The Silver Tsunami

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Editor’s note: The Allegheny Conference on Community Development claims that as many as 760,000 people in the 10-​county southwestern Pennsylvania region will be heading toward retirement in the next 20 years. This unprecedented retirement wave promises to bring significant challenges to the region’s labor force as well as such sectors as housing, healthcare, education, recreation and transportation, to name only a few. This “Silver Tsunami” is unlike any wave we’ve seen. In this first installment, Pittsburgh Quarterly explores the impact of mass retirement on housing/​healthcare for seniors. The tsunami may be but a rivulet now, but it’s already turned this sector topsy-​turvy.

Vincentian Collaborative System (VCS), one of the region’s most respected operators of retirement communities, eliminated more than 100 skilled nursing beds at its former Vincentian Regency campus in McCandless.

Squirrel Hill’s Charles Morris Nursing and Rehabilitation Center, operated by the Jewish Association on Aging (JAA), is decommissioning 35 skilled nursing beds and is repurposing the space for an Alzheimer’s/memory care unit.

Washington County has put its nursing home up for sale after it rolled up $9 million in losses over four years.

What the heck is going on here? At a time when our residents are aging, when Pennsylvania’s population soon will include a projected 600,000 people over 80, we need more nursing homes rather than fewer, right? That’s the conventional wisdom, but against the Silver Tsunami, the conventional wisdom no longer applies. What we’re seeing instead are declining skilled nursing capacity and, at the same time, emerging needs for independent living communities and affordable home care. And it isn’t at all clear that we’re prepared to meet those needs.

Skilled nursing a dinosaur?

Actually, had we been paying closer attention, we would have seen this coming; the downsizing of skilled nursing capacity has been underway for most of this century. According to Commonwealth of Pennsylvania figures, there has been a 7 percent decline of skilled nursing beds between 2000 and 2015 — from 95,083 to 88,118. In the same period, Allegheny County experienced a decrease of nearly 12 percent.

Moreover, nursing home residents are there for shorter periods now. The average length of stay statewide has plunged more than 42 percent over the past 15 years to about 134 days. Allegheny County’s figures are similar, showing a decline of nearly 39 percent to just over 88 days.

Why are nursing home operators eliminating beds? One reason is a fundamental change in the nature of retirement and retirees, especially baby boomers.

Retirees today want to stay active,” says Nick Vizzoca, president and CEO of VCS, operated by the Vincentian Sisters of Charity of Nazareth. “These boomers — think back. They’re hippies. They’re flower children. And a lot of them are healthy. They demand something different, just like millennials will demand something different as they age. They want to bike. They want to walk. They want to paint. They want to do their photography. For the community that we’re building in the North Hills, I told the architects: Think Fallingwater. Think the Frick Environmental Center. Bring nature inside.”

They may require skilled nursing down the road, but today’s retirees won’t accept being warehoused there. “In the past, people might live in a nursing home for five, six, 10 years,” Vizzoca notes. “Now, it literally is the last two months of their lives.”

Until they reach that end stage, there are more and better options than skilled nursing.

When I started in this business, there were nursing homes, period,” says Mark D. Bondi, president of UPMC Senior Communities. “Now, we’re trying to keep people healthy and take care of them in different ways. They’re going to other settings that are much more homelike — less clinical and more acceptable to them.”

Indeed, UPMC is heavily involved in all the options. Over 21 facilities, it maintains 1,047 skilled nursing beds, 1,132 independent living units and 607 personal care/​assisted living beds.

St. Barnabas Health System, which operates retirement communities and continuing care facilities for about 700 residents in Allegheny, Beaver and Butler counties, also is creating more options by converting some of its skilled nursing beds to one– and two-​bedroom apartments and a suite for assisted living.

People like living in a home rather than a bed,” says Karen Tabacchi, senior vice president of St. Barnabas Clinical Services. “Once they’re in one of these apartments, we can have our home care staff support them.”

Another factor in dwindling nursing home capacity is that the Medicaid reimbursement system, very much an unsettled issue these days, hasn’t kept pace with rising costs.

Nursing homes are becoming really selective in their process of evaluating patients and their ability to pay,” Vizzoca says.” If you get a 60-​year-​old who’s on Medicaid, my gosh, he could live another 35 years, so all you’ll get from Medicaid for that patient is $100 a day for the next 35 years. Boy, you can’t afford that.”

The screws are even tighter for government agencies operating nursing homes, such as the 288-​bed Washington County Health Center. Washington County Board of Commissioners chairman Larry Maggi reports that only 11 of Pennsylvania’s 67 counties continue to operate nursing homes, even though such facilities may be the only affordable option for the indigent. The primary reason, he says, is that reimbursement for government operators is substantially less than it is for nonprofit or private owners. “They’re pushing counties out of the business.”

Nor are there ways to make up the difference. “Outpatient rehab is a moneymaker, but we’re not able to capitalize on that,” Maggi says. “Government is not in the business of promoting and marketing, so we’re fighting with one hand tied behind our back. When we opened our Alzheimer’s unit and tried to market it, we actually were picketed and accused of wasting public money.”

As Maggi notes, rehabilitation and therapy are potential growth areas that providers are emphasizing as they eliminate skilled nursing beds.

Skilled nursing? It’s extinct. It’s a dinosaur,” Vizzoca says. “You’ll see skilled nursing facilities become specialized nursing facilities in four areas: stroke, cardiac, orthopedic, Alzheimer’s/dementia/ memory care.”

That trend is evident in Charles Morris’s creation of its newest Alzheimer’s/memory care unit. Deborah Winn-​Horvitz, president and CEO of Charles Morris, attributes the change, at least in part, to reductions in insurance reimbursements for therapy.

Previously, we would receive insurance approval for three to four weeks of therapy after a complex total hip replacement. Now, average length of stay is eight to 10 days if we’re lucky. We had to look at what to do with this space or be in a situation where we have empty beds, which we’d never had before. So we’re meeting a community need for memory care and also making best use of space we already have.”

She predicts more such transformations throughout the long-​term care sector. “The number of beds will continue to decrease, and how they’re utilized will change. We’ll be taking care of people for shorter periods of time but with more critical issues.”

Pent-​up demand for housing

Many new and soon-​to-​be retirees won’t need long-​term care for a while. For now, they’re seeking new, active lifestyles. One option is a retirement community. Most such communities in the region offer a number of dwelling types as well as assisted living and skilled nursing options for residents who eventually require them. In the parlance of the industry, they’re “continuing care retirement communities (CCRCs),” and they’re going great guns.

Baptist Homes Society offers both upscale residences at Providence Point in Mt. Lebanon and federally supported apartments at Baptist Manor in Castle Shannon. Al Allison Jr., president and CEO, reports both are well subscribed, with an 80-​unit expansion in the works at Baptist Manor.

We’re probably too early in the process to see a tremendous amount of impact from baby boomers,” Allison says. “Most of that will start hitting senior living providers in five years.”

At Vincentian Villa, a McCandless CCRC, the waiting list is 42, with 185 additional applications in the pipeline. How pent-​up is the demand for residences for active seniors? Vincentian has yet to lower the first spade for its new retirement community, hasn’t even named it, yet it already has received six applications.

In such a sellers’ market, retirement community operators could stand pat. Instead, they’re implementing new services and amenities to accommodate the Silver Tsunami. Vincentian Villa, for example, has launched a pilot program that features on-​site kiosks where residents can have their vital signs measured, with results automatically relayed to their physicians and family members.

St. Barnabas expanded its amenities in an innovative way when, in January 2016, it was given two adjacent golf courses — Suncrest and Conley Resort— along Route 8. Rather than look a gift course in the mouth, St. Barnabas now offers its residents free golf. And since the Conley bonanza included 56 guest rooms, St. Barnabas suddenly found itself a hotelier. St. Barnabas added the hotel and golf courses to its hospitality group, which offers its amenities — including a theater and restaurants — to the general public as well as residents.

Free golf and blood pressure kiosks are fine perks, but new retirees seeking retirement communities may encounter two problems. First, there isn’t enough supply to meet demand, and many communities are landlocked with little room for expansion. There are, of course, retirement communities that offer residences and amenities without continuing care components, but eager buyers typically snap up these homes even before they’re constructed.

The second problem is cost. Many CCRCs require an upfront payment, often called an “endowment,” that can range from $100,000 to $850,000 or more— and that doesn’t include additional monthly payments that can be in the $2,000 – $2,500 range. The endowments guarantee residents always will have a spot and the care they need — the state considers endowments insurance policies and regulates them as such — and they may be completely or partially refundable. As for retirement communities without continuing care, acquisition costs at two of the region’s newest plans begin at $300,000 and stretch to $800,000 — not much relief there.

St. Barnabas expanded its ammenities in an interesting way when, in January 2016, it was given two adjacent golf courses — Suncrest and Conley Resort — along Route 8.”

Typical retirees with little or no savings can tap the equity in their residences, but with the average home price in the region at $140,000, that would leave most well short of the cash needed to secure a unit in a retirement community. Where does that leave them?

Home care — a qualified maybe

It leaves them right in their current homes. With few housing options available in the middle market, many retiring Boomers will stay where they are — like it or no — and continue to fret about shoveling snow, raking leaves and other chores they’d hoped to leave behind.

In our focus groups,” Vizzoca reports, “we ask people, ‘Why aren’t you going to independent living? You’ll have everything taken care of.’ They say, ‘I can’t afford it.’ I would venture to guess 80 percent would love to.”

For the most part, new retirees are healthy. But should they require long-​term care, those who remain in their longtime homes won’t be guaranteed placement in assisted living or skilled nursing, as CCRC residents are. If they opt to be treated in their residences, it could create a huge need for home care services. Nationally, we’re beginning to see this surge, at least for post-​hospitalization services, such as therapy, that usually are covered by insurance.

The Medicare Payment Advisory Commission (MedPAC) recently told Congress that, between 2000 and 2014, the number of Medicare-​covered home visits grew 27 percent while the number of patients utilizing these services rose 37 percent. Expenditures soared 108 percent to $18.1 billion.

Locally, UPMC Community Provider Services reports that its home care visit caseload has risen to more than 700,000 per year. If that expansion continues, do we have the regional resources to meet the need? The answer is a qualified maybe.

The region has plenty of experienced home care providers. UPMC is a major player, as is Allegheny Health Network. St. Barnabas has been offering home care — to its residents and the broader community — for about 30 years. Increasing demand, though, could highlight several thorny issues.

One potential hurdle: insurance reimbursement mechanisms often are based on traditional metrics, such as number of visits, that may not fully accommodate long-​term treatment plans.

Most people think that if we have a more robust model for inhome care, patients being sent to inpatient facilities could instead receive services in their homes,” says Nick Stupakis, vice president of Highmark Health Home and Community Services. “In time, as more robust home-​based models of care are built, patients that previously would have stayed in the hospital or have gone to a facility would now be able to receive care in the home. We are working to realign the system toward quality outcomes rather than traditional volume– and fee-​for-​service-​based models. Reimbursement models need to incentivize providers for top-​tier outcomes.”

Another obstacle is a potential shortage of home care nurses. “There’s definitely a caregiver crisis coming,” Winn-​Horvitz says bluntly.

There’s definitely a huge need,” Stupakis confirms. “We are constantly recruiting, constantly looking at staffing up to find more nurses. There’s a finite number of nurses out there, and all companies are fighting for the same people. As regulations and reimbursements evolve to align to the right care, at the right time and in the right place, we’re sending people back into the community with more complex needs than ever before. Home-​care agencies need to prepare to meet the needs of those patients by introducing more robust education platforms that will help develop homebased services that are well equipped to manage more complex patients in the home.”

There’s a finite number of nurses out there, and all companies are fighting for the same people.”
—Nick Stupakis, vice president of Highmark Health Home and Community Services

Flipping the pyramid

When Vizzoca ponders the Silver Tsunami, he sees it in geometric terms.

The pyramid in the past was, nursing homes/​skilled beds was the foundation. Then you had personal care/​assisted living in the middle. The small piece on top was independent living. We need to flip that pyramid. The bottom needs to be independent living. The middle still remains personal care/​assisted living, and then that small sliver up top is now skilled nursing.”

Achieving that paradigm shift will take quite an effort, but the housing and healthcare sectors have launched a number of initiatives to make it happen.

Baptist Homes is looking for partners to help it develop and serve retirement communities in the middle market.

We’ll see growing demand for independent living for seniors of moderate income,” Allison says. “They’ll want to remain independent as long as possible. They’ll want to be very active, very socially involved, involved in community groups.”

That middle market also is a target for JAA, which has begun scouting sites for middle-​income independent living communities. A key difference: these communities would be located in the city near familiar, popular amenities.

We need to build them closer to city centers,” Vizzoca says. “You have a lot of seniors who live in the Shadyside, Oakland, Squirrel Hill area. They like to walk to everything, and now you’re telling them, you have to move to McCandless. That’s tough, but there really isn’t anything in the cities.”

To help bridge the affordability gap, St. Barnabas has introduced an “Annual Use Plan” that allows new residents to buy in for only $3,000 (plus monthly fees) in exchange for a one-​year commitment to remain at St. Barnabas.

At the end of every year, the resident can choose to remain with us or move on,” says Douglas Day, senior vice president of St. Barnabas Communities. “Some actually keep their homes [as a contingency plan] once they move here, but they’re ready to list them after a few months here.”

In the area of home care, JAA in 2010 launched a business line dedicated to such services and already has seen its active patient load triple. In some cases where insurance– covered visits have been exhausted, JAA has continued to manage clients, performing the work pro bono.

We don’t get reimbursed for it, but we feel it’s the right thing for the client,” Winn-​Horvitz says.

Technology may soften the impact of the chronic shortage of nurses. For its clients, UPMC Community Provider Services has implemented a tele-​monitoring system that enables patients to check their own vital signs. The results are communicated to a call center, which notifies physicians or family if it picks up significant changes or irregularities.

It’s an early detection system to make sure we can respond to any changes in the home,” says Deborah Brodine, the organization’s president. “It’s an additional tool which includes the patient.”

An important thrust in home care is the work of UPMC’s Living-​At-​Home and Staying-​At-​Home units. With a combined staff of 35, the companion programs help about 1,000 seniors, most of limited income, with such vital tasks as medication compliance and management, and they connect clients with the providers of various geriatric services. None of this is covered by insurance, but thanks to financial support from UPMC and UPMC Health Plan, there’s no charge to clients except when they’re referred to private providers.

We’ve been able to show over the years that our intervention reduces hospitalizations,” says Missy Sovak, director of geriatric care coordination. “It’s much cheaper to maintain people in their homes than it is in skilled nursing. There’s a high degree of patient satisfaction as well. Our staff become part of the family and support system.”

All are welcome initiatives, but unless we want to be swept away by the Silver Tsunami, preparations must be made.

Evan Pattak

Evan Pattak is a Pittsburgh freelance writer and publicist. His work appears regularly in TEQ, Pennsylvania Manufacturer, Pop City and Pittsburgh Quarterly Magazine.

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