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Continuing Care at Home: An Innovative Business Line for CCRCs

by Published On: Sep 28, 2012
Sarah Spellman, a director at CliftonLarsonAllen LLP in Plymouth Meeting, PA, moderated a session on Continuing Care at Home during the PEAK Leadership Summit in April.

Spellman, a former developer and operator of a Continuing Care at Home program, spoke to LeadingAge about the CCRC at Home model and what an organization should know before deciding to adopt this new business line.

LeadingAge: Can you explain what you mean by Continuing Care at Home?

Sarah Spellman: Continuing Care at Home is an innovative lifecare model that provides a full continuum of services and supports to older adults living in their own homes. These programs are actually very similar to a traditional continuing care retirement community (CCRC). Like a CCRC, the Continuing Care at Home program asks members to pay an entrance fee and a monthly fee in return for a guarantee of future care. The big difference, of course, is that Continuing Care at Home programs deliver most of their services in the member’s home. The only exception is campus-based assisted living and nursing home services, which are available if a member can no longer remain at home.

Continuing Care at Home programs appeal to older adults who want the security of a retirement community but don’t want to live on a campus. The programs have care coordination at their core. They also try to offer 1-stop shopping, meaning that they will help members find any service they need or desire, even if they have to refer those members to another provider.

LeadingAge: How long has this concept been around? Is it new?

Sarah Spellman: The first Continuing Care at Home program was launched in 1990, but these programs have not come on line quickly. It took 8 years for the second program to be developed. Growth has picked up in the past 10 years, though. We’ve seen 11 programs come on line since 2003.

The biggest stumbling block for new programs has been legislative and regulatory issues at the state level. Fortunately, states are beginning to understand this concept with help from local LeadingAge affiliates and members. Nine states have already taken action to allow Continuing Care at Home programs. Three states currently have legislative action underway. 

LeadingAge: What type of organization typically starts these programs and why?

Sarah Spellman: Most Continuing Care at Home programs are established by not-for-profit CCRCs. I know of one hospital that has moved into this market as well. I also know of at least one free-standing nursing home that offers the program.

Most sponsors view Continuing Care at Home as a way to fulfill their missions to serve seniors no matter where they live. Others look at this option as a way to reach a segment of the consumer market that they haven’t traditionally served, including that very large population of older adults who will never move to a CCRC campus.

LeadingAge: How does Continuing Care at Home improve a CCRC’s financial position?

Sarah Spellman: Continuing Care at Home programs have relatively low startup costs. There are virtually no capital costs, especially if you are locating the program’s infrastructure in existing buildings on your campus. Of course, you have to remember that this is lifecare, so you’ll have to continue to maintain reserves, as with any lifecare contract.

Cost savings come from the ability to spread the organization’s current administrative costs over an additional program. Let’s say the Continuing Care at Home program has an office on your campus. You can charge rent for that office. You can also charge the program for other administrative services, including the work your staff does to bill program members.

A Continuing Care at Home program can also help you increase utilization and occupancy of your assisted living or nursing home. Granted, you won’t increase your occupancy by very much because these programs are focused on keeping people at home. But if Continuing Care at Home members ever need assisted living, nursing home care or even short-term rehab, they are going to use your campus facilities. And you can charge the Continuing Care at Home program for those services.

Finally, there may be a small number of Continuing Care at Home members who decide, after a while, that they want to move to your campus. This usually happens when someone experiences a life change, like the loss of a spouse. 

LeadingAge: Let’s say an organization is interested in this concept. What are the first steps it should take to move forward?  

Sarah Spellman: You have to think about developing a Continuing Care at Home program in the same way you would think about developing a new CCRC. You are assuming the risk for the long-term care of your members. So, believe me, you need to do your homework.

The first step needs to be market research. Talk to consumers. Make sure they are interested in this type of program. Don't assume anything. There are differences in every market, including consumer attitudes toward long-term care, their understanding of lifecare, and the value they place on a product like this.

The size of the market also matters. There needs to be a critical mass of age- and income-qualified older adults to be able to reach a critical mass of program members.

LeadingAge: Let’s assume an organization can document a need and desire for its Continuing Care at Home product. What’s next?

Sarah Spellman: Next, you’ll want to do a few important things:

  • Hire a strong entrepreneurial manager. This person must be very flexible. He or she needs to be able to wear many hats, especially in the beginning. The manager needs to be the face of the program, and has to hire and manage staff, develop the program infrastructure and be involved in sales and marketing. 
  • Have a full complement of staff on board at kick-off. Prospective members are considering making a large investment in your program. Since there are no bricks and mortar, they are investing and trusting in the people.  

  • Hire sales people who can describe a very complicated product. Sales and marketing is not easy for this product. Your first challenge will be to convey the need for long-term care planning. Most consumers don’t yet understand that need.  

  • Don’t skimp on your marketing budget. Be prepared to spend marketing dollars.  Member recruitment is the primary focus of the program in the first 3 to 5 years.  Consistent dollars must be spent on direct mail, advertising and sales seminars to generate leads. 

  • Offer a variety of pricing plans. This will help you address consumer preferences. Be sure to keep your margins as reasonable as possible. Obviously you want to be comfortable. But understand that this is a price-sensitive product. Don’t price your way out of the marketplace. 

  • Develop a good admissions process. Look at the health records of prospective members. Do functional assessments. Remember that your target market is composed of healthy individuals who have not been diagnosed with a degenerative disease. Selecting these members will help minimize your financial risk for future care.  

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