Don't discount continuing-care retirement communities. The CCRC business isn't the newest, sexiest or fastest-growing segment of the senior housing industry, but it's thriving.
Although surging interest rates dampened some new CCRC financings last year, industry growth remains respectably positive.
"Those who would say that CCRCs are a thing of the past are, in my opinion, mistaken," said David Schless, executive director of the American Seniors Housing Association, a Washington-based trade group representing 160 for-profit and not-for-profit organizations. "The continuum-of-care concept remains a very viable product."
By providing access to assisted-living, skilled-nursing and other healthcare services, CCRCs enable healthy residents who become chronically ill or disabled to remain within a retirement community. In other words, they are allowed to "age in place."
"Until long-term-care insurance becomes an acceptable fact of life in the U.S., they will have a nice little niche," said Edward C. Merrigan, a vice president of healthcare and higher education at New York-based Fitch Investors Service, which rates CCRC bond issues.
The American Association of Homes and Services for the Aging estimates that 1,300 CCRCs operate nationwide. The Washington-based AAHSA represents 800 not-for-profit CCRCs. Four years ago, the association's best estimate of the number of CCRCs in operation was just 700.
Hospitals and nursing home chains that own or operate CCRCs appear to be responsible for a good portion of the industry's growth.
Solid growth.
MODERN HEALTHCARE's 1995 Multi-unit Providers Survey shows a 6% increase in the number of CCRCs owned or managed by hospital systems and nursing home chains last year. The 74 respondents operated 481 CCRCs in 1994, compared with 453 in the year-ago period.
The 481 CCRCs in the survey reported a total of 51,374 independent-living apartments, 10,645 assisted-living units and 19,952 nursing home beds.
For-profit systems accounted for the largest share of the CCRC increase, with 200 communities in 1994, a 13% increase from 1993.
Industry experts said they've noticed an uptick in CCRC projects by proprietary developers. Schless said many of the new projects are being developed by "companies that have track records in the CCRC product," rather than new entrants to the business.
By contrast, many new projects in assisted living, a rapidly growing segment of the senior housing industry, are sponsored by developers that are new to the field.
Secular not-for-profit systems in MODERN HEALTHCARE's survey reported the next largest gain with 110 CCRCs, a 5% increase. Catholic systems operated 69 CCRCs in 1994, up one from the previous year, and other religious systems operated 102 CCRCs, down one from a year ago.
Not-for-profit CCRC bond financings started dropping off around September 1994. Fitch's Merrigan said several interest rate hikes by the Federal Reserve Board "put a chill on new issues."
Projects move forward.
Although few CCRC bond deals are being rated now, a number of unrated projects sponsored by religious organizations or groups of churches are moving ahead with financings. The activity includes a number of start-ups, particularly on the East Coast, said
R.J. Fleishman, an assistant vice president at Ziegler Securities, Walnut Creek, Calif.
According to a recent American Seniors Housing Association survey of 84 industry executives, 42% said their companies plan to develop new senior housing within the next year. Of that group, 15.3% said they plan to develop CCRCs.
"We do see development in senior housing picking up," said Ed Kenny,
senior vice president of operations for Life Care Services Corp., a CCRC owner and operator based in Des Moines, Iowa.
With 45 CCRCs owned or managed, Life Care ranked second among systems responding to MODERN HEALTHCARE's survey. In 1994, the company picked up five management contracts: in Chicago; Ankeny, Iowa; Omaha, Neb.; Atco, N.J.; and Wilmington, N.C. Life Care's strategic plan calls for continued growth of its professional management and marketing services.
One service it hopes to expand is home care provided through retirement communities. Life Care now operates 10 home-care offices serving 17 retirement communities.
A promising omen for the CCRC industry is the movement of new financiers into the marketplace. In March 1995, Senior Campus Living, a Baltimore-based retirement community developer, entered a joint venture with Prime Property Fund, a New York-based pension account, to build a $200 million, 1,900-unit CCRC in Parkville, Md. The agreement with Prime Property Fund, which is managed by Equitable Real Estate Investment Management, calls for the fund's participation in more than $2 billion in retirement facilities over the next two decades.
"No pension fund has ever invested in senior housing before," said Mel Tansill, Senior Campus Living's public affairs director.
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(chart 1/3)
1994 1993
Evangelical Lutheran Good Samaritan Society 54 56
Life Care Services Corp. 45 42
Beverly Enterprises 40 42
Forum Group 25 25
Advocat 1 20 19
Catholic Health Corp. 2 20 17
Genesis Health Ventures 16 15
Lutheran Health Systems 16 16
Presbyterian Manors of Mid-America 16 16
United Health 16 13
Brim 14 9
Evergreen Healthcare 14 -
Lutheran Health System-La Crosse 14 13
Advantage Health Corp. 11 12
Covenant Benevolent Institutions 9 9
National Benevolent Association 9 9
Franciscan Health System-Aston, Pa. 8 8
Presbyterian Homes 8 8
Freedom Group 6 6
Catholic Healthcare West 3 5 5
Franciscan Sisters of the Poor Health System 5 5
Health Care and Retirement Corp. 5 5
Pacific Homes 5 5
Royal Imperial Group 5 5
Sisters of Charity Health Care Systems 2 5 5
1 Formerly Diversicare
2 Catholic Health Corp., Sisters of Charity Health Care Systems and Franciscan Health System, Aston, Pa., signed a letter of intent to merge in April 1995.
3 DCNHS-West will merge with Catholic Healthcare West this month.
Modern Healthcare / May 22, 1995
