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Advancing the Tradition of Catholic Senior Living Sponsored by Hot Topics in Catholic Senior Care: Insights from CEOs October 26th, 2019 / 11:15 AM
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Sponsored by
Hot Topics in Catholic Senior Care: Insights from CEOs
October 26th, 2019 / 11:15 AM
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Facilitator:
Lisa McCrackenDirector, Senior Living Research
Ziegler
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Presenter:
Jerry CarleyPresident & CEO
Benedictine Health System
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
The Benedictine Sisters of
St. Scholastica MonasteryDuluth, Minnesota
Our Sponsors
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
“Care of the sick must
rank above and before
all else, so that they
may be truly served
as Christ, for he said,
‘I was sick and you
visited me.’”
Rule of St. Benedict, Chapter 36
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Locations
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
▪ 34 LTC Member/Associate/Partners
▪ 27 Nursing Facilities – 2,228 beds
▪ 29 Housing w/Services – 2,135 units
▪ BHS Foundation▪ 28 Associate Foundations
▪ BHS Insurance Services SPC, Ltd.▪ Segregated Portfolio Insurance Company (PL/GL)
▪ Benedictine Groups Self-Insurance Association▪ Self-insured Worker’s Comp Association (MN)
▪ BHS Corporate▪ Corporate Parent/Manager
▪ Self-insured Health/Dental Insurance Programs
Benedictine Health System - Today
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Presenter:
Adriene IversonPresident & CEO
Elder Care Alliance
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
▪ Serving CA
▪ 5 communities / 660 residents
▪ AL/MC = 3; AL/MC/SNF=1; 55+=1
▪ 1 Brown Bag Program / 6,000 served
▪ Dementia-inclusive Program / 500 served
▪ Managing the present-
Preparing for tomorrow
Elder Care Alliance – Who We Are
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
▪ Formed in 1997
▪ Corporate Members
▪ Sisters of Mercy
▪ Sierra Pacific Synod ELCA
▪ Founder Mercy Retirement & Care
Center – in Oakland since 1907
Elder Care Alliance – Who We Are
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
▪ Expressing our faith heritage, Elder Care
Alliance is an integrated system committed
to serving and enriching the holistic
wellness of older adults and those who
care for them ...
Elder Care Alliance – Who We Are
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Engaging hearts, Transforming lives, Erasing boundaries
▪Enriching human relationships, connecting people and community, providing environments that foster independence, allowing people to flourish and where there is joy.
▪Partnering to create communities where people are empowered, engaged, and have a voice and a vocation.
▪A key contribution we make to the field of aging is in developing leaders with a calling to deliver person-centered, high quality services in support of holistic wellness.
▪We strive to transform ourselves, the lives we touch, the field of aging, and society’s view and value of older adults.
Elder Care Alliance – Who We Are
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Presenter:
Karen ReichMarket President
Health System Senior Services
Bon Secours Mercy
Health System
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Bon Secours Mercy Health System
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Our Foundresses
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
▪ Home Health Revenues $58,706
▪ DME, Infusion, Acute Rehab, Hospice
Bon Secours Mercy Health Post Acute
Facility Based
Nursing Care 1,111
Assisted Living 368
Independent Living 116
TOTAL 1,795
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Hot Topics in Catholic Elder Care & Aging
Services
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Supply & Demand Trends
Competitive Landscape
Pressures Points
Technology & Innovation
Catholic Sponsorship & Partnerships
Concluding Thoughts
Hot Topics
20Source: Population Division, U.S. Census Bureau, 2010 - 2040, released
8/14/08
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
0
5
10
15
20
25
30
35
40
45
50
2010 2015 2020 2025 2030 2035 2040
Millions
Population of 75+ (Number in Millions) Annual Growth
DEMOGRAPHICS DEFINE THE MARKET PROJECTED U.S. SENIORS POPULATION (2010 TO 2050)
TODAY
Will more than double by 2040
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
*REPRESENTS NIC PRIMARY 31 MARKETSSources: Ziegler National CCRC Listing & Profile (Sept. ‘19), NIC Investment Guide, Fifth Edition
(2018)
The National Center for Health Statistics, Centers for Medicare and Medicaid Services (2016)
Today’s Retirement Options
A Look at Seniors Housing & services Supply
• 1,950 communities 600,000 units
Life Plan Communities
• 4,800 centers avg. 39 participants/day
Adult Day
• 12,000 communities 1 million residents
Affordable Housing
• 4,300 agencies 1.34 mill discharged/yr.
Hospice
• 15,600 homes 1,400,000 units
Nursing Homes
• 1,400 communities 73,000 units
Freestanding Memory Care*
• 7,200 communities 595,000 units
Freestanding Assisted Living*
• 12,200 agencies 4 million served/yr.
Home Health
• 2,800 properties 427,000 units
Primarily Independent Living* 3%
15%
17%
22%
24%
26%
33%
51%
77%
% NFP
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
▪ Among the largest Not-for-Profit senior living providers in the
country, roughly 8 out of 10 are faith-based
▪ Catholic providers have the third largest number of senior living
units among multi-site Not-for-Profits
An Overview of Not-for-Profit Faith-Based
Senior Living Organizations
Source: 2019 LeadingAge Ziegler 200
49,975
39,853
35,116
30,451
19,560
14,43310,938
6,430 5,932 5,750 4,901 4,749 3,920 3,565 3,084 3,008 2,183 1,506
0
10,000
20,000
30,000
40,000
50,000
60,000
L P CA M C B UC E MN J EVC Q EF D PI EC CH DC
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
▪ Many Catholic entities cross multiple service lines
▪ 40% of the largest Catholic providers offer Affordable Housing for seniors
▪ 70% provide some type of HCBS
▪ Heavy skilled nursing presence
▪ Of those with Life Plan Communities, largely rental as opposed to entrance-fee model
▪ Bifurcated sector
Catholic Elder Care Profile
Sources: 2019 LeadingAge Ziegler 200; Ziegler Investment Banking
Large Catholic-
Sponsored Health
Systems
Small Catholic-
Sponsored Nursing
Homes
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
New Location Development
Community Expansions & Repositioning
Affiliations, Mergers,
Acquisitions
Defining Growth
HCBS
Joint Ventures & Partnerships
Alternative Models
Sources: Ziegler Investment Banking
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Discussion: Supply & Demand Trends
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
▪ Today’s seniors have more choices for housing and care
than in the past
▪ The ability to “age in place” in your own home has
increased
Competition
www.leisurecare.comSource: Ziegler Investment Banking
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Overall Seniors Housing Inventory
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
1980 1985 1990 1995 2000 2005 2010 2015 2020
Tota
l num
ber
of
pro
pert
ies
Total Inventory of Market-Rate CommunitiesExcludes Freestanding Nursing Homes
For-Profit/Private Sector Not-for-Profit Sector
Source: Ziegler Investment Banking Estimates & Projections (August, 2018); based on sources from Ziegler as well as ASHA,
CMS, LeadingAge NIC, ASHA
Note: As of 2017, there were approximately 15,600 nursing homes in the U.S.
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
For-Profit Assisted Living Construction as Percent of
Inventory May Be Declining
0%
2%
4%
6%
8%
10%
12%
14%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Construction vs. Inventory; MAP31Seniors Housing | 4Q05 – 2Q19
For-Profit
Independent
Living*
For-Profit Assisted
Living*
Not-for-Profits
Source: NIC MAP® Data Service | www.nic.org/nic-map; *Excludes CCRCs
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Is Freestanding Assisted Living & Memory
Care Overbuilt?
September 18, 2019
Source: NIC MAP® Data Service, Q2 2019 |
www.nic.org/nic-map
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Discussion: Competitive Landscape
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Changing Business as Usual
Changing
Customer
Workforce
Pressures
Skilled
Nursing/
Post-Acute
Technology &
Innovation
Source: Ziegler Investment Banking
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Framing the Topic-
Senior Living & Services Workforce
Source: Ziegler Investment Banking
• Technologies and innovative solutions
• Benefits
• Staff training
• Minimum wage hikes
• Cost of insurance
• Bonus/incentive comp.
• Cost of turnover
• Branding
• Improving internal efforts
• Starting younger
• AI/Technology
• Front-line staff
• Middle-Management
• C-Suite
• External partners
Stakeholder Groups
Recruitment
Retention$
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
The Growing Complexity of the Skilled
Nursing Service Line
▪ Changes occurring within the skilled nursing side of the business (long-term & post-acute)
Reimbursement Challenges
Shifting Consumer Preference
Aging-in-Place
Regulatory Pressures
Workforce Shortages
“Skip the SNF”
Source: Ziegler Investment Banking
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Nursing Home Inventory
Source: NIC MAP Data Service, 12/31/2018
15,600 total nursing
homes in the U.S.
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Enrollment in Medicare Advantage
Source: Kaiser Family Foundation, “A Dozen Facts About Medicare Advantage, 2019”
In 2019, one-third of Medicare beneficiaries (22 million people) are
enrolled in Medicare Advantage plans.
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Discussion: Pressure Points
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Technology: Not-for-Profits as Innovators
▪ “Nonprofit organizations are the pioneers of seniors
housing. The first communities, dating back to the early
1900s, were affiliated with religious organizations. Fast-
forward to today and nonprofit organizations are again on
the forefront of innovation.”
Source: Seniors Housing Business, August-September 2019
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Technology- The Disruptor▪ Easier to “age in place” in one’s
own home
▪ Pace of change- are senior
living providers keeping up?
▪ Increasing consumer and staff
expectations
▪ New “competitors” to the
marketplace
Source: Ziegler Investment Banking
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Technology Spending - Budgeting
Source: Ziegler CFO HotlineSM, December 2018
% Capital Budgetdevoted to Technologies
% Operating Budgetdevoted to Technologies
2018 2016 2014 2018 2016 2014
Average %
(Total)10.0% 11.8% 12.2% 3.2% 2.5% 2.7%
Median %
(Total)7.0% 7.0% 9.5% 2.0% 2.0% 2.0%
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Discussion: Technology & Innovation
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Sector Consolidation
▪ Similar to other health and service-related sectors,
the not-for-profit senior living sector is
consolidating
▪ Sponsorship Transitions
▪ Affiliations
▪ Mergers
▪ Acquisitions
▪ Dispositions29 41 63 97
149204
264320
385446
36 5175
111
174
254
345405
568
651
0
100
200
300
400
500
600
700
2010 2011 2012 2013 2014 2015 2016 2017 2018 Sep-19
Cumulative Totals (2010-SEPT 2019) by # of Transactions & # of Communities
Transactions Market-Rate Communities
Note: Includes market-rate communities; excludes government subsidized; The ELGSS community count is also excluded from the
community count (represents 160+ communities); Source: Ziegler Investment Banking 9/1/2019
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Drivers for NFP Senior Living ConsolidationComplexities of
Healthcare
2000 2010
Influence
Leadership
Turnover
Technology
Demands
Diversify Service
Lines
Health SystemConsolidation
Ability to Attract & Retain Talent
Complexities of
Healthcare
Leadership
Turnover
Technology
Demands
Diversify Service
Lines
Health System Consolidation
Ability to Attract Talent
Technology
Demands
Hospital
Consolidation
Ability to Attract Talent
Financial
Pressure
Financial
Pressure
Access to CapitalAccess to Capital
Access to Capital
Leadership
Turnover
Complexities of
Healthcare
Reinvestment
Requirements
Competition
Competition
Competition
TODAY
Growth Capital
Board Strength
Source: Ziegler Investment
Banking
Pressured
Situations
Strategic
Mergers &
Affiliations
-VS-
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Impact of Shrinking Numbers on
Catholic Senior Living & Long-term Care
Source: Center for Applied Research in the Apostolate
▪ In 2018, it was
estimated that
there were
roughly 44,000
religious sisters in
the US
▪ Estimated average
age of Catholic
sisters in US is 74
160,931
126,517
102,504
79,814
57,544
44,117
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
1970 1980 1990 2000 2010 2018
Number of Religious Sistersin the U.S.
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
▪ Across the past 10 years,
nearly 90 Catholic- sponsored
facilities have changed
owner/sponsor.
▪ Of those that have gone to
another Not-for-Profit sponsor
since 2009:
▪ 50% with another Catholic
organization
▪ 15% have affiliated with a
faith-based non-Catholic
sponsor
▪ 35% with a not-for-profit
that was not faith-based
Catholic Senior Living: Consolidation Statistics
Source: Ziegler Investment Banking, October 2019
Closure, 16%
Sale to FP, 60%
Affiliation with
another NFP, 24%
Status of Sponsorship
Transition (Catholic
Providers)
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Discussion: Catholic Sponsorship & Partnerships
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Discussion: Concluding Thoughts & Questions
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Thank you.Jerry CarleyPresident & CEO
Benedictine Health System
www.bhshealth.org
Adriene IversonPresident & CEO
Elder Care Alliance
www.eldercarealliance.org
Karen ReichCEO
Bon Secours Mercy Health System
wwww.bonsecours.com
Lisa McCrackenDirector, Senior Living Research
Ziegler
www.ziegler.com
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
▪ Ziegler is a privately-held investment bank, capital markets and proprietary
investments firm
▪ A registered broker dealer with SIPC & FINRA
▪ Ziegler provides its clients with capital raising, strategic advisory services,
equity & fixed-income trading and research
▪ Founded in 1902, Ziegler specializes in the healthcare, senior living and
educational sectors as well as general municipal finance
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A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
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information, including audited and unaudited information, certain statistical information and explanations of such
information in narrative form (the “Information”). Management believes this information to be correct as of the
date or dates contained herein. However, the financial affairs change constantly, and such changes may be
material. Today’s discussion may contain forward-looking statements, which may or may not come to fruition
depending on certain circumstances, including those outside the control of management. Please be advised that
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please be advised that past financial results do not predict future financial performance.
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