How LifeCare and CCRCs are Changing
We’ve noted some strong emerging trends in CCRCs management. Three of these trends, we believe, are likley to define the future direction of CCRC’s growth in the coming decade.
- More choices for type of contracts within a single community. The form of CCRC contracts from pay-as-you-go fee-for-service rental to all-in-one full LifeCare was first a distinguishing feature between various CCRCs. Increasingly, we see a single community offering a range of contracts as a way to offer various price points and to encourage full-occupancy. The traditional LifeCare (Type A) contract (see below for a summary of the three different contract types) is no longer the exclusive contract offered at some LifeCare communities. Rather, a few communities are now offering a mix of the contract types within the same community. Offering this range of contract choices within a single community means more choice for consumers but also complicates the initial purchase decision. The trend also shows up in offering more than one offered level of return of capital.
Life-care (extensive) contract (Type A) This is the original full-service contract in which individuals (or couples) agree to pay an entrance fee and ongoing monthly fees in exchange for living accommodations and an extensive range of services and amenities. A Type A contract generally provides for a resident’s transfer to the appropriate level of care—assisted living or nursing, either on-site or accessible off-site—for an unlimited time at little or no additional cost. The CCRC bears the majority of the financial burden of the resident’s long-term care.
Modified contract (Type B) With this type of contract, the resident pays an entrance fee and ongoing monthly fees for the right to stay in an independent living unit and receive certain services and amenities. The Type B contract obligates the CCRC to provide residents with appropriate assisted living or nursing care for a specified number of days at no extra charge and/or at rates that are discounted from those charged to those admitted from outside the CCRC. The number of covered days and/or the discount varies from community to community. The CCRC bears the financial burden of the resident’s long-term care during the covered period; thereafter, the financial responsibility for long-care shifts to the resident, who must pay the regular per-diem rate charged to those admitted from outside the CCRC.
Fee-for-service contract (Type C) Fee-for-service continuing-care contracts require an entrance fee and ongoing monthly fees but do not include any discounted health-care or assisted living services. Rather, the resident receives priority or guaranteed admission for these services, as needed, but must pay the regular per diem rate paid by those admitted from outside the CCRC. With this type of contract, the resident bears the financial burden of his or her additional long-term care needs. The charges will vary, depending upon the services needed.
– Today’s Continuing Care Retirement Community (CCRC), CCRC TASK FORCE Jane E. Zarem, Editor 2010
An estimated 75% of CCRCs offer contracts that include an entrance fee. The majority of these offer some repayment of the entrance fee to the resident or the resident’s estate when the resident leaves.
- A renewed emphasis on Managed Care. In the wider health care market, managed care is on the resurgence as the Affordable Care Act (popularly known as ObamaCare) has many features that increasingly pay for good results or penalize provider payments for bad health outcomes. The changing financial incentives are leading to increased consolidation of both health systems and insurers and more coordination between a patient’s various providers. We actually like Coordinated Care as a descriptor or label. Managed Care carries some historic baggage. Medicare’s traditional fee-for-service reward for volume over results historically harmed retirees with poorly coordinated care. Improving the coordination between various providers is a good thing. CCRCs are providers and CCRCs are increasingly coordinating care and focusing on results:
- on-campus with programs like Masterpiece Living or an on-campus physicians’ office, and
- off-campus by affiliation or more formal relationships with larger health systems like local hospital networks.
- CCRCs Without Walls or Continuing Care at Home (CCaH). Going by various trade names: Kendal at Home, Cadbury at Home, Friends Life Care, Longwood at Home, Seabury at Home, LifeChoices at Bethany, etc. The idea of offering the benefits of a continuum of care that starts in a member’s current home without requiring a move onto a CCRC ‘apartment’ community, lowers the price point of entry into a CCRC’s system of care and leverages or takes advantage of the home health care affiliates or subsidiaries of a CCRC or its management company. This can also be seen as another symptom of seeing health care as a continuum to be managed or coordinated and not just as isolated episodes. The “at home” also tends to capture residents within the system at a younger age. Anyone in sales will see this as an example of identify your best customers, sell them more (up-sell and cross-sell), and find more like your best customers — the get, grow and keep cycle. For a CCRC or the management company it also increases the number of revenue sources by including more income from third-party payers like Medicare or private insurers. (The added income doesn’t always go into pockets that residents see with community level financial reporting.)
The following are a range of services that are typically included in a LifeCare Without Walls arrangement. Some exist as a cafeteria plan allowing residents to pick and choose the services used.
- Meal Service
- Health Care
- Long Term Care Insurance (once applicants pass an initial examination)
- Recreational and Fitness Activities, maybe provided at a community ‘clubhouse’ for member’s use.
- Home and Community Maintenance.
We’ll delve into each trend with more in-depth coverage to come. For now, in research we’re asking about each trend as we review individual communities and we’re looking for other examples of these emerging trends.
Tell us what you’re seeing in your community and what you think of the trends, good or bad.