Continuing care retirement communities are designed to offer a wide range of senior care services across multiple settings at their campuses, including skilled nursing. But, with occupancy recovery slowed and consumer trends changing the look of nursing homes and senior care nationwide, some CCRCs are forced to ask what the future of their skilled nursing wings should be.

In order to modernize and follow consumer trends some have looked to move out of skilled nursing altogether, but Lisa McCracken, director of senior living research and development for Chicago-based specialty bank Ziegler, said most CCRCs she works with are still committed to skilled nursing.

However, reinvesting in, reconfiguring and modernizing SNF wings has become a growing trend for CCRCs in 2021.

“We do see that reinvestment and generally it includes downsizing,” McCracken said. “We’re not seeing big expansions, just like we’re not seeing many new nursing homes being built out there.”

She added that on the West Coast it’s been more common for CCRCs to exit skilled nursing because they have more options with their assisted living assets.

Illinois-based Smith Senior Living recently completed a $23 million renovation of its skilled nursing care wing which saw the facility move down from 100 licensed beds, designed mostly for double-room occupancy, to 78 beds. It converted a majority of the rooms to private suites.

“The days of semi-private rooms or more than two in a room are well over,” Kevin McGee, Smith Senior Living president and CEO, said in a recent interview. “I wish I had something creative to say, but you’ve got to figure out a path to private rooms, otherwise, you’re not part of the game anymore.”

For SpiriTrust Lutheran, an organization with several CCRCs throughout Pennsylvania, the move to private rooms also started prior to the pandemic.

“We’ve been looking at continuing to move more towards private rooms because that’s where we believe the people we serve would prefer to be in,” Bob Rundle, president and CEO of SpiriTrust Lutheran, said

Move to private rooms consumer driven

Evidence suggests that single-resident rooms keep patients healthier, happier and is their desired option moving forward, according to researchers with Michigan-based consulting firm Health Management Associates. But those projects don’t come cheap, and in an industry still recovering from the COVID-19 pandemic, converting to private rooms isn’t always feasible for operators.

“The economics of ripping down and demolishing a building, and then rebuilding it, given the reimbursement climate that exists, is a hard thing to make work,” Rundle said. “The other influence continues to be, especially here in Pennsylvania, a mismatch of the cost of providing skilled care to our Medicaid residents and the reimbursement.”

He said that gap is approaching, if not exceeding, $100 a day for many providers in Pennsylvania.

SpiriTrust is in the process of reconfiguring a 100-bed all-semi private room nursing community to mostly private rooms.

“We moved 40 beds out and constructed a facility with all private rooms and will reconfigure those remaining 60 beds within the confines of the original 50 semi-private rooms that exist on the campus,” he said.

Rundle said their move to private rooms is largely consumer-driven.

“It’s not for economic purposes, because at the end of the day, it’s not an efficient model to provide care from a cost perspective, but it’s a dignity issue,” he said. “We’re going to continue to expand our residential living component, which is one of the areas where we can generate some funds to allow us to be creative.”

Rundle added that SpiriTrust is not considering moving on from its skilled nursing wing at this time.

“I know that for a lot of organizations, that may be a way to go into the future and we have had the conversation, but have not come to that conclusion,” he added.

SpiriTrust Lutheran isn’t the only CRCC looking to reconfigure the health care settings in its facilities, according to McCracken.

“They know they need to be competitive,” she said. “If that means putting some reinvestment dollars into modernizing, they are, but at the same time, many are taking a look at what their unit mix allocation is and that may include downsizing.”

“I don’t think there’s widespread exiting,” she added. “I think what we’re going to see is continued examination of what the total commitment from a unit count standpoint should be for skilled nursing.”

Reinvesting in what they’ve got

In order to stay competitive and offer the care that their referral partners and patients want, Rich Scanlon, senior managing director with Ziegler, has seen several CCRCs move forward with plans for reinvestment and reconfiguration.

The Florida-based Mayflower Retirement Community, which includes 220 independent living apartments, 31 private assisted living units, 15 of which are used for memory support services, and 60 nursing beds, recently secured $80 million Series 2021 Bonds to reposition its campus.

Phase one of the project was financed in November, 2020, with over $60 million in Series 2020A Bonds, and consisted of the construction of a new health care center consisting of 24 private memory care suites and 60 private skilled nursing rooms.

The second phase of the project will consist of constructing 50 new independent living units, a clubhouse and converting skilled nursing beds into 21 assisted living units.

Other projects he’s worked on include converting Florida-based CCRC Sunnyside Villages’ semi-private rooms into private rooms and helping Fleet Landing in Atlanta Beach, Fla. take some of their semi-private rooms out of service in favor of private rooms.

Scanlon said one trend he’s seen on these renovation projects is that a couple of CRCC owners have elected to wait and see what happens in the market before deciding what to do with their skilled nursing wings.

“We’ve seen the last two not have any nursing beds in phase one to give them time to reassess the market, reassess trends and see what happens before they develop phase two,” he said.

Scalon felt that CCRCs tend to cater to the higher end of the market and having newer facilities and newer rehab helps these communities modernize to attract private pay residents and Medicare short-term rehabs.

“They’re seeing much more competition in their marketplace and much greater competition for the short-term Medicare rehab stays,” he said. “Unless you have private rooms, you’re probably not going to get any of the Medicare rehab stays or anybody moving in on a private pay basis.”