Continuing Care Retirement Communities

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 3,700 firms classified as continuing care retirement communities (CCRCs) in the US operate 5,300 facilities. Services include assisted living with on-site skilled nursing facilities, independent living, assisted living, and skilled nursing services either on campus or at nearby facilities. These facilities involve a contract each resident signs, entitling them to a continuum of care in exchange for payment of an entrance fee and ongoing monthly fees.

Sensitivity to Capital Markets

Difficulty in obtaining financing or in re-financing existing debt can force CCRCs to delay needed renovations, postpone planned expansions, or prevent them from breaking ground.

Demographic Trends Grow Demand

Since January 2011, baby boomers have been turning age 65 at a rate of 10,000 per day - and this will continue for 20 years.

Industry size & Structure

The average CCRC has about 128 employees and generates $10.5 million in annual revenue.

    • There are about 3,700 CCRC firms in the US operating 5,300 facilities with $40 billion in annual revenue and 485,000 employees.
    • About half of facilities are "true" CCRCs offering care from independent living through skilled nursing under a contract that guarantees a continuum of care in exchange for an entrance fee and ongoing monthly fees.
    • About half of "true" CCRCs are affiliated with faith-based organizations, such as Presbyterian, Lutheran, Methodist, or Catholic churches.
    • Companies that own and operate multiple communities include Life Care Services and Erickson Living.
    • CCRCs are located in a range of geographical areas from urban to suburban to rural.
                              Industry Forecast
                              Continuing Care Retirement Communities Industry Growth
                              Source: Vertical IQ and Inforum

                              Coronavirus Update

                              Apr 23, 2022 - Pandemic-related Problems Cited In Bankruptcy Filing
                              • Dallas, Texas-based continuing care retirement community Edgemere, a luxury community owned and operated by Lifespace Communities, is filing for Chapter 11 bankruptcy after encountering financial headwinds due to the Covid-19 pandemic. The community has faced many challenges since the outset of the Covid-19 pandemic, with occupancy falling to 74% in 2021, down from 93% in 2018, financial records obtained by Dallas Morning News showed. That contributed to the community’s annual losses, which grew to $30 million in 2021. A historic winter storm that tore through Texas in February 2021, added to the company’s troubles, Lifespace President and CEO Jesse Jantzen said in a press release.
                              • About two-thirds of the senior housing units relinquished during the four quarters following the onset of the coronavirus pandemic were refilled in the second half of 2021, according to real estate services firm Marcus & Millichap (M&M). The pace of move-ins during the second half of 2021 increased in some cases to pre-pandemic levels, whereas the pace of move-outs remained stable. “The recovery last year was driven by a pent-up need for the care services that seniors housing communities provide, as well as a higher level of confidence among prospective residents once more of the population became vaccinated,” M&M analysts said.
                              • The US Supreme Court allowed a federal vaccine mandate to stand for medical facilities that take Medicare or Medicaid payments. "We agree with the Government that the [Health and Human Services] Secretary's rule falls within the authorities that Congress has conferred upon him," said the majority, writing that the rule "fits neatly within the language of the statute. After all, ensuring that providers take steps to avoid transmitting a dangerous virus to their patients is consistent with the fundamental principle of the medical profession: first, do no harm."
                              • Some industry experts say that the vaccine mandate helps vulnerable facility residents but may cause more caregivers to resign from facilities that are already suffering from staffing shortages.
                              • The Centers for Disease Control and Prevention is not changing the definition of "fully vaccinated," but is instead "pivoting the language" to get people "up to date" on their vaccinations, CDC director Rochelle Walensky said. "If you are eligible for a booster and you haven't gotten it, you're not up to date and you need to get your booster in order to be up to date," Walensky said. "What we really are working to do is pivot the language to make sure everybody is as up to date with their COVID-19 vaccines as they personally could be," Walensky added. Booster doses of Pfizer-BioNTech and Moderna vaccines significantly reduce hospitalizations from Omicron and reduced the likelihood of a visit to an emergency department or urgent care clinic, CDC data show.
                              • Small-business owners who received taxpayer-subsidized Paycheck Protection Program (PPP) loans of $150,000 or less during the coronavirus pandemic can seek forgiveness directly with the government through an online portal that was opened on August 4, allowing them to sidestep the private financial institutions that ran most aspects of the program for 14 months.
                              • Some businesses that took PPP loans in 2020 but don't apply for forgiveness soon will need to start making payments on the loan plus interest. The PPP loans will automatically convert to a standard loan at 1% interest if a small business does not apply to the SBA for forgiveness within 10 months of the end of the covered period under which they had to spend the money. For some businesses that received a loan when the PPP launched in April 2020, there was an eight-week covered period, which would put the forgiveness application deadline in the middle of July. For most loans operating under the more popular 24-week covered period, that meant a deadline in September 2021.
                              • The window to apply for Small Business Administration (SBA) COVID-19 Economic Injury Disaster Loan (EIDL) loans, Targeted Grants, and Supplemental Targeted Grants closed on December 31, 2021. The SBA had $11.8 billion in funds remaining across all of its programs as of December 24, 2021, according to The Business Journals. The SBA has been making billions of loans a week, which means the money could run out soon. The SBA will continue processing loan applications received before the deadline, including requests for reconsideration, and Targeted EIDL Advance (grant) applications, including requests for reconsideration. Small business owners who are still struggling with pandemic-related problems will have to look strategically for other grants and COVID-19 relief programs. Options may include private small business grants, state and local government grants and relief programs, and traditional SBA loans.
                              • COVID-19 has introduced a fear of traditional healthcare delivery settings, especially among older adults, according to Bob Kramer, founder of aging services consulting firm Nexus Insights. The fear will drive change in healthcare delivery, and senior living settings are emerging as a key player in that change, with a major objective being to keep residents out of the hospital. “If you’re going to tell a resident’s family, in essence, ‘Well if something happens to Mom, we just call the paramedics and she goes to the ER,’ they’re going to go, ‘No, that’s not acceptable to us,’” Kramer said. “And payers are not going to put up with sending somebody that they are holding the managed Medicare plan risk for to the ER every time there’s an issue at 2 in the morning.”
                              • Employment at continuing care retirement communities decreased 5.5% year over year in February and was down 14% from the pre-pandemic month of February 2020, according to the US Bureau of Labor Statistics.
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