Seniors Housing Business

AUG-SEP 2015

Seniors Housing Business is the magazine that helps you navigate the evolution of the seniors housing industry.

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74 Seniors Housing Business n August-September 2015 Orchestrating Loans for the Seniors Housing and Care Industry Bridge Loans Mini-Permanent Loans Mezzanine Loans Revolving Lines of Credit Tracy Maziek • Managing Director • 858.750.2563 • Katie Mainello • Director • 860.881.3218 • "Frankly, when Martha was describing the things you need to consider in your own home to age in place, those are all of things we consider in our [seniors hous- ing] design aspects," he said. "The delivery of that can be much more effcient, and you don't have to struggle to think of all these things yourself." Not surprisingly, the last but certainly not least component in Pelaez's function-identity-eco- nomics formula for aging in place takes little time to resurface in the discussion about senior living and care. "There's always going to be that gap between those who don't qualify for Medicaid and those who can't afford the high-end care," she said. "The biggest challenge we have is on the affordability side," said Weisenburger of Health Care REIT's target tenants. "We're very much [focused on] middle-income to upper-middle income and above just because that's the cost of developing prod- uct. Home health is a great option, but it's very expensive to take care of 50 different people who all live in 50 different places, and to truly care for them in the appropri- ate way." An evolving product Hutchinson said today's seniors industry offers a "plethora of senior apartments" and thus differ- ent cost entry points. With optional or "a la carte" services, seniors can fnd housing for approximately $1,500 per month versus $2,800 to $3,000 for full-service facilities. Weisenburger asserted that to "really get to the crux of the [cost] issue" changes to the Medicaid and Medicare reimbursement sys- tems will be required "to allow the money to travel with the person and put them in the most appropriate setting and to allow more people to have dollars for their care." Hutchinson singled out the Illinois reimbursement program as one that allows "Medicare dol- lars to follow the patient." He also touched on the power and infu- ence of the nursing home contin- gent in maintaining the status quo in senior care. "The issue and challenge has been the nursing home lobbies that don't want to lose those patients because they need to keep their facilities full," he said. "If you put Resident A in a nursing home that charges $200 a day, that's $6,000 per month. If you can take care of him in assisted living for $3,000, you've now saved the state $3,000 a month. That person is in a more appropriate setting, but also a more cost-effective setting." Funding based more on function and identity, Pelaez's pillars sup- porting aging in place, would give seniors healthy options and pro- vide the states with much-needed budget savings. The Congressional Budget Offce reported that by 2039, spending on healthcare pro- grams will account for 14 percent of GDP versus the 7 percent aver- age during the past 40 years. "Everyone has a choice, and they should have that choice," Hutchinson said. "They need to have a way like they do in Ger- many where the care is provided by the state, or they'll give you money for the [private] care." Germany provides long-term care coverage for nearly all of its population. Thus, more private home care service providers and new residential options arose; fewer German families were forced to care for the elderly in their homes. Demographic tsunami still to come Retirement for the Boomers, who are expected to live longer than any previous generation, will be a market revolution in and of itself, according to Hutchinson. "Baby Boomers are not direct consumers of what we're providing today," Hutchinson said. "Obvi- ously, 10 years from now when they reach our prospects' age they're certainly going to have an impact on supply. We don't have nearly the supply to handle that demand." Add to the equation the expanded Medicaid coverage and continued technological innova- tion in the sector. Enhanced vision and planning will undoubtedly be required. The housing industry won't sat- isfy the surge with product quan- tity alone. Boomers will bring many dynamics to the equation and, given the aging-in-place momen- tum, will set their own pace. n About the writer Brian A. Lee is a freelance reporter who has covered all sectors of real estate for more than 15 years. He was a CRE magazine editor for eight years.

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