Brookdale Senior Living continues to see promising results in itsmHealthPlus value-based care coordination program, which the company expanded as expected in the second quarter, President and CEO Lucinda “Cindy” Baier said Tuesday on the Brentwood, TN-based company’s latest earnings call.
On the company’s first-quarter call in April, the CEO said that the program had been implemented in 31 communities and that the company planned to add it to 18 more communities before the end of the second quarter. Now, the program is in almost 50 communities and also has expanded from two states — Ohio and Texas — to a third, Florida, according to the provider’s website.
“I am proud to report that the independent third parties once again confirmed that residents in HealthPlus communities have fewer urgent care visits and hospitalizations compared to similar seniors residing in competitive senior living facilities or living independently,” Baier said. “Importantly, urgent care visits were 78% lower, and hospitalizations were 36% lower for Brookdale HealthPlus residents than similar individuals living at home.”
The results do more than demonstrate the ability of the program to improve resident health and well-being by providing proactive care coordination and preventive care, Baier said. “They also demonstrate the value that Brookdale’s care provides in lowering healthcare costs for our residents,” she said.
HealthPlus, Baier said, will help differentiate the provider in the market and “attract someone who’s really focused on maximizing their health span.”
“We just need to make sure that we’re balancing the value proposition with the rate that we charge,” she said.
In general, Baier said, the company “is really excited about the value of assisted living” and noted that assisted living memory care costs one fourth of the expense of hiring a home health aide.
“When a senior needs care, senior living is incredibly attractive from a cost perspective,” she said.
“Significant growth” in the sector, Baier predicted, will be driven by muted inventory supply, increasing demand, and a decline in the number of family caregivers to support a rapidly growing aging population.
Occupancy continues increasing
Move-ins exceeded Brookdale’s pre-pandemic average by 7.5%, which led to occupancy growth in the second quarter over the first one, the company reported.
The portfolio saw 190 basis points of occupancy growth in the quarter, and post-quarter occupancy in July was at 78.5%.
Executive Vice President and Chief Financial Officer Dawn Kussow said that Brookdale recovered the seasonal occupancy loss from the first quarter, increased occupancy each month within the quarter, and now has returned to an occupancy level above the 2022 year-end level.
Baier said she is confident that the company “will remain on a path of occupancy growth over the coming years, capturing an organic growth opportunity that has more potential for positive momentum than at any other point in the past decade.”
Second-quarter operating expenses were flat compared with the first quarter. Within same-community operating expenses, Kussow said, labor expenses as a percent of revenue decreased 500 basis points compared with the second quarter in 2022, whereas other facility operating expenses decreased by more than 60 basis points.
Labor expenses continued to decline in the second quarter, with Brookdale experiencing an 80% year-over-year reduction in contract labor as well as reduced turnover rates. The company is working to stabilize its workforce this year after increasing staff size by 15% last year, executives said.
Lease agreement actions
During the quarter, Brookdale and Welltower agreed to amendments to the companies’ existing lease arrangements. Brookdale will continue to lease 74 communities from the Toledo, OH-based real estate investment trust.
Brookdale also will continue to lease 10 communities from LTC Properties, a partial departure from the company’s original decision, announced in February, not to exercise the lease renewal option on 35 Brookdale communities owned by LTC. Those leases were to expire Dec. 31.
Monday, the Westlake Village, CA-based REIT announced that it had re-leased 10 of the 35 properties, located in Colorado and Kansas, to Brookdale under a new master lease. The six-year lease will begin Jan. 1 and includes a purchase option for Brookdale in 2029.
“This 10-community lease is very beneficial to Brokdale because we now have the right to acquire all 10 assets under a favorable purchases option,” Baier said Tuesday on the earnings call. LTC also has agreed to fund $4.5 million in capital expenditures for the first two years of the lease, she said.
In a statement Monday, LTC Properties Chairman and CEO Wendy Simpson said that the REIT plans to sell some of the remaining communities and transfer other ones to new managers.
