In an effort to boost revenues and create a pipeline of new residents, building owners are testing the tricky market of home care services. Take, for example, Silverado Senior Living, a for-profit owner and operator of buildings for the frail and memory-impaired elderly.

About three and a half years ago, Silverado started a home care division that provides geriatric case management, private caregivers and companions. The service can be purchased by residents of the Silverado buildings, or by seniors who live elsewhere.

Though the service was at first mostly purchased by building residents, last year about 50% of revenues came from non-residents who also represent a large pool of potential residents. Silverado’s home care division is projected to generate revenues in 2007 of $10.5 million. Company-wide revenues are expected to hit $102 million.

“Home care is a growing business for us,” says Mark Mostow, vice president of sales and marketing at Silverado in San Juan Capistrano, Calif. “It creates a full continuum of care so we can say to families no matter what you need, we can meet your needs.”

Though home care represents an obvious expansion opportunity for housing operators, they’ve been somewhat reluctant to enter the business. Instead of creating their own divisions, building owners and operators often opt to form alliances with established home care companies. The business can be tough, with high staff turnover rates. Also, employees not on site are difficult to monitor, building owners say.

Industry giant Sunrise Senior Living Inc. (NYSE:SRZ) exited the home care business in May when it merged its Sunrise at Home division with AllianceCare of Boynton Beach, Fla. Now called AllianceCare At Home, the business has 1,400 employees. Both Sunrise and AllianceCare declined to provide deal details for this story.

“This [deal] enables Sunrise to remain focused on its core senior living services,” stated a Sunrise spokesman, who added that Sunrise maintained a small stake in the new company, though he declined to say how much.

At AllianceCare, president and CEO Greg Bellomy says he plans to expand the business and offer home care as well as home medical services in all the markets where Sunrise currently has buildings.

Meanwhile, competition is heating up. New home care companies are cropping up to provide services to the growing number of seniors who live at home and need help. Franchise operations are becoming popular, too. Home Instead Inc. of Omaha has more than 700 outlets worldwide.

“It’s become a very competitive business,” says Mary Harrison, senior vice president of the Health Care Group at Life Care Services LLC, in Del Ray Beach, Fla. “There’s a new [provider] every day.” Life Care started its health care group in 1984. Back then “nobody in seniors housing thought home health had a place in the business,” notes Harrison.

Today, the group provides services to 32 of the 81 buildings operated by Life Care, which is headquartered in Des Moines, Iowa. Harrison points out that Life Care's approach is different from many home care agencies that offer only companion and housekeeping-type services. Life Care is also certified by Medicare to offer actual health care services, such as those from a registered nurse.

Life Care building residents are the primary customers, but 30% of revenues come from non-residents. The amount of non-resident business varies widely by building, Harrison says, from as little as 5% of revenues at some projects to as much as 60% at others.

Health care revenues are growing about 10% a year, Harrison says. (She declined to provide specific numbers.) But the business has grown enough that it now offers consulting services to seniors housing operators that want to get into the home care business. “If it’s managed right, it’s a good business,” she says.

Looking ahead, Life Care plans to add home health care offices at its new communities. Two new continuing care developments are under way, one in Brentwood, Tenn., near Nashville, and another in Talus, Wash., a suburb of Seattle. “We want to open one to two new [home health] branches a year,” Harrison says.

Despite increased competition, Harrison thinks Medicare-certified operations should do well. A growing number of seniors have long-term care policies that pay for in-home help, but usually only to Medicare-certified agencies. “It’s a growing source of business.”