Washington Post: It Was Either Diversify Or Die

September 19th, 2010 By Jackie Larena-Lacayo

‘It was either diversify or die’

By Matt Sedensky

Sunday, September 19, 2010

MIAMI – Seniors amble the nursing home’s halls, while children from around the world visit for biofeedback treatments. One floor down from the hospice, middle-age workers fill its pain-management clinic. A rehabilitation center attracts people of all ages.

For decades, the mission at Miami Jewish Home and Hospital was simple: to care for the old. But like nursing homes across the country, the facility is changing how it does business because of consumer demands and the economic realities of selling a service nearly no one wants.

“This is a place of life. This isn’t a place of impending death,” said Blaise Mercadante, its chief marketing officer. “And that’s fundamentally the mind-set change.”

Other companies whose core business has been housing the elderly are also coming up with new ways to make money, but Miami Jewish has taken the innovation further than most. While similar providers have expanded senior-related offerings, such as in-home care or assisted living, the Miami home took a gamble in recent years by hiring specialists in fields that attract younger patients.

The moves are paying off: Miami Jewish expects to break even in 2011 after several years of losses.

Another provider that has changed its mix of services is Ecumen, which operates 70 senior communities, mostly in the Midwest.

In 2004, Ecumen derived more than 80 percent of its $99 million in revenue from traditional nursing homes. Five years later, revenue climbed to $126 million while nursing homes’ share fell to less than 60 percent, as Ecumen markedly expanded assisted-living complexes that allow seniors to be more independent. A $2.5 million loss in 2005 became a $937,000 profit last year.

“We were heavily invested and reliant on a product that wasn’t very popular,” said Mick Finn, a company official. “That’s a no-win proposition for any business.”

Meanwhile, managers of its facilities were challenged to find new ways to make money off their existing services.

One began offering meals from its cafeteria pickup service to community members. Another started an online business selling incontinence products. A third opened its fitness classes to nonresidents.

“It was either diversify or die,” said Eric Schubert, another Ecumen official.

Branching out
Even as the number of older Americans surges with the aging of the baby boom generation, demand for nursing homes is decreasing. The Centers for Disease Control and Prevention estimates that the number of nursing home residents fell from 1.63 million in 1999 to 1.49 million in 2004, the last year for which data is available. Meanwhile, the number of nursing homes decreased by nearly 16 percent over the two decades ending in 2004.

Demand for services such as assisted living, in-home care and adult day care, meanwhile, is booming. Nursing homes have expanded their offerings to cope with shortfalls after finding that in many cases they are unable to provide care for less than the amount they are reimbursed under Medicaid, the main governmental provider of long-term care.

Brian Williamson, an analyst for Standard & Poor’s who follows nursing homes, said facilities have been branching out to deal with lower occupancy rates. “Where before you may have been able to keep your facility 97 percent full, now maybe it’s 92 percent,” he said. “You have to figure out, ‘How do I compensate for that lost percentage of beds?’ ”

While some facilities have shuttered, observers say there will always be a need for nursing homes. Neil Kurtz, chief executive of Golden Living, one of the largest nursing home operators in the nation, said the emphasis has shifted from providing a place where seniors can grow old and die to a place where seniors can recover from illness or surgery before moving back home or elsewhere.

At Miami Jewish, the broadening of services began when its executives saw a market for services such as pain management and biofeedback. The hospital built a staff of experts in those areas mostly from scratch, adding more than 50 specialists.

The center’s success with patients of all ages is evident in a tour of its buildings. At the pain center, 101-year-old Tilly Harris receives therapy a few feet from Tony Pukewitz, 54, who has traveled from South Africa for treatment.

Harris is a resident but says it doesn’t feel like a nursing home to her.

And for those who think of Miami Jewish as just a place for the old, Pukewitz has some simple advice.

“Look deeper” he said.

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