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A Healthy Healthcare Industry Expands As Senior Housing Unit Prices Skyrocket

THE TIME TO ACT IS NOW: The acquisition market is hot as existing providers stay competitive by adding to their portfolio.  Bigger rather than smaller is producing lower costs, higher quality care, and attractive bottom line for aggressive providers in all types of Senior Facilities:  Assisted Living, Memory care, Independent Living, Post Acute Care and Continuing Care Residential Communities.

Low interest rates and cap rates trending downward prompt established providers as well as new players entering the space to compete for the purchase of facilities on the market or future development.  According to statistics, senior housing is the No. 1 asset across all commercial real estate based on returns.  Consequently if a facility which is on the market was purchased at a 12% return, a new operator could be interested in buying it at an 8% return because the perception of risk is diminishing.

As Senior Housing mergers and acquisitions reach over a reported 16 billion, increases in the average price paid per unit is hitting new highs.   Data shows for the 12 months ending September 30, 2014 compared to the previous year the average price per unit for assisted living increased 30.5%  from $150,600  to $196,000, jumped 28.8% from $164,000 to $211,300 per unit for independent living/assisted living, and 7% from $73.300 to $78,400 per bed for skilled nursing.  Driving the increase in skilled nursing prices was the growing number of over $100,000 per bed skilled nursing facility acquisitions in the past two years.

Buyers are positioning themselves for the changing post-acute care market by purchasing those skilled nursing facilities with the most potential to increase their sub acute census and managed care business according to a report by Stephen Monroe.

The Market for high-quality senior living properties today is stronger than it was at the peak of the last bull market in 2006-2007.  The availability of equity and cheap debt, plus an influx of new buyers continues to drive prices up and cap rates down in a senior housing bull market that is seeing more mergers and acquisition transactions than ever before according to Irvin Levin Associates.

THE PRUDENT, DEMAND DRIVEN HEALTHCARE PROVIDER is an active player in today’s   Healthcare Industry which is providing an attractive bottom line as well as a quantum leap in qualitative care for the senior population.

By: Shep Roylance

RFCE Reform Act 2014 Part 2

Senior Housing for Sale

Throughout March and April 2014, the bills that comprise the RCFE Reform Act were heard for the first time by legislative committees. The bills in the act are designed to protect the health, safety, and security of the Residential Care Facilities for the Elderly (RCFE). There are twelve bills within the act, and if passed, will cause a serious, direct impact in the RCFE community in California and a potentially far reaching impact on neighboring states such as Oregon, Nevada, Arizona and even Washington, Idaho, Colorado. Over time, this could ripple all the way down to Texas and to the east coast in Florida. The accompaniment bills are as follows:

AB 2236 (Stone and Mainschein) Increased Penalties for Violations

Currently, the maximum penalty for violation of RCFE laws and regulations in California is $150, even if the violation results in the death of a resident. AB 2236 would give new, stiffer minimum and maximum penalties, allocating fifty percent of all revenue gathered from these civil penalties to go toward an emergency fund for the relocation of residents in the instances of revoked or suspended licenses.

AB 1554 (Skinner) Responding to Consumer Complaints

Until now, the CCL did not have an effective method of investigating complaints filed by residents of RCFEs. AB1554 would require California’s CCL to investigate complaints in a timely fashion and provide written notice of the investigation and findings.

AB 1571 (Eggman) Consumer Information System

AB 1571 would require the DSS and CCL to set up an online information system listing accurate, updated information about many issues.

  • Licenses
  • Ownership
  • Surveys
  • Complaints
  • Enforcement information

If passed, this bill must be implemented by 2019. Also, owners of RCFEs would have to disclose any previous ownership of a similar facility in California and other states such as Oregon, Idaho, and Utah. A history of non-compliance or compliance will also be recorded on the online information system.

AB 1572 (Eggman) Resident & Family Councils

Currently, resident care facilities for the elderly in California have no obligation to inform residents and their families or representatives of their right to form a Resident or Family Council. If the bill is passed, potential buyers of residential care homes currently for sale in California will be required to inform residents and family members of their right to form councils and peer support groups.

AB 1523 (Atkins) RCFE Liability Insurance

If passed, AB 1523 will require all RCFEs in California to obtain and maintain liability insurance as a condition to licensure. This would set precedence for other states such as Texas and Florida.

What This Means for You

Overall, these changes are necessary and a step in the right direction for RCFE reform. Unfortunately, many facilities may be forced to sell their residential care facility due to inadequate funds to cover new fees and penalties incurred. For more information about how these bills may affect you in your state, please talk to an informed brokerage who is knowledgable in the healthcare industry and is dedicated to the well being of the Senior population.

RFCE Reform Act 2014 Part 1

RCFE Reform 2014

Throughout March and April 2014, the bills that comprise the RCFE Reform Act were heard for the first time by legislative committees. The bills in the act are designed to protect the health, safety, and security of the Residential Care Facilities for the Elderly (RCFE). There are twelve bills within the act, and if passed, will cause a serious, direct impact in the RCFE community in California and a potentially far reaching impact on neighboring states such as Oregon, Nevada, Arizona and even Washington, Idaho, Colorado. Over time, this could ripple all the way down to Texas and to the east coast in Florida. The bills are as follows:

SB 894 (Corbett) RCFE Suspension/Revocation of Licenses

Up to this point, the suspension and revocation laws for RCFE licenses have been too vague. This is leaving the Department of Social Services (DSS) unable to adequately protect the health and safety of elder and dependent adults living in residential care facilities whose licenses have been suspended or revoked. If passed, SB 894 strengthens the obligations of the DSS and said licensee and includes adequate relocation timelines for the safety of the residents.

SB 895 (Corbett) Inspections/Evaluations of RCFEs

Evaluations of RCFEs are crucial to ensure proper laws and procedures are being followed daily. Unfortunately, in 2004, California’s Community Care Licensing Division (CCL) started checking facilities only once every five years. They had trouble maintaining even this schedule. If passed, SB 895 would require the CCL to comprehensively check all RCFEs at least annually, unannounced.

According to the latest report from The National Center for Assisted Living, many of the facilities in operation today will not meet the state-mandated requirements for staffing levels and quality care. As a potential result, many assisted living facilities might find themselves up for sale if their licenses are revoked due to neglect and abuse issues that have surfaced during the long gaps in CCL inspections.

SB 911 (Block) Training and Qualifications of RCFE Staff

SB 911 would strengthen the training requirements and qualifications for all RCFE staff and for staff that work directly with at-risk residents. Currently, these standards are woefully inadequate, requiring little more than a GED and between four and forty hours of mandatory training, with six to forty hours of annual training.

SB 1153 (Leno) Ban on Admissions

SB 1153 would impose penalties for non-compliance of RCFE laws and procedures. This bill would authorize DSS to suspend the admission of new residents until complaints can be proved.

What This Means for You

Overall, these changes are necessary and a step in the right direction for RCFE reform. Unfortunately, many facilities may be forced to sell their residential care facility due to inadequate funds to cover new fees and penalties incurred as a result. For more information about how these bills may affect you in your state, please talk to a brokerage firm who is knowledgable in the healthcare industry and who is dedicated to the improvement of Senior Care.