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A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Sponsored by
Research Update: What We Know –U.S. Catholic Senior
Ministries in a Time of Changing Need?
October 27th, 2018 / 11:15 AM
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Presenter:
Lisa McCrackenDirector, Senior Living Research
Ziegler
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Among the largest Not-for-Profit senior living providers in the country,
roughly 8 out of 10 are faith-based
Catholic providers have the third largest number of senior living units
among multi-site Not-for-Profits
An Overview of Not-for-Profit Faith-Based
Senior Living Organizations
Source: 2018 LeadingAge Ziegler 200
52,174
38,978
31,494 31,299
16,83713,925
10,996
6,426 6,035 5,869 4,901 4,765 3,924 3,187 3,087 2,127 1,581 1,506
0
10,000
20,000
30,000
40,000
50,000
60,000
L P CA M C B UC E J MN EVC Q D EC PI CH EF DC
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
The Largest Catholic Senior Living Organizations
Multi-Site Providers
Source: 2018 LeadingAge Ziegler 200; Ziegler Investment Banking
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Source: Ziegler Investment Banking
The Largest Catholic Senior Living Organizations
Single-Site Providers
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Roughly 40% of the largest Catholic Senior Living providers also
offer Affordable Housing for seniors
Approximately 6 out of 10 provide management services for
another provider (mainly other Catholic organizations)
70% provide some type of Home & Community-Based Services
Home Health, Home Care, Hospice, PACE, Adult Day
Of those with Life Plan Communities, the majority offer a rental
contract as opposed to an entrance-fee model
The Largest Catholic Senior Living Providers:
Additional Characteristics
Source: 2018 LeadingAge Ziegler 200
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Ziegler estimates that the average size of the Catholic-
sponsored communities and facilities in the country is
roughly 130 units
Catholic Senior Living/Long-term Care Sponsorship:
Diocesan: 16%
Religious Order: 40%
Healthcare: 37%
Other: 7%
Catholic Senior Living: Smaller Scale
Source: Ziegler Investment Banking, 10/2018
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
The Largest Catholic Senior Living Organizations:
Unit Configuration
Compared to other Not-for-Profit Senior Living
Organizations, Catholic-sponsored providers are more
likely to focus on the skilled-care end of the continuum
% Independent
Living
% Assisted
Living
% of Skilled
Nursing
Catholic Senior
Living Overall
20% 19% 61%
NFP Senior Living
Overall 52% 20% 28%
Source: Ziegler Investment Banking; 2018 LeadingAge Ziegler 200
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Skilled Nursing Today
Supply of SNFs/Age of Plant
Occupancy/Length of Stay
Reimbursement
Staffing Shortage
Tech Needs/Cost
Home Care and Assisted Living Competition
ACA/Networks/ACOs
Aging Population
Increasing Lifespans
DRIVERS
DISRUPTORS
Source: Ziegler Investment
Banking
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Unraveling the Skilled Nursing Marketplace
Source: Ziegler Investment
Banking
Long-term SN
Resident
Post-acute/
Short Stay
Skilled Nursing Overall
• Changing preferences among
consumers to stay in AL or IL
with services
• Future of private pay?
• “Skip the SNF” trend
• Decreasing LOS
• Referral networks narrowing
• FP up-scale development
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Skilled Nursing Occupancy:
Sharper decline in short-stay occupancy
Source: Ziegler CFO Hotline, August 2018
24.6%
46.3%
29.1%
21.6%
35.8%
41.0%
0% 10% 20% 30% 40% 50% 60%
Above 1 year ago
Same as 1 year ago
Lower than 1 year ago
Post-Acute/Short-Stay Long-Term SN
Skilled Nursing Occupancy Compared to One Year Ago(Short-stay vs. Long-Term SN)
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Skilled Nursing Occupancy- record lows
Source: National Investment Center for Seniors Housing; Skilled Nursing Data Report (March 2018)
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
National decline in skilled nursing beds
14
Senior Living & Post-Acute’s Emerging Managed Care Role
Share of
Medicare
Beneficiaries
In Medicare
Managed Care
Plans
Source: Kaiser Family Foundation
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Medicare, Private Patient Day Mix Declining
Source: National Investment Center for Seniors Housing; Skilled Nursing Data Report (June 2018)
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Drivers for NFP Senior Living Consolidation
2010
Influence
Complexities of Healthcare
Leadership Turnover
Technology Demands
Diversify Service Lines
Hospital Consolidation
Ability to Attract Talent
Financial Pressure
Access to Capital
Competition
Ability to Attract & Retain
Talent
Financial Pressure
Diversify Service Lines
Hospital Consolidation
Access to Capital
Reinvestment
Requirements
Growth Capital
Leadership Turnover
Technology Demands
Competition
Board Strength
TODAY
Complexities of Healthcare
Source: Ziegler Investment
Banking
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Impact of Shrinking Numbers on
Catholic Senior Living & Long-term Care
Source: Pew Research Center, August 2014; Center for Applied Research in the Apostolate
In 2016, it was
estimated that
there were roughly
47,000 religious
sisters in the US
Estimated average
age of Catholic
sisters in US is 74
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
We know that Catholic Senior Living & Long-Term Care has
a deep history
Life Plan Communities/CCRCs
Avg. age Catholic-sponsored: 60 yrs.
Avg. age non-Catholic sponsored: 45 yrs.
Catholic LPCs: 83% are “Non-Purpose Built”
Average number of acres in Catholic LPC: 72 acres
Catholic Assets: Land & History
Source: Ziegler Investment Banking; National CCRC Listing
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Not-for-Profit Sponsorship TransitionsCumulative Data
29 4163
97
149
204
264
320353
3651
75
111
174
254
345
405
498
0
50
100
150
200
250
300
350
400
450
500
2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD
Cumulative Totals (2010-YTD 2018) by # of Transactions & # of Communities
Transactions Market-Rate Communities
Note: Includes market-rate communities; excludes government subsidized
Source: Ziegler Investment Banking 8/30/2018
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
15
42
7
32
0 10 20 30 40 50
New Jersey
Pennsylvania
Total number of Catholic-sponsored Senior Living/LTC Facilities/Communities
2018 2013
Regional Change in Catholic Sponsorship in the
Past 5 Years- PA & NJ (2013-2018)
Source: Ziegler Investment
Banking, October 2018
Cause of the
decrease:
• 77% sold to
FP owners
• 5% Facility
closure
• 17% sold to
another NFP
(non-Catholic)
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Across the past five years, 80% of the NFP to NFP
sponsorship transitions have been among faith-based
providers
52% were with another faith-based organization
(may/may not be within the same denomination)
20% of those within the same faith/denomination
Source: Ziegler Investment Banking, 4/1/18
The Role of Faith in Sponsorship transitions
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Between 2009 & YTD 2018, 50+ Catholic- sponsored
facilities have been sold to the for-profit, private sector.
A number of dispositions/sales have been from independent
congregations and facilities.
Since 2010, there have been 11 closures of Catholic senior
living communities/facilities.
Of those that have gone to another Not-for-Profit sponsor
since 2010:
60% have affiliated with a faith-based non-Catholic sponsor
40% with another Catholic organization
Catholic Senior Living: Consolidation Statistics
Source: Ziegler Investment Banking, October 2018
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
NFP Sponsorship Transitions - Likelihood of Staying
NFP if Change of Sponsor/Owner is ExploredBased on Historical trend data 2010-YTD 2018
0%
10%
20%
30%
40%
50%
60%
Catholicsponsored
NursingHomes
AssistedLiving
IndependentLiving
Life PlanCommunities
16% 15%
22%
36%
54%
Source: Ziegler Investment Banking, October 2018
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Are you prepared to be in at-risk relationships with payors?
Do you have the scope and sophistication needed to be competitive?
Are you nimble enough to adapt to changing admissions, acuity, etc.?
Do you have the technology capabilities to keep up?
• Are you providing services across
the spectrum of acuity? When
and where the consumer prefers?
• Are you exploring new models
and service lines?
• Do your options span the income
spectrum?
• Are you exploring partnerships
and joint ventures?
Source: Ziegler Investment
Banking
HEALTHCARE
COMPLEXITYSERVICE LINE
DIVERSITY
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Senior living and healthcare is becoming
a more complex business
The consumer is changing
Skilled nursing pressures
Workforce shortages
Cost of keeping up with technology
Demographic and population trends present some unique challenges for Catholic senior living organizations
Catholic organizations are encouraged to think strategically and develop meaningful relationships and partnerships when needed
Explore creative partnerships and do not wait too long to address potential threats to long-term viability
Key Takeaways - Trends
Source: Ziegler Investment Banking
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Ziegler is a privately-held investment bank, capital markets
and proprietary investments firm
A registered broker dealer with SIPC & FINRA
Ziegler provides its clients with capital raising, strategic
advisory services, equity & fixed-income trading and research
Founded in 1902, Ziegler specializes in the healthcare, senior
living and educational sectors as well as general municipal
finance
About Ziegler
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Investment banking, capital markets and proprietary investment services offered
through B.C. Ziegler and Company. FHA mortgage banking services are provided
through Ziegler Financing Corporation which is not a registered broker/dealer. Ziegler
Financing Corporation and B.C. Ziegler and Company are affiliated and referral fees
may be paid by either entity for services provided.
This presentation was prepared based upon information provided by Management and
contains certain financial information, including audited and unaudited information,
certain statistical information and explanations of such information in narrative form
(the “Information”). Management believes this information to be correct as of the date
or dates contained herein. However, the financial affairs change constantly, and such
changes may be material. Today’s discussion may contain forward-looking statements,
which may or may not come to fruition depending on certain circumstances, including
those outside the control of management. Please be advised that management has not
undertaken, assumed no duty and are not obligated to update the Information. In
addition, please be advised that past financial results do not predict future financial
performance.
Disclaimers
A d v a n c i ng t h e T r a d i t i o n o f C a t h o l i c S e n i o r L i v i n g
Thank you.Lisa McCrackenDirector, Senior Living Research
Ziegler
www.ziegler.com
