Larger communities focus on aging-in-place environments Are larger communities such as CCRCs the answer for the seniors housing industry to control supply and demand?

One of the leading concerns among seniors housing providers is that supply and demand need to tighten in 1998. The major focus is on the larger, more campus-styled communities such as congregate care retirement communities (CCRCs), which allow the resident to age in place while staying within one facility. Owner/operators, developers and managers have awakened to the call for more communities with more than one sector of service within a campus. The CCRC environment and larger communities can bring many seniors into a facility with dignity and independence while sustaining various levels of life care.

"Growth will drive the CCRC market into the next decade. The problem our industry has is letting all the other seniors providers know what we really are about," says George R. Gunn Jr., vice chairman and CEO of West Point, Pa.-based ACTS Inc., the nation's largest non-profit CCRC provider. "We are launching a corporate image campaign in southeastern Pennsylvania, meaning the Philadelphia area, and we have eight communities, which is about 3,500 residents and 2,500 employees. We have a large share of the market and, in a desire to keep our communities full, I decided it would be to our advantage to have an industry educational campaign. This will actually help our competitors, but it will help us more due to the large market share we have."

The campus-styled community is one answer to the need for product in seniors housing, and CCRCs must stay in harmony with all the other sectors to maintain the continuum of care environment. "There are many influences that cause people to seek seniors housing, its people, on average, who are 78 years old and still have spouses under one roof. The influences on an individual or couple to move into seniors housing are many, and we do our best to differentiate ourselves from the rest of the market," says Gunn. "Our current plan calls for us to do about $350 million in new construction over the next five years. We're going to explore mergers and acquisitions for 1998 for more market share, and that's part of our growing environment as a seniors provider."

In 1998, major seniors housing providers will be developing large, campus-styled communities targeting the aging-in-place strategy to keep residents in their facilities. "We have focused on a continuum of care because our belief is that the construction changes reflect the various programs that we're going to offer in one campus which has led to design changes," says Penny Pritzker, president of Chicago-based Classic Residence By Hyatt. "Someone who is moving into independent living in a long-term care project is making a choice much earlier than someone who needs an assisted living facility. In a rental project that offers a continuum of care or life care facility, your length of stay is longer and the dynamics are different. I think that in our industry people are going to want to know when they move a resident to a facility that one company will be able to take care of that resident. The family is wanting to know that they will not have to move the resident someplace else."

With Hyatt focusing on more than 3,600 CCRC units to be developed in 1998, the campus-styled model is definitely part of the seniors industry today. "I think the campus-styled community has been somewhat abandoned by a lot of the competition in favor of freestanding assisted living that has been driven both by demand and Wall Street and, in the end, the consumer wants a continuum of care product," says Pritzker. "We have focused on the CCRC niche because it has worked well with us as a private company, and in my mind there is less competition. There is a point where a project can be too big, and you can ultimately build a bigger project because in one community you're in various businesses. You can be doing Alzheimer's, nursing care, assisted living, independent living and home healthcare, and you've got a lot going on."

The hospital affiliation is a focus that CCRC developers must address to keep the continuum of care philosophy in place. The hospital-facility relationship is one that is market-driven and keeps the residents knowing they can age in place. "It is helpful to have hospital affiliation and community-to-community relations, and we've got that. It is definitely one aspect of having a strong project and one of the success factors needed to stay ahead," says Pritzker. "The relationship helps the resident to know the quality of the hospital and the kind of doctors they're dealing with and, from the hospital's standpoint, the hospitals want the facilities to refer residents to them."

Financial aspects of larger communities with dementia-related units is a focus that is acknowledged when considering development. "There is a part of the market that wants to see community living while providing a number of services or medical needs. In the campuses we're developing, yes they're more expensive, but they have many more amenities than a freestanding or assisted living project," says Pritzker. "We are incorporating a more resort style of living, even if we're doing it intown. In other words, you can have, overall, more than 60% of your units being independent living. To attract the independent living resident you need to have a different kind of program, both physically and operationally."

Two of the many considerations developers have to deal with are the construction of the campus-styled CCRC and what results will be rendered upon completion of a project. "Developers are more likely to pursue the campus-style projects. The marketability of a continuum of care environment is very important to family members placing a loved one in these facilities," says John Fish, president of Suffolk Construction, a Boston-based builder specializing in seniors housing. "This is definitely a growth segment of the market. The market grows as acceptance grows for the 24-hour care of these residents away from home. It is becoming more widely accepted that Alzheimer's residents can be better cared for with building designs and layouts that accommodate this kind of expansion in the industry. In order to justify a reasonable investment, they (the developers) must be able to accommodate assisted living and skilled nursing while benefiting from the economies of scale resulting from a larger project."

Some current facilities have to be retrofitted for expansion to increase their market share for the long-term care arena. "Another consideration is genetic advancements which may result in future cures and thereby impact the demand for Alzheimer's units," says Fish. "So these units and wings must be convertible back to assisted living for future uses. Construction changes can include isolation of the module resulting in the separation of Alzheimer's residents from others. These units can have security and interior design changes such as control of access to outside areas, along with varied lighting and color schemes that are very important. Sunlight and vibrant colors are always used and, the units must have more room - a sense of familiarity. Also, all sidewalks must be circular, not linear so they dead-end and have a lack of obtrusive entries, such as swinging doors, curtains and open baths."

The development of large communities has a small number of owner/operators and developers going into the 250-plus range for units and sustaining a significantly higher cost than freestanding facilities. "We have products that start in the 200- to 390-unit range. We've made a determination that it is important to have a campus-like setting, mainly because we want each of our different types of programs to succeed and we strongly believe in the concept of the elderly aging in place," says Harvey Rafofsky, president of Naples, Fla.-based HealthTrust America. "A majority of our product is a congregate type setting with a small amount of Alzheimer's units, generally around eight to 14 units per project. We offer amenities like a country club setting and have a large number of independent units and assisted living residences. The key is the involvement of a whole bunch of services for the seniors, so they don't have to move from place to place."

In CCRCs, the development design is one of the most important factors for the success of the larger community. "We have outdoor gardens, separate amenity areas and a patient wander guard system. If we recently bought a facility, these things would be one of the focused renovations to the building for the increase of Alzheimer's market share," says Rafofsky. "We don't go after freestanding or a particular piece of the market. We don't want smaller than a 120-unit building, because you then can't afford to bring in the high-caliber help you want. The larger the building, the better quality of help you can afford because you're serving more people and your residents reap the benefits."

"Some of our residents are frail and elderly, but they would like to come to the activity programs of the more active community. We like to offer both choices, and we have an intergenerational program where the residents can interact with younger people from a local high school, and we also have a program for elderly volunteers going into other off-site buildings," says Rafofsky. "We have formed alliances with local hospitals and universities where we have educational seminars and the residents talk about their careers, so we want to learn from the elderly and let them teach us as well. We have learned an enormous amount from our residents in these large communities."

Pure CCRC providers have placed themselves in a solid run for a major portion of the seniors housing marketplace. "We have existing facilities that we're retrofitting, and we're planning several new projects every year. We are particularly interested in dementia-related issues and the Alzheimer's environment because it targets our focus as a provider," says Dr. Gary Appelbaum, vice president and medical director for Baltimore-based Senior Campus Living. "These types of issues happen with residents over the age of 85, and 30% to 40% of our residents fit that category. When dealing with a community at those percentages, you need to keep a stable community and plan for the future of the residents and the facility. One of the plans is for smaller group settings for Alzheimer's residents, so they need a structured environment, a safe environment to be around. This positions the campus environment well in the marketplace and keeps our residents aging in place with us."

Congregate seniors housing is expected to continue its positive growth pattern in the near future. Many positive events will shape congregate care such as: * There is an abundance of capital available from both U.S. and foreign banks to congregate care developers. * Construction activity of congregate residence is beginning to pick up as the senior population continues to grow. * Congregate care owners are beginning to pay full price when acquiring facilities.