There are two reasons organizations use crowd sourcing.
A few days ago I moderated a panel on senior living at a conference held in San Francisco that was mostly focused on healthcare development and marketing. The first presentation was about a very complex new construction medical office building that took or is taking, something like 10 years from site acquisition. It took merging 7 parcels owned by 7 different groups until the first tenants will move in. Welcome to the world of development in San Francisco.
This project and the whole conference was a very interesting look at the eldercare and the healthcare development market from a different angle.
This particular project will be about 50% occupied by a large health system and the other 50% by small physician practices, meaning either solo practitioners or very small groups. As a side note, San Francisco is one of the last holdouts for solo practitioners.
What caught my interest and I think has some application to senior living is that the physicians who are renting space will have the opportunity to purchase a proportionate ownership interest in the building. If a physician rents 3% of the space they will have the ability to purchase 3% of the project. As I think I understand it, there will be fairly favorable financing for a good chunk of their investment.
Nursing Home Referrals
Every nursing home is required to have a medical director who is a licensed physician and is paid to serve in that capacity. The amount paid can be relatively nominal to a pretty substantial amount of money. The amount they are paid is above what they are able to bill Medicare and other payer sources.
The size of that monthly retainer is often related to how many new admissions that physician can bring to the facility. (I do want to note that it is clearly against the law to pay physicians any kind of referral fee, but in many cases this is seen as a good investment for the facility.) In fact, it is not all that uncommon to see several paid physician positions that end up giving a skilled nursing facility a competitive advantage.
Crowd Sourcing Senior Living
There are two reasons organizations use crowd sourcing. The first is that sometimes the idea is so radical or risky or crazy or small, that traditional capital sources just would never be interested. The second reason is that it is a way to get a large number of people interested in and committed to a project.
I find myself wondering if a senior living developer could give themselves a serious competitive advantage by offering local referral sources to become investors in the project. It would again need to be a legal and above board market rate transaction, but I can’t help but think it would be a great way to fund needed capital requirements and build deeper bonds within the local marketplace community.
Good idea/Bad idea, Your thoughts?