Senior Health Care

In the news up here in the Adirondack Park.  Got me thinking...  Is investment into senior health care industry, something like Sunrise Senior Living, a good long term plan?

Lots of people getting old and living longer....

Need Warp to chime in on this one....Warp???

There is nothing wrong with Investing in Senior living facilities.   They are like a hotel for old people.  When you get into the actual assisted living and nursing homes it makes it a lot more difficult.  If you could have all private pay it makes it much easier.  When old people run out of money in nursing homes you can't kick them out.  You have to accept what medicaid pays and sometimes that does not cover the costs.  Tricky industry.  That said all the people I know that owe long tem care facilities are very wealthy.   They usually have a complex.  Senior living, assisted living into full blown nursing home care.   Kinda like a cattle line ultimately leading to the cemetary.


Health Care Reits are a good way too invest in the industry.  

The answer is a definite maybe !  

With the uncertainty surrounding Obamacare and its future morph whatever it may be over the next few yrs ,  reinbursement rates for the healthcare industry over the next decade are scheduled to take a major hit. The numbers i've seen just this week at a strategic planning session conducted by a well known expert in the industry were indeed  cause for concern ,

the demographic bulge in that age  sector for the most part  depends on a payer mix of either Medicare or medicaid and those two sectors are in the crosshairs now .  Efficiencies can still be wrung out of most delivery systems but ultimately that becomes a diminishing return. Growing your way out of the dilemma depends on market catchement area and PAYER MIX .

Many extended care facilities have enjoyed a decent operational environment ---that is going to change IMHO . Most healthcare delivery systems will be looking for ways to either share services , consolidate periperals and or frankly combine to sustain a dynamic mix of optimizing efficieny, while cost sharing on growth .

Sorry to be so effusive BUT things right now seem Clear as MUD . Whoever wins the election -- HEALTHCARE finanacing will be in for a major change -- the overall numbers  we  saw  this week ---seem daunting. the challenges are also magnified at the STATE level as far as Medicaid is concerned .

SO short answer look at current margins, payer mixes in their catchment areas and also what the regional demographic look like AND then decide . I'd be conservative but then again who REALLY knows with certainty  

Right now the funding for ALL healthcare facilities including assisted living AND home healthcare as wellas hospitals has taken a turn for THE WORSE . the facts are VERY few facilities break even , i believe this past yr BEFORE this situation ONLY approx 17 percent ran in the black . Charity care is way up due to the recession and NOW with the medicare and medicaid rates scheduled for a clifff fall over the next decade ,heretofore PROFITABLE facilities are running in the red and many have JUST this month done LAYOFFS .This industry will be under serious financial constraint and even tho current NEITHER medicare nor Medicaid reimburse at FULL COST rate , that situation will DEFINITELY worsen .

So choose WISELY . Look ONLY at institutions , agencies and orgs that were PROFITABLE at the end of 2012 unless you are willing to make an emotional rather than rational investment . There are several luckily our regional med center is one but i am aware of many others regionally that are experiencing difficulty.

Operationally things will need to change and efficiencies albeit requiring serious capital investment in IT and other systemic efficiencies will need to leveraged BUT the challenge to do with with SEVERELY constrained financial flexibility due to the changing reimburements previously cited will FORCE. , mergers , consolidations and closures in MY opinion . DO YOUR HOMEWORK VERY CAREFULLY .

To clarify what i said in the previous post  the data was NYS and the 17 percent referred to institutions in NYS.