We believe that our industry has a $1 trillion bill being waved in front of it, and nobody is batting an eyelash. Let us explain…and then let’s figure out how we can reverse the trend.
Background
First, let’s paint the two-sided landscape – and put pen to paper as we look at the near future. Consumers: By 2030, the median Boomer will be age 75. That is the ripe age when families begin considering seniors housing and care options. Public payers: CMS reported $1 trillion of spend in its four public insurance programs, including Medicare and Medicaid with national health expenditures projected to grow 5.5%. This means that by 2030, $2 trillion will be spent. Add to this the additional spend on supplemental benefits and out of pocket expenses by consumers, and the figures stagger towards $3 trillion. (Source: https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nhe-fact-sheet.html)
The Gaps that Surface $1 Trillion of Opportunity
Decades of research has surfaced that one-third of healthcare spending is wasted. At the same time, we know that seniors housing and care buildings are home to the higher-cost patients in the healthcare system. Here’s a simple example that many of us experience in our buildings: A resident falls going to the bathroom at midnight. The sleepy stupor doesn’t help. With no RN on the overnight shift, the frightened aides call 911 – whether or not it was a fall with injury, whether or not the injury was a head injury. Now market factors come into play. With the privatization of ambulance services, the ambulance company only makes money when they take someone to the hospital. So, guess how many of those 911 calls go to the Emergency Room? 100%.
The implications are enormous. When you apply the conservative one-third rate of excessive healthcare OVER utilization to the aforementioned $3 trillion, we quickly see the gaps that surface $1 trillion of opportunity.
Why Is Our Industry So Slow to Grab This Opportunity? And What Should We Do Instead?
almost farcical that a free market misses a massive $1 trillion opportunity. Or, is it a free market? Unfortunately, economic barriers such as the dead weight loss of REIT regulatory restrictions plus the Congressional restrictions on traditional Medicare Part A funds have inhibited real innovation. Until now. The thought leaders and forward-facing visionaries of our industry have tapped into pools of opportunity. Namely, they include:
- Medicare Advantage (MA) HMO and even PPO plans
- MA’s Special Needs Plans (SNPs)
- RIDEA structures
- Ancillary services
Acronyms often scare people away, but here, it is not rocket science. This is the first in a series of blogs and content on how we as an industry can move into the 2.0 world. In short, it’s simple: Better care of our seniors means better business. In other words, care can be improved, and money can be made. It’s the double bottom line; who doesn’t want that?
