Continuing Care Retirement Communities provide a continuum of care services on a residential campus, but many seniors are reluctant to leave their homes.

By Jack Cumming

At first, the idea seems obvious. Continuing Care Retirement Communities (CCRCs) provide a continuum of care services on a residential campus, but many seniors are reluctant to leave their homes. Why not simply provide the same services where the customers want to be?

For providers (CCRCs and rental senior living), that premise is beguiling. It allows the provider to follow the consumer in the consumer’s wish to stay put, while avoiding the heavy capital investment required for a bricks and mortar CCRC. Of course, it’s not that simple. Continuing Care at Home (CCaH), a virtual CCRC without the residential element, involves more risk relative to revenue than does the more predictable world of real estate investment.

Is a CCaH Business for You?

Although CCaH is generating growing interest, only a handful of providers have taken the plunge and for good reasons.  

  1. It is risky, especially if thinly capitalized based on optimistic projections that underestimate risk volatility.  

  2. It hasn’t yet caught on; there are not many participants.  

  3. Consumers have better options; they don’t need to pay an entrance fee for home-based services.  

  4. The trend of technology favors the alternatives; connectivity and electronic response support independence. In short, to paraphrase the Government Accountability Office CCRC report, “Continuing Care at Home Programs Can Provide Benefits, But Not Without Some Risk”.

That said, though, CCaH concepts could be a godsend especially for stand alone assisted living facilities. If done right, assisted living facilities can form the core for a virtual CCRC, allowing people to remain in independent homes in the vicinity. Threshold assistance services can be provided by mobile assistants based at the nearby facility, with the assurance that people can transition to residential care when the time comes. That might be a less risky business model than stand alone CCaH and could help maintain assisted living occupancy.

Wise management are always looking for new revenue streams and for how best to adapt existing business models to conform with market and cultural changes. This calls for considerable perspicacity combined with sound, prudent business judgment. It’s good business to think beyond the norms of today but to be cautious in shaping the business for the future.

These ideas require elaboration, so let’s get started.

Is CCaH too risky?

There are many kinds of financial risk. The one that comes quickly to mind is ruin risk, the prospect that an enterprise may go bankrupt. But such disasters are relatively rare. Most often disaster can be averted since adverse trends invite corrective action. More common is the risk of vacillation and fluctuation. CCaH participants are not as locked in as are CCRC residents, so participation may shift dramatically and unexpectedly.  

Likewise for service utilization. Coverage of services may drive higher utilization generating a cost/revenue spiral that can get out of control. There are many parameters that require expert management and rapid responsiveness. Pricing, for instance, may fall behind the upward movement of costs. These risk elements call for more capital relative to revenue as a bulwark against unexpected deficiencies than is the case for traditional senior housing.

Competition Is Confusing, Even Confounding

Competition can also be fierce. Although CCaH is still a relatively minor part of the senior services industry, the barriers to entry are low. Still, participants can shift from one CCaH provider to another far more easily than they can move from one CCRC to another. Entrance fees are much lower, and changing CCaH providers does not require a physical move. Today churn as participants move from one CCaH to another is not much of a factor. CCaH remains for now a nascent business model. There is little direct competition, but there are many alternatives including doing nothing and hoping for the best.  

CCaH essentially combines two core competencies. One is care coordination and facilitation. The other is packaged pricing as a consumer financial services product. Traditional, inclusive lifecare contracts are one example of packaging, while tiered pricing, common in many CCRCs, is another. Home-and-community-based services (HCBS) offer competition for the care facilitation aspect of the business model. Long term care insurance (LTCi) competes with the financial component. CCaH is minuscule compared with the larger HCBS and LTCi industries, but that can change as people become more aware of the CCaH business model.  

Both alternatives have challenges. HCBS requires workers who can operate in people’s homes without direct supervision and who can be trusted to dedicate themselves to their tasks and not to take advantage of their situation. That can be challenging especially among the low-paid workers who are the primary service providers. LTCi has encountered formidable pricing and profit challenges. Those with LTCi coverage are more likely to take advantage of services than otherwise and that drives utilization upward. Additionally, the cost of services has increased as labor costs have risen.  

CCaH does offer advantages that conventional long term care insurance doesn’t and that are difficult for individuals to arrange. Primary is the emphasis on care management. Everyone, regardless of age, can benefit from having a health advisor who periodically assesses their lifestyle and needs and who puts together a health and well-being program for them. Such well-being plans are not common today. The desirability of a well-being plan is greater as age advances. A well-being plan is a proactive form of care plan, though care plans generally kick in only after decline is evident. The big advantage that a well-managed CCaH program offers is the plan itself and availability of resources to help the participant carry out the plan. When done right, it can add years of vitality to what otherwise might become a withdrawn, isolated existence.

Carol Barbour, CCaH Pioneer

Carol Barbour, President of Friends LifeCare, may be the most knowledgeable person today on both the promise and the pitfalls of CCaH. Many organizations have ventured into the business, sometimes from a CCRC base, and sometimes as a promising standalone business model.  It’s not wise to imagine that CCaH will lend itself to the kind of stable administrative leadership that characterizes CCRCs. The greater exposure to market and economic vicissitudes requires a higher standard of active, assertive management than would otherwise be the case.

Ms. Barbour freely shares her experience, which can be informative. Many organizations, though, wander into CCaH with high optimism, blind to the pitfalls and lessons of the past, perhaps supported by expert believers, but relying principally on the view that all is likely to work out as they hope it will. They would be well advised to listen to the series of four videos that Ms. Barbour has made available on YouTube in the Friends Life Care channel. Start with President’s Perspective Part 1 and that will link to the full series of four.

CCaH vs. Village

The idea of CCaH is to provide the benefits of a CCRC without requiring people to move to a residential campus where they often trade home ownership for an entrance fee. It differs from the Village Movement in two significant respects. First, it addresses the healthcare needs that accelerate with advancing age. Village communities work best for those under, say, 80- to 85-years-old for whom minimal assistance is needed to maintain independence.  

Second, CCaH is organized by enterprises seeking a market to support a business model. Village communities are created by the grassroots efforts of people coming together for mutual support. Since CCaH is a business, there can be a disconnect between the executives developing and managing the business and the customers they serve. That is not the case with most “Villages” even if the members hire professional staff to help meet their needs.

Both the CCaH and Village models depend on prospects who recognize that they are likely to need services and who plan ahead to provide for future contingencies. The primary competition, therefore, for both aging support models is not from other similar entities, but from the inertia of people who don’t like to plan and who hope that they are unlikely to need the services that CCaH makes available. This resistance to act can mount as people age. Moreover, the CCaH model works best if initial enrollment is confined to healthy, younger people.  

Technology Changes Everything

Technology is increasingly allowing people to put together their own individual virtual Continuing Care Residence simply by life choices that they make. This latter possibility became evident to us recently, when a provider misperception made us think that we would have to leave the CCRC in which we had expected to stay for the rest of our lives. We were forced to look at alternative living options even though we are now ten years older than we were when we first moved in. That gave us an up-to-date perspective that we didn’t have a decade earlier.

There were several elements that led us to move to a CCRC ten years ago when I was 70 and my wife was 64. First was the wish for collegiality since I didn’t want my wife to be alone if I were to die suddenly. I, too, wanted a more socially connected life. Second was concern for the time when we could no longer drive. How would we get to physician appointments, grocery shopping, or to meet with friends? Third was the availability of assistance at hand should we need it unexpectedly.  

Now, with the passage of time, we found that our outlook had changed as we contemplated in 2017 life beyond our CCRC. Collegiality is less problematic with many opportunities for connection that weren’t there ten years earlier. Transportation, too, is far more ubiquitous and readily at hand with the growing prevalence of Uber, Lyft, etc. And new technologies can summon care 24 hours a day when and where it is need.

More interesting was that we found ourselves looking at residential possibilities providing many of the campus advantages of a CCRC without the entrance fee and managerial oversight that CCRC living entails. We found three first-class assisted living facilities, all located adjacent to first-rate shopping and communal resources, and we began looking at homes and apartments within a quarter-mile radius of those resources. Combined with the connectivity capabilities now available, we realized that we might be able to have a more fulfilling lifestyle beyond the walls of the CCRC campus. In the end, we stayed put, but it was liberating to know that we have options.

Opportunity Beckons

Those options for a freer, safer lifestyle form the CCaH opportunity. Although the elements for a more empowering life are at hand, what we would miss is our prior belief that in a CCRC there is someone who puts resident welfare first and who will step in to help sustain well-being and to make arrangements when emergencies present themselves.   

That’s an opportunity for those centrally located assisted living facilities that we saw as essential to our peace of mind. If they were to offer CCaH assistance centered around the adjacency they can provide of assisted living (and memory care), then that would allow us greater freedom of movement and choice with the same kind of assurance for our future that a CCRC provides. They could even open their dining and event opportunities to neighbors who commit and affiliate.

Instant connectivity is the clear necessity to enable this model of a virtual CCRC built on a CCaH platform with an assisted living core. It may be the future for CCRCs generally as they may become increasingly no more than high level assisted living with people choosing to avoid giving up ownership or the security of their own home. Today’s technology allows that continuous connectivity.

Challenges for the 21st Century

There are many challenges confronting senior housing and services as we move more deeply into the 21st century, but already some themes are presenting themselves. One is that people, increasingly, want to remain in the general community and not isolate themselves demographically in age-delineated residences under enterprise ownership. CCaH presents one response to that reality. Whether it will catch on popularly to become an area of growth remains in doubt.  

Technology is another evident reality. Those providers will survive who are able to embrace and master technology, and technological connectivity is a powerful force supporting the aging-in-your-own-home concept. Wisdom says, “You can’t manage what you don’t measure,” and technology gives that truism fresh meaning. It also enables those who are aging to remain independent, and in charge of their own destinies, longer than was possible a decade ago.

Third is the wish of a new generation of aging Americans to be involved in the organizations that serve them. This is most evident in the Village movement. It is also evident in the increasing age at entry into CCRCs, revealing that younger people are loathe to accept submission to a management that doesn’t include them unless they have no other choice.

The empowerment era, which is now fast approaching, calls for both wisdom and sacrifice on the part of executives and managers who are used to control. It also calls for new skills for listening to customers and putting the needs of customers first. When customers are first and well-served, as is more likely with the CCaH model than with CCRCs, then employee satisfaction and prosperous economic results follow. Managers who prize serving their customers also elevate their employees. Success builds on success lifting the enterprise with a culture of optimism.