But that started changing in 2016, when HDG was examining its offerings and demographic trends. While SNFs will “always be a key part of senior health care,” according to Shvetzoff Hennessey, moving into assisted living allows for the opportunity to care for more people. It also gives the operator some breathing room financially by allowing it to offer a broader set of services that don’t necessarily rely on the vagaries of government reimbursements.

The two facilities in Wisconsin helped solidify that push into senior living in the Badger State — though with the Atrium skilled nursing and assisted living facilities HDG has held in receivership for about a year, the company had already taken on a significant senior living load in Wisconsin.

At present, assisted living facilities account for about a third of HDG’s managed portfolio, but the goal is to grow on the senior living front: There are currently three to four assisted living communities in multiple states that are under development that HDG plans to manage, Shvetzoff Hennessey said, in addition to the recent two Wisconsin facilities.

“I think over the next two to three years, I would like to see us hit that goal of 50% assisted living and housing and 50% skilled,” she told SNN. “And I think we’re pretty close.”

The assisted living model’s general shift toward a medical model has made the setting increasingly attractive to skilled nursing operators. Given HDG’s work in skilled nursing, it’s able to manage complex medical needs — and just as acuity has risen in SNFs, it’s been on the rise in assisted living as well, Shvetzoff Hennessey noted.

“When you’re a SNF operator, it’s a nice transition to assisted living, because you’re not afraid of the clinical complexity,” she said. “The workforce is the same; you still are dealing with residents and families. There’s a lot of similarities.”

But there are also many key differences, even allowing for the fact that “assisted living is becoming more like the skilled nursing we’ve seen in the past,” as Shvetzoff Hennessey noted.

Hospitality and dining are crucial to success in the senior living arena, which required HDG to embark on an improvement program that targeted factors such as ambience, lighting, linens, and food menus — a bit of a departure from the skilled nursing world’s larger emphasis on health care quality.

But the skilled side ended up having an influence on assisted living as well, Shvetzoff Hennessey said, given that SNFs manage complex patients in a residential housing model. One example she gave was adding a physician office to an assisted living design.

“If we’re going to be operating assisted living, we need to know that part of it is going to be medical,” she explained. “Improving the integration that we have with physicians, making sure that the physical plant allows us to take care of medically complex patients and … making sure that we have the right clinical staff to make sure that people are safe to age in place.”

And in some ways, moving into assisted living helps shake up the mindset that comes with working in the SNF space, where financial margins are thin and rules and regulations numerous. That can lead operators to get trapped in a cage of their own making, according to Shvetzoff Hennessey.

“You are used to operating in a system that doesn’t reward innovation, and you operate in fear of regulation, and you operate in fear of not being able to make it financially,” she said. “When you get into assisted living, and the payment model is different and the regulation is so different, I think it allows people — especially those who come from skilled nursing — to think outside the box in ways they maybe haven’t been able to before.”

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