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How 2Life Communities, Northbridge Companies Get Creative to Make Middle-Market Math Work

The middle-market is among the biggest opportunities in the senior living industry today — and yet, it is also one of the sector’s hardest market segments to reach.

Low occupancy rates and relatively high expenses have driven down net operating income (NOI) for many operators. While predominantly private-pay senior living companies have responded to these pressures in many cases by enacting historically high rate hikes, operators that focus on the middle market don’t always have that luxury, given they are already threading the needle between service quality and affordability. For residents.

Still, while life has become more difficult for middle-market operators, there are some that have coped through careful planning and a laser focus on not passing on costs to residents where possible.

These include Northbridge Companies, which is pursuing middle-market assisted living models in Washington, D.C. and New England; and 2Life Communities, which is forging ahead with a concept in the Boston area based on a mix of resident volunteerism and partnerships with social services and other health and senior care providers.

Although the viability of middle-market senior living models largely depend on the services and supports available in the market where they are located, both Northbridge Companies’ and 2Life’s experience and creative concepts in the sector offer guidance for an industry in search of new ideas to reach middle-income seniors in the years to come.

“The two biggest challenges to aging optimally are loneliness and affordability, and we addressed both simultaneously,” said 2Life Communities President and CEO Amy Schectman.

Affordable assisted living in D.C.

Washington, D.C. is among the priciest rental markets in the nation — and it is also where Northbridge is building a new middle-market assisted living model for older adults.

The company is collaborating with Gragg Cardona Partners and the D.C. Housing Finance Agency on an assisted living community slated to open in the fall called The Residences at Kenilworth Park.

The 157-unit project is being financed partly through $58 million in bonds and $20 million in 4% LIHTCs issued by the D.C. Housing Finance Agency.

What makes the project unique is that it is targeting the middle-middle market despite existing on paper as an affordable community. Even so, slightly less than a quarter of the community’s units will be geared toward middle-income residents, according to Sharon Ricardi, who is president of Northbridge Advisory Services, a division of Northbridge Companies.

“We’re going to define it as about 25% less than the going rate in D.C., which is one of the highest markets in the whole country,” Ricardi said during a panel on middle-market senior housing at the 2022 NIC Spring Conference in Dallas.

Landing on a model using tax credits was a process that contained “a lot of stumbling blocks.” And because of the way the project is financed, Ricardi said it has a “very short runway” to get stabilized.

“If you’re doing a tax credit project and you’ve never done one before, make sure you’ve got an advisor that really understands tax credit,” she added.

Another hurdle to making the model work is staffing. To mitigate those pressures, Northbridge is aiming to offer a higher minimum wage to workers and offering better workforce development paths to recruit them.

The company also is working with partners such as the D.C. Board of Nursing to improve the training it can offer caregivers; and forging partnerships with organizations that can aid it along the way, such as D.C.-based payment provider Elderbridge.

If all goes according to plan, the community will be the first of four such projects in the District.

Northbridge also is undertaking middle-market assisted living with three communities in Maine — two assisted living communities with added independent living in coastal areas; and a memory care community utilizing the state’s MaineCare free and low-cost health insurance.

Meeting the middle-market near Boston

Over the years, 2Life has served low-income older adults in the greater Boston area through affordable senior housing. But last year, the faith-based nonprofit decided to branch out into the middle-market to meet the massive and growing demand for those services.

The model that the organization landed on, Opus, is tailored for middle-income older adults living in the Boston suburb of Newton, Massachusetts. As planned, the model will offer monthly rates for residents of between about $1,640 and roughly $3,800. For reference, a similar two-bedroom apartment without any extras in Newton would run about $4,000, according to Schectman.

“Our highest price will be less than the average cost for an unsupported unit,” she added.

In creating Opus, Schectman said the organization wanted to “replicate what we do so beautifully for our low-income older adults.”

But therein lies some hurdles. Low-income residents typically qualify for government programs that middle-income residents may not. And while there are government programs to develop true affordable senior housing, they do not typically apply to middle-market projects.

The model is a melange of different measures meant to keep costs more affordable for residents. For instance, residents who live in an Opus community must agree to volunteer their time for 10 hours a month, with duties ranging from staffing the library to setting tables during dinner.

The first Opus is planned to include 174 residences, with more than eight different one- and two-bedroom plans ranging from 650 to 1,350 square feet in size. It will be located next to 2Life’s affordable Coleman House community on the campus of the Greater Boston JCC.

Opus is planned to be connected to Coleman House via a two-story community center, meaning the two communities can benefit from scale and share services.

In many cases, the volunteer work that residents do can also cut down on staffing overhead costs. For instance, future 2Life Opus residents have volunteered to be music directors or activity planners — positions that the organization typically hires for.

“The volunteerism is turning out to be quite significant in keeping our staffing costs down,” Schectman said.

And asking residents to volunteer their time has not only not been a deterrent to inquiries or leads, “it actually is the biggest reason people are attracted to our community,” she added.

Dining is another part of the senior housing experience that can drive up costs and staffing expenses. In the Opus model, residents will be able to buy food under an a la carte pricing model. The community will also host resident-led theme nights, restaurant pop-ups, potlucks, and meal delivery group dinners.

The model also relies on partnerships with other health and senior care organizations to help keep costs lower for residents; and with a location adjacent to another 2Life community, the organization can leverage its scale when working with partners.

“That leads to efficiencies,” Schectman said. “It also leads to making it attractive … for our service partners for doing the health care, because now you’ve got 400 people on the campus.”

In some cases, that scale has helped lead to new and more efficient ways to serve residents. For instance, 2Life’s is partnering with a home care company that can deliver care in smaller increments that are more affordable for residents and plans to have a partnership with a geriatric care practice, which will dispatch doctors and nurse practitioners to care for residents on campus.

The organization also offers a Program of All-Inclusive Care for the Elderly (PACE) at its campus, and plans to offer an all-inclusive health care, housing and home care insurance product in partnership with its PACE partners.

“Instead of having to do four hours, you can purchase a half an hour,” Schectman said. “We’re going to have care navigators and wellness assessments, and we’ll keep track of people’s health insurance.”

The post How 2Life Communities, Northbridge Companies Get Creative to Make Middle-Market Math Work appeared first on Senior Housing News.

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