ManorCare Health Services targets the best customized help for its residents. For 38 years, ManorCare Health Services Inc. (MCHS) has participated in an active marketplace for seniors housing utilizing a commitment to caring for its residents and making advances in the industry. ManorCare Health Services' foremost goal is to help individuals gain as much control and independence in their lives as possible. The publicly held company (NYSE:MNR) is one of only two healthcare facility corporations that has an investment-grade credit rating of BBB. As well, MCHS is a Standard & Poor's 500 company and a Business Week 500 company, ranking 497th in market value, according to the Business Week survey.
Based in Silver Spring, Md., MCHS is the third-largest long-term care provider in the nation and has ownership of more than 3,200 apartment units with more than 27,500 beds in 208 seniors housing facilities throughout 29 states. The company offers a range of health and personal care services that meet the seamless service required by its customers. These services include assisted living, Alzheimer's care, skilled nursing and rehabilitation, and post-hospital care. MCHS also owns 51% of Vitalink Pharmacy Services (NASDAQ:VTLK) and holds a controlling interest in In Home Health (NASDAQ:IHHI).
MCHS is ranked in the American Seniors Housing Association's (ASHA) top 25 owners and managers across the nation. The company has approximately 39,000 employees, including Vitalink and In Home Health, and generated more than $1.24 million in 1996. Even with a booming seniors environment, MCHS is pursuing an aggressive corporate growth strategy. "ManorCare Health Services is dedicated to developing customized healthcare, social, educational and support services for this country's seniors population and for its extended family of caregivers," says Donald Tomasso, president of MCHS. "We will continue to build on this commitment to sustain our original vision of providing a comprehensive continuum of seniors healthcare services."
A DIVERSE PORTFOLIO In addition to the seniors housing portfolio MCHS owns and manages, it has a lodging segment called Choice Hotels International, which owns, manages and franchises more than 3,600 hotels containing over 310,000 rooms serving 30 countries. Choice Hotels International is the second-largest franchisor in the world. Today, ManorCare Health Services and Choice Hotels International have a combined total of nearly 42,000 employees and a market value of $2.6 billion as of April 1997, vs. $700 million a decade ago.
The main focus of MCHS is on assisted living and the trend of more elderly residents in the near future. In a Wall Street Transcript article, Stewart Bainum Jr., chairman and CEO of MCHS, said that a majority of MCHS's capital investment over the next five years will go into assisted living. "We're making a majority investment in assisted living to a large extent," said Bainum. "Right now, acquisition prices are fairly high for assisted living, so we're watching and we'll acquire when the prices become more reasonable. In the meantime, we're building and we have about 30 sites under contract."
MCHS's focus on assisted living facilities is strengthened by its background in Alzheimer's Special Care Units (SCU) and a substantial interest in Vitalink Pharmacy Services, a publicly held company that, in a merger this year, gained MCHS approximately $450 million per year, combining Vitalink and TeamCare, GranCare's institutional subsidiary. Bainum said that MCHS is looking for companies to acquire or merge with, but primarily companies that are in the principal businesses MCHS is in: assisted living, skilled nursing and pharmacy services. The country's demographics are changing with a growing 65 and older age group in the next few years, and MCHS has prepared carefully in the investment of assisted living facilities with high yields for its investors.
PRODUCTS THAT WORK MCHS has two products in the realm of assisted living that target this next wave of elders. The first product is called Springhouse, which generally is for an elderly resident needing general or limited skilled care. The other product is called Arden Courts, an assisted living community targeted toward Alzheimer's afflicted residents that are in the beginning to middle stages of the disease. MCHS has Arden Courts facilities in Washington, D.C.; West Palm Beach, Fla.; Philadelphia; Chicago; and Detroit to help patients with Alzheimer's disease enjoy residential living while receiving professional and personal attention 24-hours per day.
Arden Courts has the right idea for the 65 and older group over the next few years, for this group is projected to account for approximately 20% of the entire population by the year 2030. The next generation of residents that will need seniors housing will be the parents of the baby boomers, and the Arden Courts program offers the comfort that these parents are given by their children. "Arden Courts is a place where seniors can get the extra support they often need to stay independent, whether it's assistance with bathing, grooming, incontinence or reminders to take their medication," says Kurt Conway, vice president of MCHS. "Our qualified staff will be there to provide just the level of support each resident needs. Our residents' quality of life and maintaining as much independence as possible is important to them and their families. Making that possible is important to us."
Each Arden Courts resident is given an extensive assessment prior to moving in, which helps MCHS staff create a customized service plan for the patient. Residents live in one of four housing styles that are linked to a central common area. Each house has its own living room, dining area, kitchen, bathing area and 12 bedrooms, each with a half bath. There are visual cues -- colors, symbols and photographs -- the kind of help residents need to stay oriented and as independent as possible. MCHS is looking to add, over the next year five to 15 new Arden Court facilities and six to 12 Springhouse facilities through new construction or acquisitions. "We have a very active development program, and we're looking at building three to five skilled nursing facilities per year," says Greg Miller, vice president of marketing for MCHS. "We're looking at opening, over the next 12 months, around 25 to 30 new buildings."
As well, MCHS is developing additional products and services and making them available in new locations, along with care settings that most closely match consumers' needs and preferences. "We recently opened up an Arden Courts in Farmington, Conn., and that was our first venture into New England; we're looking at New York and New England for more assisted living facilities," says Miller. "Based upon the tremendous success with the Arden program, we feel there is a real need for Alzheimer services in that particular part of the country."
In a move this fall, MCHS will undergo a corporate identity change to encompass its entire integrated network to carry the MCHS name. At present, MCHS facilities are under seven brand names: Americana, Arden Courts, Four Seasons, Leader, Manor Care, MedBridge and Springhouse.
ABSOLUTE SERVICE MCHS's relationship with its staff members is developed from a philosophy of considering what is best for the residents, for nearly 50% of the customers in MCHS's nursing and rehabilitation facilities either return home or to a setting where they require less care. "We are distinguished in particular by two things: the great effort we go to for developing individualized custom care plans and the quality of the wellness component at each facility. We have expertise that many other health providers do not have with training people on meeting the healthcare needs of the patient," says Miller. "We recognize the difference in assisted living and skilled nursing, but we are able to provide the health oversight with the company skills we have better than many assisted living providers."
One of the best regarded practices that MCHS has presented to its residents and shareholders is customer service. MCHS maintains a core commitment to using state-of-the-art equipment and treatment programs to provide appropriate levels of care. MCHS's employees participate in continuing education programs to maintain the most advanced caregiving practices. The employees continuously seek opportunities for improvement and advancement for residents. One way MCHS illustrates this is with Customer Satisfaction Surveys -- 13,000 MCHS customers are surveyed annually to measure key aspects of service on a continuing basis.
Also, a Quality Improvement Program (QIP) ultimately provides MCHS with a system for assessing and improving quality, while helping them prepare for successful state surveys. "We're very proud of what we do in customer satisfaction. The purpose of the program is to continuously improve our customer service, and we have just implemented a new approach called the voice of the customer," says Miller. "We have conducted a series of in-depth, one-on-one interviews with customers at each of our facilities that developed over 300 customer statements in customer language stating their needs and desires about the product. The annual Customer Satisfaction Survey is now, literally, in the words of our clients, and our product users have determined what are the 20 most important things that we can do for them. The programs developed by MCHS gives direct feedback to its individual facilities so staff members can better serve the customer's needs on an individual and a daily basis."
THE HORIZON MCHS will continue to evolve in the assisted living marketplace, where the product cycles are going through a fast evolution. As well, MCHS has custom-designed two lines of assisted living to meet the needs of two different populations. "I think you will continue to see improvements at a fairly rapid rate in assisted living and see new product such as we're building driving out some of the marginal product," says Miller.
MCHS's highly disciplined approach to growth continues to vary from its competition. The company will target market values and a development strategy with new construction and acquisitions while consistently measuring its 15% growth margin per year. "Right now, we are primarily developing for two reasons: Market values are high for acquisitions and we think the new generation of products, for the most part, is better than what is available," says Miller. "Over the history of ManorCare, we have made several major acquisitions with a mixture of development and conversion going forward, but it depends on what is available in the marketplace and what makes the most sense."