Increasing demand and continued low interest rates are combining to increase the value of senior housing properties. Now, many senior housing providers are taking advantage of new opportunities in the sector to boost their occupancy, net operating income, and valuations. Specifically, these providers are working more with hospitals and rehabilitation centers to attract more temporary residents, who they hope will eventually move into their facilities on a full-time basis.
Providers Develop Short-Term Stay Programs
Assisted living providers increasingly view themselves as part of a larger healthcare system that is becoming more and more integrated. For example, Sunrise Senior Living, one of the country’s largest senior living providers, created what it calls its “Road Home Program” in an effort to attract more short-term residents. Under this program, Sunrise is partnering with hospitals and rehabilitation centers in an effort to attract more short-term stay residents to their facilities. Hospitals and rehab centers benefit from this because the individuals they refer to Sunrise get any additional care they need at a licensed senior housing facility. This reduces the likelihood of that one of those individuals will get reinjured and end up back at the hospital. This is especially important in the post-Affordable Care Act world because the Act includes numerous provisions requiring that hospital payments be based on patient outcomes rather than number of services provided. Hospitals are also penalized if their readmission rates are too high.
Sunrise also benefits from its Road Home Program because it gives the company an opportunity to showcase its communities to potential residents and their families. Residents in the program are able to use all the services and amenities the facility offers during their time there, even though their stay is limited to 30 days. Sunrise’s hope is that residents in the program will enjoy their time there and will decide to move in when they are ready to transition into a senior housing community.
Other providers recently began following Sunrise’s lead, implementing their own short-term stay programs in an effort to boost occupancy, revenue, and net operating income. As their financial performance improves these facilities will be able to access additional capital. Providers in this situation and seeking capital for acquisitions, sale/leasebacks, debt refinancing, or for other purposes should contact the Chicago-based firm Cambridge Realty Capital to learn more about the many different financing programs it offers for a wide variety of senior housing transactions.
