As senior living operators consider strategic opportunities for growth in the wake of the coronavirus pandemic, service line diversification offers a variety of options, according to specialty investment bank Ziegler.
COVID-19 has led many organizations to launch strategic planning initiatives, Ziegler Director of Senior Living Research & Development Lisa McCracken said in a recent article. Along with striving to be an employer of choice and integrating technology into daily activities, providers also are considering diversification in relation to risk, revenue sources and older adults served, she said.
Traditional and emerging alternate service lines and revenue streams, McCracken said, include:
- Home care, home health and hospice
- Program of All-Inclusive Care for the Elderly
- Rehabilitation company ownership
- Continuing care at home
- Staffing agency
- Third-party management
- Behavioral health
- Information technology, consulting and other services
- Addiction-related services
Data from Ziegler’s CFO Hotline survey show that the pandemic has doubled provider interest in expanding through home- and community-based services, based on increasing consumer demand for such services, McCracken noted.
Although most not-for-profit senior living organizations with HCBS platforms have annual revenues of less than $10 million, others have developed substantial HCBS offerings and revenue after several years of strategic growth and development, she said. HCBS also can offer a substantial income stream for smaller organizations, she said.
Behavioral health is a trending area, McCracken said. As McKnight’s Senior Living previously reported, CareTrust REIT President and CEO David Sedgwick recently announced the real estate investment trust’s planned expansion into the asset class.
“If anyone has been paying attention to the mental health trends among older adults, it is clear that the need for mental and behavioral health services is only going to increase,” McCracken wrote. “This is an entirely different vertical to senior living and organizations need to carefully do their homework.”
McCracken encouraged senior living organizations to think creatively about strategic growth opportunities, including branching out into emerging or alternative service lines.
Pharmacy falls under the “emerging” category, she said. It is “not an easy business line to master,” McCracken said, but the pharmacy line of business can develop into a service for operators’ own communities. It also can evolve into a platform serving other communities.