The past 12 months have been quite eventful for the health care market, especially the seniors housing and care sector. There have been massive deals, real estate investment trust (REIT) divestitures of skilled nursing facilities (SNFs), concerns of overbuilding and changes in payor mix. While there are a number of uncertainties regarding the health care market and 2017, one thing is certain—changes are coming. We take a look at recent market data to shed light on the past 12 months, identify trends, and provide a big picture analysis of what the industry looks like as 2017 begins.
In December of 2016, Lancaster Pollard sent an online survey to approximately 4,000 leaders at seniors housing and care facilities throughout the U.S. Over the course of two weeks, 273 respondents completed the online survey. The survey has a 95% confidence level and a confidence interval of 5.38, meaning that the differences in responses of 5 percentage points or more are statistically significant.
In seemingly every presidential election, we are told by pundits and politicos that this particular contest represents the starkest choice between two vastly opposed ideologies that we’ve seen in decades. The future, your kid’s future and your grandchildren’s future, depends on its outcome.
The last several years have been challenging for hospitals, as uncertainty regarding the Affordable Care Act (ACA) and a narrowing in operating profitability became the norm. In 2015, however, the three major credit rating agencies (CRAs) presented refreshingly optimistic reports, particularly for the larger providers, citing strong revenue growth, continued cost containment, greater clarity with respect to the ACA and industry trends (e.g., consolidation and technology) as reasons for the positive momentum.
In December of 2015, Lancaster Pollard sent an online survey to approximately 4,000 leaders at seniors housing and care facilities throughout the U.S. Over the course of two weeks, 295 respondents completed the online survey. The survey has a 95% confidence level and a confidence interval of 5.68, meaning that the differences in responses of 6 percentage points or more are statistically significant.
The seniors housing industry is at an inflection point. This is not simply because of the aging baby boomers, rather, because this generation has drastically different financial situations and living expectations as compared to their parents. Diminished finances, a lack of caregivers, and rising costs converge to create an unprecedented need for seniors housing at a variety of price points. As such, traditional seniors housing supply will be required to adapt to meet the needs of the new generation of seniors in the coming decade.
In 2011, the Baby Boomer wave began to crash upon the shores of retirement. By 2030, 72.8 million Americans will be over the age of 65, an increase from 43.1 million in 2012. While developments in health care have added quality as well as quantity to the average lifespan, aging often still brings the need for assistance with Activities of Daily Living (ADLs). Many individuals retain the majority of their physical and mental abilities and yet still require some assistance with one to three ADLs. A segment of these individuals without the physical capacity to care entirely for themselves are low- to moderate-income seniors unable to afford traditional assisted living (AL) services. These individuals present an opportunity for operators and states to think creatively about how best to care for their financial, physical and mental needs.
Community hospitals face many challenges given the dynamic nature of the health care sector today. Compressed margins, competition from acquisitive health systems, and physician recruitment and retention are just a few examples. However, community hospitals may be able to leverage some of their inherent strengths to mitigate some of these challenges through prudent investments in seniors housing within their market area.
Health care reform has caused a seismic shift in the U.S. health care landscape. The aftershocks continue to be far reaching—toppling long-standing paradigms and causing hospitals to reevaluate how they currently operate.
The U.S. Department of Housing and Urban Development (HUD)/Federal Housing Administration (FHA) Sec. 232 program, better known as HUD LEAN, recently adopted significant changes to its loan closing process. In a previous article, we examined the new borrower and operator agreements as well as loan monitoring changes. Now let’s take a closer look at new accounts receivable (AR) financing documents.
Let’s face it, community hospitals. When playing the financing game, the cards aren’t exactly stacked in your favor.
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