There is a not too surprising, but unfortunate, tension between the worlds of not-for-profit and for-profit senior living providers.

There is a not too surprising, but unfortunate, tension between the worlds of “not-for-profit” and “for-profit” senior living providers. At the core it looks like this:

  • The not-for-profit providers tend to have a loftier self-view because they are mission driven, as opposed to being profit driven. While hopefully not intentional, there is a tendency to look down on the for-profit providers.
  • The for-profit providers are wary of the not-for-profit providers, first because there is a sense that they (the not-for-profits) have an inherent advantage not needing to show a profit. Secondly, there is some distrust of the not-for-profit world because of an apparent willingness to point fingers at the for-profit providers when there are industry problems. Case in point: the ProPublica Hatchet job.

The first general session at LeadingAge California this past Monday morning was titled ‘“Pundits and Predictions: The View Style”’. This was a roundtable discussion moderated by Joanne Handy, the President & CEO of the organization. Her first topic was the important issue of why not-for-profit providers exist. It was a brave question to ask and it was difficult to listen to the responses because it felt as if panelists struggled to provide an articulate explanation or justification. I do understand the problem, because regardless of the tax status of the ownership entity, the day-to-day realities of running a business that needs to produce a margin is the most important thing.

A Historical View

100 years or so ago individuals or community organizations (often faith-based) looked around their local community and found that there were elders who needed care and nothing was available. They went to work raising money and created “old folks homes”.  Some were lovely and others where pretty minimal and, in some cases, downright terrible. Many of today’s not-for-profits have these roots. At that time in history if not-for-profits did not exist the needs would simply not have been met. The fair question today is this: Are not-for-profit senior living providers really providing services or changing the world in ways that for profit enterprises cannot or are not willing to do?

What The Not-For-Profits Do Really Well

There are some things that the not-for-profits do very well:

  • Operating financially stable CCRC’s that do a nice job of serving seniors through the final stages of aging and elder hood.
  • They provide and operate a significant percentage of low income senior housing (without services) throughout the country.
  • Many have initiatives to explore the outer edges of innovation and are aggressive about sharing the results of those explorations.
  • Some have, through the years, completely reinvented themselves with respect to the kinds of services they deliver and how they are delivered.
  • They have some very creative bright thinkers. In fact, most of the people I like to sit and dream with about the future of senior living come from the not-for-profit side of the senior living.

The Case for Cynicism

When it comes to providing skilled nursing, assisted living and memory care for low income seniors their track record is pretty terrible (If you are the exception to the rule don’t beat me up for saying this, but instead share what you are doing). When it comes to skilled nursing, the record is particularly troubling, with many . . .  maybe even most, not-for-profit skilled nursing communities serving mostly Medicare, HMO and private pay residents. This is particularly troubling because the not-for-profit world frequently points to their better outcomes and higher level of resident satisfaction. I have no doubt that the statistics are accurate, but I find myself wondering if the for-profits would have similar outcomes if they had the same payor mix. One of the panelists made note that 95% of all Medicaid skilled nursing care is provided by for-profit companies.

Passionate Optimism

As I watched the panel discussion unfold, I was encouraged because there seems to be a real awareness that, in a number of organizations, the mission of the organization needs to be updated to reflect the current world we live in. Over the last few months I have gotten rather good at offering unsolicited dreams for organizations like Brookdale Senior Living and so here is my dream for the not-for-profit organizations: I have this dream that those organizations serving the more well healed senior populations will use their excess cash flows in these three ways:

  1. To do radical innovation in the areas of programming, building design and technology.
  2. To take those excess cash flows and use them to seek out and serve those senior populations that are most insecure. Today that is probably not the ultrapoor but rather those with modest means who could never on their own afford the highest quality, the best of the best senior living.
  3. Mentor and inspire a new generation of leaders who are committed to innovation and solving the really big emerging elder care problems that will challenge us over the next 30 years.

Steve Moran

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