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Predicting The Future

Predicting The Future. Steve Monroe Managing Editor and Partner Irving Levin Associates, Inc. monroe@levinassociates.com www.levinassociates.com. The SeniorCare Investor. The Senior Care Acquisition Report. The SeniorCare Investor. HJ Sims Presentation. Anthony Argondizza

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Predicting The Future

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  1. Predicting The Future Steve Monroe Managing Editor and PartnerIrving Levin Associates, Inc. monroe@levinassociates.com www.levinassociates.com

  2. The SeniorCare Investor The Senior Care Acquisition Report

  3. The SeniorCare Investor

  4. HJ Sims Presentation Anthony Argondizza Senior Vice President and Chief Operating Officer

  5. Organizational Growth - 2014 and Beyond • Purpose • Expand mission • Lower overhead costs • Improve revenue through management fees • Serve new markets 12

  6. New Construction • Long lead times • Entitlement approvals • Financing • Working capital • Finally break-even • Construction / Occupancy risk 13

  7. Mergers / Affiliations • Shortened lead time • Zoning and approval issues easier • Capital considerations • Cash flow • Operating efficiencies – staff, systems, leverage • Access to capital and funding 14

  8. Consideration • Affiliation • Merger • Shared services agreement 15

  9. Growth Considerations • Geography • Risk profile • Mission • Culture • residents, trustees, staff 16

  10. Springpoint Merger Activity • Navesink Harbor – July 2006 • Winchester Gardens – June 2013 • Un-named CCRC 17

  11. Case Study - The Atrium at Navesink Harbor • Extremely challenged • Small units • Physical disrepair • Deferred maintenance • No cash • Financial distress • Weak board • Partially occupied 18

  12. Case Study - The Atrium at Navesink Harbor • Repositioned: • Façade replacement • Total interior reconstruction • Larger units (total unit count: from 213 to 138) • Deck replacement • New addition – 60 units • External challenges • 2008! • Investment much larger than planned 19

  13. Case Study - Winchester Gardens • Challenges we all face in CCRCs: • Heating and cooling upgrades • Decorating • Changes in space utilization • Strengths: • Very strong balance sheet • Strong demographics • CEO and Board of Trustees vision • New marketplace for us • Impossible entry otherwise 20

  14. Summary Assumptions Projected Springpoint Savings Based on Preliminary Analysis – 2013: Administration $649,000 Dining $111,000 Marketing $250,000 Legal $53,000 Purchases and Insurance $264,000 Service Contracts $100,000 Refinancing $830,000 Forward Purchase Utility Contract $150,000 Total Projected Savings $2,400,700 21

  15. Case Study - Unnamed CCRC • Similarities/Fits: • Geography • Familiar organizational type • Challenges: • Declining occupancy (substantial) • Capital needs ($10.0MM+) • Decent demographics • Very large debt burden • Reputational risk • Estimated 7-10 year fill 22

  16. Clinical Decision Unit A new opportunity for growth of Skilled Nursing Home Services

  17. Issues Facing Short Term stays.. • Managed plans, “Medicare Advantage” • Shorter Stays • Decreased Reimbursement • Part B Therapy Shrinking • Narrowing Hospital Networks • Short Term Beds are available, but not full!

  18. The Opportunity • A unique care opportunity • Sought by managed care companies & “incentivized” primary care physicians • A new ‘admission’ type to SNF • Downstream impact to AL, Home Health etc. • Alignment w/ a large primary care physician practice • Alignment with Managed Care organizations • Innovation is our mission ‘call’ • Reduce the cost of care • Add a new revenue stream to the CCRC • Gain experience in “Incident of Care” risk based payments

  19. What is a Clinical Decision Unit? • Dedicated unit (5-10 bed) within a skilled nursing or short term rehabilitation facility • Treat patients that don’t yet need hospital admission • Similar to a hospital Observation Unit • Patients awaiting a “clinician’s decision” for care pathway • Short length stays (3-10 days) • Types of Diagnosis: • COPD Pneumonia • CHF Uncontrolled Blood Pressure • Failure to Thrive Uncontrolled Blood Sugar • Staffed by RN, (ratio 5 to 1) • Supervised by “on site” Physician or Nurse Practioner

  20. Proposed Clinical Structure • Physicians will provide clinical support, on site and with EMR • Patients will be “managed Medicare” ONLY!!! • Preapproved and Not Requiring the “3 day stay” • Physicians will be initial referral stream: • From Observation Unit at Hospital and • Direct from Physician Offices • Clinical Decision Unit will manage: • Transport from referral site • Lab and Imaging • Respiratory and Other therapy • IV Fluids • Pharmacy needs • Patients will be monitored until Discharge (home or skilled unit)

  21. Patient Flow Direct from Office COPC Patient Presents at ER Admit to Obs Unit D I S H C H A R G E D Discharge to CDU AL, LTC, SNF Discharge to Home or Admitted Clinical Decision Unit

  22. Steps to CDU Opening • Development of Financial Structures • Billing Status for Medicare • Avoidance of out-of-pocket costs for patients classified as observation • Contracts with Medigold and other payors partnered with COPC in risk management contracts • Development of Clinical Pathways • Staff Hiring and Training • Projected opening date 6/1/14

  23. 2014 HJ Sims Conference The 4 P’s of Marketing • Product. The right product. • Price. The right product offered at the right price. • Place. The right product at the right price available in the right place • Promotion. Informing prospects of the availability of the product, its price and its place. Todd Swortzel President and CEO

  24. 2014 HJ Sims Conference

  25. 2014 HJ Sims Conference Product • Rehabilitation / Physician Practice Business • Pilot CMS Bundled Payment Project with Illinois Bone and Joint Institute • Product/Catered Living for Independent Living (All IADL’s)

  26. 2014 HJ Sims Conference Pricing

  27. 2014 HJ Sims Conference Promotion

  28. Let’s Hear from the LeadersSenior Living Trends March 6, 2014

  29. AGENDA • Welcome • Occupancy / Rate Trends • Construction Activity • Transaction Activity • Trends in Acuity • Regulatory Trends • Impact of the Internet • Technology March 6, 2014

  30. Assisted Living occupancy strengthened in 2013 March 6, 2014 Note: Represents majority AL and MC, excludes IL and SNF

  31. Annual rent growth slows slightly in late 2013 March 6, 2014 Note: Represents majority AL and MC, excludes IL and SNF Source: NIC MAP Data and Analysis Services

  32. Construction pace slows as completions outpace starts and inventory increases March 6, 2014

  33. Public buyers, generally REITs, continue to be the most active buyers, however the private sector regained momentum after a lull in 2011 March 6, 2014

  34. Trends in Acuity • Average age of our residents is 88, compared to 82 ten years ago • 53% of our residents are on a care package which means they need assistance with Activities of Daily Living • Today’s residents move-in with 3-5 ADL needs, where previously residents moved in for socialization • 65% of our residents are receiving assistance with medications • 72% of our residents take 3 or more medications, this number has more than doubled since 2010 • In 2013, 43% of our residents moved out due to death • Move-outs due to death in <1 year length of stay has increased 54% • The Top 5 diagnosis for our resident population are: Hypertension, Dementia, Depression, Congestive Heart Failure, Diabetes March 6, 2014

  35. Regulatory Trends • Do current State Regulations Support Caring For Frail Residents? • Basic assisted living, or create a second tier for providers who can offer “enhanced” services? • Skilled nursing services within assisted living? • Alzheimer’s Care:  Training requirements, Safety precautions (such as “Silver Alerts”), Specialized Programs, Research Funding • Prevention of Elder Abuse and Financial Exploitation: increasing emphasis on mandated reporting, prosecution • Increased Consumer Disclosure requirements to clarify and manage expectations • Medicaid & Assisted Living:  Recent CMS regulation clarifies AL’s role in the Home & Community Based Waiver program • Review of Life Safety Code issues March 6, 2014

  36. Impact of the Internet on Senior Living • 60% of our leads come through the internet, both directly from our website and through paid internet sources (A Place for Mom, SeniorLiving.Net, Caring.com) • Leads are coming to us much more educated from doing research online. • Paid internet lead sources provide qualified leads to communities but there are numerous drawbacks • Very costly – 70%-100% of one month’s rent/care - with residents coming in more frail and with shorter lengths of stay we are paying more and getting less. • Internet sources pass along information to numerous communities • Leads don’t always understand what is going to happen when they fill out a form and it can be a very overwhelming and frustrating experience and often makes the process more confusing • Social Media is becoming a player in the marketing of senior living • Facebook enhances the customer experience for residents and family members, engages associates and captures the true essence of a community for prospective residents and their families • Online review sites are impacting the research and decision making process March 6, 2014

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