Colorado Real Estate Journal - April 20, 2016
For the first time since the nursing home construction boom that occurred after Congress passed the Medicare/Medicaid Act in the 1960s, there is high demand for new construction and repositioning of nursing facilities, and a new focus on the physical environment. What is fueling this new demand? Two things. First, the average nursing home in America is over 45 years old and most of these older facilities are obsolete with regard to values and expectations that newer generations of seniors and their families have for their environments. The second reason for this increase in construction activity is that developers and providers have ready access to capital. Because of high performance in the senior industry that occurred after the recession, money is available through real estate investment trusts, commercial banks, U.S. Department of Housing and Urban Development, and private equity investors. Meeting consumer desires. While nursing home usage has remained flat or receded in recent years, skilled nursing is still an important part of the continuum of care. The population is aging and the demand for short-term rehabilitation beds is increasing. Given the obsolescence that exists in the industry, developers and providers find that new and repositioned facilities can capture a significant number of the available short-term Medicare-reimbursed rehabilitation patient that aches for a better physical environment and a better home like experience than the “old nursing home” provides. This is an important part of the formula because the Medicare resident and its reimbursement rates is the fuel that drives new development feasibility. “Build it and they will come” is an appropriate axiom today but only if you build to satisfy ideals that seniors and families have for their living and care environment. Several companies are experiencing success building new models that are responsive to desires and expectations of today’s seniors and their families. Mainstreet, based in Carmel, Indiana, has built 25 new projects in five states, including Colorado, and has another 50 projects under development in 11 states. Wellbrooke of Westfield, Genesis Power Back Rehabilitation Centers and Welbrook Senior Living also are examples of other for-profit providers that have multiple new facilities recently completed and in development. While 75 percent of investment grade nursing homes are owned by for-profit providers, hospitals and other traditional nonprofit providers also are active in the development arena. Adventist Care Centers, for example, after a 15-year hiatus from the building business, is developing four new freestanding nursing facilities with a 50-50 mix of long-term and short-term care and is repositioning eight existing facilities to respond to the need for more short-term beds and the need for more responsive interior environments that align with consumer desires. Best practices and market preferences. So what are these providers building and what are some of the best practices in facility design to respond to today’s market? First, it is important to note that in facilities with both short-term and long-term care populations, these two user groups are very different in age, purpose of stay and length of stay. Consider that for the long-term care population, who are among the oldest in the continuum, this is their home and the interior environment should reflect and personify the image scale and function of home. The short-term population, whose average stay is 15 days and which includes some of the youngest seniors in the continuum, are expecting more of a hospitality experience in terms of service and environment. Many providers call this population “guests” instead of “patients” or “residents,” which bears out this new paradigm. Here are some programming and design practices utilized in this new generation of nursing home. • For facilities with both short-term and long-term care, provide separate entrances and separate interior living social and amenity spaces to avoid mixing these two populations. • Utilizing lessons learned from the assisted-living industry, de-scale and de-institutionalize the environment by eliminating long corridors. Design the building with “neighborhoods” that have individual neighborhood great rooms, dining areas, activity areas, family niches and guest areas. Providing direct access to the outdoors from these areas, reinforce both a residential and a hospitality intent. • Design for an abundance of natural light throughout the building. This, along with views and access to nature and the outdoors, are evidenced based concepts for healing environments and part of a healthful and therapeutic living and healing pattern. Therefore, create strong indoor/outdoor connections along with a variety of outdoor spaces including protected, shaded and covered areas that are habitable, accessible and stimulating. • Provide hotel-like private rooms with desks for personal computers; large, flat-screen TVs; and built-in closets, dressers and adequate seating for visits by family and friends. • For both levels of care, provide a variety of spaces within the building that are designed to invite family, friends and the community at-large. Bistros, grab-and-go food options, theaters, outdoor kitchen and dining experiences and flexible activity spaces are all examples of these kind of programming ideas. • Include provisions for higher levels of technology to appeal to a more tech-savvy resident. Utilize technology to enhance health care services as well as the service-on-demand lifestyle that has continued to evolve in America. Part of an effective program for living and healing environments includes concepts for sustainability and green design. Many of the principals of sustainability are important opportunities for residents and guests as well as the staff. Natural lighting, better air quality and control systems, use of nontoxic building materials and maintenance products along with other sustainable concepts promote healing and better health – they should be part of the overall project goals in this new era of nursing facilities. The real payback. In this new era of nursing home construction, the new focus on the physical environment and the power of the architecture to promote healing, feelings of home and overall wellbeing is changing the spectrum of housing, care and rehabilitation for America’s nursing home population. Providers who understand and continue to build to these new consumer expectations will experience one of the most rewarding returns on their investment – making a difference.