Fears over the spread of the novel coronavirus have brought short-term pain to the public markets and serious concerns over the potential effects on vulnerable elderly Americans — particularly in the wake of the first confirmed cases at a nursing home, reported this past weekend.
But the leader of a major real estate investment trust (REIT) with holdings in both senior living properties and skilled nursing facilities on Monday attempted to frame the spread of COVID-19 as a justification for the ongoing necessity of institutional care for older people.
“The idea that, because there’s a flu outbreak, they can stay at home and be cared for at home — I think is a bit misguided,” Welltower Inc. (NYSE: WELL) CEO Tom DeRosa said during an early morning presentation at the Citi Global Property CEO Conference in Hollywood, Fla. “If you’re very wealthy, you might be able to do that. But for many people, they need to be in a controlled environment, where their social determinants of health — things like nutrition, and things like safety and [medication] management — need to be monitored.”
The spread of infectious diseases, such as the familiar flu and the novel coronavirus, represent a significant threat to skilled nursing facilities and other senior housing settings such as assisted living and memory care properties: Not only do they feature many residents and employees in close quarters, but they specifically cater to populations most at risk for complications and death.
COVID-19 has already struck a nursing home operated by Life Care Centers of America in the Seattle suburb of Kirkland, Wash., with four deaths associated with the home reported as of Monday.
Still, DeRosa was steadfast in his belief that institutional care sites will be vital for treating coronavirus cases due to the need for constant monitoring and improvements in disease protocols.
“I’d like to think that this will make outbreaks like coronavirus actually support the senior housing business,” he said.
The Toledo, Ohio-based REIT owned 1,701 seniors housing and care properties as of December 31, including 218 properties associated with its ProMedica-HCR ManorCare joint venture — and an additional 138 post-acute and long-term care facilities outside of that partnership.
Over the years, Welltower has taken a more active approach in helping its tenants prepare for seasonal flu outbreaks, DeRosa asserted, pointing to a clinical partnership that the REIT forged with the University of California, San Francisco after a particularly tough flu season in 2018.
“While Welltower is not administering care on a day-to-day basis, we’re very on top of what’s going on in the buildings,” DeRosa said. “We take it the next step — we just don’t rely on the CDC and our operators to comply with CDC guidelines.”
If anything, DeRosa argued, the senior housing and care industry should be more prepared for coronavirus than large firms in other sectors, as they aren’t accustomed to planning for flu outbreaks — both logistically and financially — as part of their routine business operations.
“We know what the world looks like — to have a flu outbreak in one of our communities,” DeRosa said. “But I don’t think many companies have ever confronted this, or have ever been asked to quantify what the impact of flu is going to be on their business.”
David Gifford, chief medical officer of the American Health Care Association (AHCA), made a similar point Monday, advising family members not to pull their loved ones out of nursing homes simply based on coronavirus fears.
Such a move could end up exposing an elderly person to COVID-19 in the community, without the benefit of around-the-clock care, Gifford noted on a call with reporters, while also potentially spreading it to others if there was an outbreak within the facility.
In addition, removing someone from a 24-hour care setting could cause other health problems unrelated to the flu or COVID-19, Gifford said.
“Moving someone out who needs that care can be very disruptive and problematic,” Gifford said, adding later that he would personally place a relative in a facility if he or she needed institutional skilled care.
Welltower stock fell last week amid a record Wall Street sell-off stoked by coronavirus fears, with shares of WELL dropping about 13% since last Tuesday.
Shankh Mitra, the REIT’s chief investment officer, described the market’s reaction to COVID-19 as “draconian,” estimating that the dip in value correlated to an assumption that the senior housing business would lose 20% to 25% of its census — a prediction that Mitra rebutted.
“As of last Friday, our occupancy has been remarkably steady — actually steadier than you would expect seasonally at this point in the year,” he said.
Mitra also tried to assuage fears that the virus could cause a spike in expenses, particularly if it contributed to the workforce crisis with waves of caregivers calling out sick — or even quarantined — after exposure.
“Expenses should not rise dramatically,” Mitra said. “If you look at the average age of caregivers and look at the mortality rate for COVID-19 on that population, it’s actually very, very low.”
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