A major regional senior care provider in the Pacific Northwest is looking to reinvent the continuing care retirement community (CCRC) model by taking Skilled Nursing out of the picture.
Wilsonville, Oregon-based Avamere Family of Companies recently announced it plans to open a “micro CCRC” in St. George, Utah. The development, which is part of the Sienna Hills master-planned community, will span two separate buildings and include 300 units of independent living, Assisted Living and memory care. The plans also call for multiple dining options, concierge services and other upscale amenities.
Workers are scheduled to break ground on the development this fall, with an expected completion date in late 2019. Avamere said it will open similar developments that cost between $75 million and $100 million in more western cities at a rate of up to one per quarter in the coming years.
Avamere currently owns, leases or manages 50 assets, and is on track to hit 60 by June 1.
CCRC sans skilled
For Avamere—which has made a name for itself in recent years as a prominent Skilled nursing provider in the Northwest—the omission of a skilled wing might stand out as unusual. But it’s all part of a plan to shake up the traditional CCRC model, especially as baby boomers start moving into senior housing en masse, according to Ryan Haller, vice president of growth and development with Avamere.
“We’re entering into a paradigm shift [where] this static concept of a CCRC will be looked at very differently,” Haller told Senior Housing News. “We sat down in a boardroom and said, we like this CCRC concept, but how do we change it for the next generation coming through?”
Many in the senior living industry would argue that a CCRC without a skilled component is no CCRC at all. But Haller, who is careful to point out that Avamere is still “bullish” on the care setting long-term, sees it differently. CCRCs are defined not only by their full range of care options, but also by their location, number of units, amenities and services, he said.
“Certainly, [micro CCRC] is not industry parlance,” Haller mused. “But maybe some day, it will be in the Merriam-Webster dictionary of senior housing.”
By omitting skilled nursing, Avamere saves on operational costs and relieves residents of the burden of paying for the care setting up front, he added. Instead of a buy-in fee, the community’s residents will pay a rent in the 80th or 90th percentile for the market.
“The thought of putting down a $550,000 or $750,000 buy-in fee is daunting to most people in the baby boomer generation,” he said.
The concept also plays into the generation’s desire for a more active, city-living type of lifestyle. About half of the micro CCRC’s units will be devoted to independent living, while 30% will be assisted living and 20% memory care. Avamere will also aim to develop future micro CCRCs in amenity-rich “urban lifestyle centers,” such as master-planned communities with medical offices and retail space, Haller said.
“We know that [our future residents would] like to live in an urban setting, and that they want a continuum of care but they don’t believe they’ll ever need skilled nursing,” he said.
That’s not to say residents won’t need a higher level of care down the road—many probably will. But some of the services traditionally offered in a skilled wing will soon be offered in an assisted living or memory care setting, Haller said.
“Today’s independent living is turning into tomorrow’s assisted living. And today’s assisted living is turning into tomorrow’s skilled nursing facility,” Haller said. “Skilled nursing will still be a very important component to care, but it’s very much an unknown sector that is being cannabalized by the assisted living and memory care space.”
Avamere also offers an array of ancillary services, like home health, rehab and transitional care, which can help fill the gap left by the absence of skilled nursing.
The micro CCRCs fit into Avamere’s overall push to change its reputation as a skilled nursing organization limited to the Pacific Northwest.
“We’re trying to balance our balance sheet and really have an equilibrium across all product types,” Haller said. “We want people to understand that we’re… not just a skilled nursing provider, but also an independent, assisted and memory care company and a rehab, home health and hospice organization.”
The company recently inked a deal with Colony Northstar (NYSE: CLNS) to manage five assisted living communities in Oregon and Washington. It also recently signed a hybrid lease/management agreement with Hong Kong-based holdings company Chevalier that includes 10 senior housing properties in Washington, Oregon, New Mexico, Nevada and Nebraska. Those moves tie into a $500 million split pipeline of development and acquisitions, Haller said.
One big reason Avamere is building up the non-skilled side of its business has to do with changing market trends. Occupancy for skilled nursing facilities fell to a new low in the third quarter last year at 81.6%, according to the National Investment Center for Seniors Housing & Care (NIC).
“When you look at national skilled nursing occupancies over the past 10 years, they’re not going up, right? A lot of [skilled nursing residents] are being sent to assisted living instead,” Haller said. “At the end of the day, we think we’re just addressing what the population is doing.”
That’s not to say skilled nursing won’t play a major role at Avamere in the years to come—it’s just not clear right now what that role will be.
“I can’t underscore this enough: We are definitely building for 2020 and 2025,” Haller said. “We’re building for the future.”
Written by Tim Regan
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