Unlocking Value Through Collaboration

Collaborating Across Care Silos to Create Value

GSLA Luncheon April 21, 2017

Presented by Bill Kauffman, Senior Principal, NIC

2

Need for Investment in Senior Care Innovation

• We are headed into a major shift in society without needed infrastructure to deliver and integrate health and supportive services to frail seniors and manage the overall financial risk to the country

• We need to create 40 years worth of innovation in 10 years

• Innovation that results in the disintegration of care silos and the integration of senior care

3

NIC Conducted Research on Adding Value to Investment Opportunity…

MAJOR FINDING

There are opportunities for adding value to investment in real estate-based care when a senior care organization “innovates” by managing health care for residents or for high-need individuals who

live outside of the property.

4

Value That’s Needed as Healthcare Risk Shifts to Providers and Payers

PER CAPITA MEDICARE SPENDING FOR SELECTED GROUPS OF BENEFICIARIES

AGE 65 AND OVER1

Group of Beneficiaries Overall Per Capita Medicare Spending

Lowest 5% of Spenders $62

Lowest 20% of Spenders $331

Highest 20% of Spenders $29,604

Highest 5% of Spenders $59,646

1 This analysis excludes beneficiaries who died during 2006. N = 24,754,479 beneficiaries with any spending, 4,950,896 beneficiaries per quintile, and 1,237,724 beneficiaries per 5%

group.Source: “Data Brief: Medicare’s Highest Spenders.” The Scan Foundation. October 2011. Accessed August 14, 2014. http://www.thescanfoundation.org/publications/databriefs/medicares-highest-spenders

5

Research Shows Current Silos Drain Potential Value

PE/VC RE Investors

Home CareCare MgmtTechnology

Primary Care

HousingSNFs

6

Operators Need to Connect Across Silos

COMMUNITY CARE REAL-ESTATE BASED CARE

Home care companies express interest in relationships with properties because they offer “great platforms” for acquiring

new customers and gaining market share

Real-estate based care needs to expand capabilities beyond

four walls whether through partnership or buy/build

7

Value is Created When Care Silos Break Down

Day-to-Day Functioning

Value

Created for

Frail Seniors

Housing &

Social

Environment

Health &

Medical Care

8

Breaking Down Silos Requires Collaboration Across Real Estate and Non-Real Estate-Based Continuum of Care

New Value

Enablers SNFs /

Seniors HousingReal Estate

Investor

VC/PE(Venture Capital/Private Equity)

Clinical & CareIntegration

Value to Insurers, Organizations Taking Risk

NeedCustomers / Platform

Need Capabilities

9

Value-based Care is Rapidly Transforming the Healthcare Marketplace

2011

5%

Medicare Fee-for-Service PaymentsLinked to Quality or Value

2016

30%

Accountable Care Organizations(ACOs) and Bundled Payment

Arrangements

Medicare Payments Now Tied toAlternative Payment Models

10

Managed Care Enrollment is Growing as Seniors Seek Relief from Medicare Coverage Gaps

2010 20150

5

10

15

20

25

30

35

24%

31%

Enrollment in MedicareManaged Care Organizations

(MCOs)

Mounting pressures will

force traditional insurers to

focus more on reforming

care delivery

11

Your Population is THE Focus for Organizations Taking Healthcare Risk

11MillionSeniors Receiving Help with Daily Activities

(30% of all Seniors)1

Per capita Medicarecost about 4Xas High

as Non-Frail2Per capita Medicare cost about

3Xas High as Non-Frail2

Seniors Housing/SNFsalready adding value

to Medicare

1 Vicki A. Freedman and Brenda C. Spillman, Disability and Care Needs Among

Older Americans, The Milbank Quarterly, Vol. 92, No. 3, 2014 (pp. 509-541)

2 The SCAN Foundation DataBrief: Di? erences in Medicare Spending by

Disability and Residence, September 2011, DataBrief No. 17.

12

Your Organization Will Benefit if it Can Partner with Enablers to Operate Across Silos

VC and PEfunding is flowinginto organizationsthat “enable”managementof high costpopulations

Care ManagementCompanies

Tech-EnabledHome Care Data Analytics

Enhanced PrimaryCare for High Cost

Patients

13

Future Returns in Senior Care Depend on Creating Value

InnovativeSeniors Housing

Models

EnablersTech, Home Care,

Primary Care at Home

+

Senior CareOrganizations:

Connecting Frail Seniorsat Home to Primary Care andAlternatives to Hospitalization

VALUE

VOLUME

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Unlocking the Value of Senior Carein a Value-Based World

• Seniors housing is a strong platform for managing the most expensive lives in health care

• But, that value is locked without key partnerships and capabilities, including strategic relationships with (between) health care, post-acute care, and home care

• The NIC Spring Investment Forum will help attendees find the partners, tools, and strategies so they can integrate across the care continuum and drive value for risk-holders in their markets

2017Q1 NIC MAP Data

16

Seniors Housing – Primary Markets

78%

80%

82%

84%

86%

88%

90%

92%

94%

-2000

-1000

0

1000

2000

3000

4000

5000

6000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Inventory Growth AbsorptionAll Occupancy Stabilized Occupancy

Seniors Housing Fundamentals

Primary Markets | 1Q06-1Q17

17

Seniors Housing - Atlanta, GA

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

-150

-50

50

150

250

350

450

550

650

750

850

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Inventory Growth Absorption

All Occupancy Stabilized OccupancySeniors Housing Fundamentals

Atlanta, GA | 1Q06-1Q17

18

Independent Living - Atlanta, GA

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

-100

0

100

200

300

400

500

600

700

800

900

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Inventory Growth Absorption

All Occupancy Stabilized OccupancyIndependent Living Fundamentals

Atlanta, GA | 1Q06-1Q17

19

Assisted Living - Atlanta, GA

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

-150

-50

50

150

250

350

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Inventory Growth Absorption

All Occupancy Stabilized Occupancy

Assisted Living Fundamentals

Atlanta, GA | 1Q06-1Q17

20

Construction Starts by Segment – Atlanta, GA

0

100

200

300

400

500

600

700

800

2006 Q2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Assisted Living Independent Living Memory Care Nursing Care

Construction Starts by Segment

Atlanta, GA | 2Q06-1Q17

Questions

22

This year’s Fall Conference will be from

Tuesday, September 26 - Thursday, September 28

Registration Opens—June 6

Early Bird Deadline—August 1