Avamere Forges Ahead with Ovation Micro-CCRC Projects
In an effort to win over the next generation of senior living residents, providers are beginning to rethink traditional models such as the entrance-fee continuing care retirement community (CCRC). One new alternative — the “micro-CCRC” concept being developed by Wilsonville, Oregon-based Avamere Companies — has encountered some construction delays but is on track to hit the market next year.
Avamere first announced the micro-CCRC concept in February 2018, and unveiled the “Ovation” branding for these projects last fall. The first two projects are coming out of the ground in Omaha, Nebraska, and St. George, Utah. While winter weather slowed construction, the Omaha project is on track to open in September 2020, according to Ryan Haller, chief development officer for Point Development, the development arm of Avamere.
Haller is slated to discuss the micro-CCRC concept at the upcoming Senior Housing News BUILD conference, to be held in Chicago on May 8. In advance of that event, he sat down with SHN to provide an update on the projects and explain why Avamere believes a new version of the CCRC is needed.
The following has been edited for length and clarity.
The micro-CCRC consists of independent living, assisted living and memory care, but no on-site skilled nursing facility. Skilled care will be provided by Avamere’s home health company, Signature, and at nearby rehab centers. Why remove the SNF component?
The skilled nursing business, I think, is an evolving marketplace right now. We think part of the micro-CCRC concept is redefining, does skilled nursing go in the typical CCRC? And we think not. But in those same markets, we’re looking to acquire short-term skilled nursing. We just don’t think it belongs in that continuum of care on a single campus.
You said skilled nursing is evolving right now. Are you thinking of the new Medicare patient-driven payment model (PDPM) that is slated to take effect in October?
Well, I think it’s all the industry headwinds that we’re seeing with skilled nursing. I think for starters, Medicare and CMS [Centers for Medicare & Medicaid Services] have made it pretty clear that they don’t want to be in that market. The cutbacks they’ve been doing have been pretty incongruent with the augmentation of minimum wages. As a consumer price index rises in any town, there is not a congruent adjustment to reimbursement rates. And as you look at PDPM, I think there’s even more losers that come out of that as well.
So I think that as the economic headwinds continue to prove that skilled nursing is not a viable option —- especially in these Medicaid markets, because that’s what skilled nursing has become —- I just don’t think it’s going to be a profitable line of business to have in something you’re trying to promote as vibrant and you’re trying to promote as youthful. That’s everything that baby boomers want.
If you need transitional care in our Ovation markets, we will own transitional care in the same town. It happens to be two miles down the road. But we don’t want that general look and feel in our campuses because we want to send the messages that it’s very urban, chic, and very hip. Skilled nursing, even if it’s short term, never sends that message.
You mentioned that skilled nursing is primarily Medicaid driven, as this is the payer for long-term care in that setting. It sounds like you envision long-term care in the future to look like assisted living or memory care supplemented with home health or short-term therapy stints?