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Operations Matter: For Seniors, and For ROI

Brian Heagler, SVP, KeyBank Real Estate Capital's Healthcare Finance 11.13.2017

Seniors housing, now more than ever, isn’t just about the transaction, it’s about the follow-up. Investing in operations helps the residents—and it helps the bottom line, too. With capital focused on operations, owners can make impactful changes that address evolving healthcare needs. At the 2017 National Investment Center (NIC) Fall Conference, I participated in a panel about “Making the Case for Investments in Operations and Maximizing Your Return,” along with other capital partners and operating partners. We spoke about ways we’re working together to provide better, more efficient care and how we’re measuring return on investment (ROI).

The panel addressed how the maturing seniors housing industry is facing a variety of challenges in operations, infrastructure, technology and staffing that need to be addressed. The goal is to reduce the administrative burden on staff so they can focus on patient care. Both residents and patients themselves, and the adult children who also influence healthcare decisions, are looking for enhanced service and better communication and connectivity.

Naveed Hakim, executive vice president and CFO of Plum Healthcare Group, shared the initiatives the organization has implemented with capital sourced via KeyBank.

Key Learnings from the Panel:

  • Management needs to address operations in a complex and evolving healthcare marketplace.
  • Measure return on operations investments by looking at occupancy, satisfaction, and re-hospitalization.
  • Best-in-class processes can be strategic differentiators and improve healthcare system partnerships.
  • Lenders take into account business processes, technology, staffing, and other operations strategies when evaluating loan packages.

Plum Healthcare Group and KeyBank: Financing Business Processes and Data Sharing

Hakim explained how Plum Healthcare Group’s key initiatives are focused on freeing up data to improve decision-making accuracy and speed so that their clinicians can prioritize patients. These investments are funded through operating cash-flow and a credit line from KeyBank Real Estate Capital.

The three areas of focus are:

  • System interoperability: Aims to break up the silos between data systems within Plum Healthcare Group and between hospitals and home health systems. The goal is the freer flow of data, transparency, and building a common ecosystem to allow care planning at a higher level.
  • Digital maturity: Looks at how Plum deploys data and analytics. The aim is not to bury clinicians in data reports, but to convert data into actionable insights that can be put in the hands of clinicians so they can easily assess and make a decision on patient care.
  • Clinical care: Clinical care has always been a strong point at Plum Healthcare. As the company moves to a higher acuity, higher demand managed care world, it wants to bring the same level of care to that faster-paced environment.

At Plum Healthcare, they’ve started first with business process design. Once that’s in place, data and technology is implemented where it can help and the entire process is integrated throughout the system.

To measure ROI, Hakim looks at both shorter-term indicators – including occupancy rates, resident satisfaction, and re-hospitalization rates – and at how investments drive strategic differentiation and stronger partnerships with healthcare systems.

Operations from the Lender’s Perspective

As we at KeyBank look at seniors housing and skilled nursing opportunities, real estate is important and financial sponsorship is important, but the focus is on the operators. We examine their experience, track record and access to capital.

While historical financials and pro formas will always be a part of the process, the conversations today around providing capital and structuring loans around business needs are changing. We’re discussing business processes and investments in technology. And we’re looking at outcomes, particularly in the post-acute space.

To evaluate operational programs, we need to understand the impact of these investments, the timing, and when it’s expected to flow back into your operating results. We must underwrite to existing cash-flow and future cash-flow, and we’re constrained in how we provide that capital, so understanding those dynamics is critical.

On Staffing and Capital Providers

The conversation turned to how much capital providers emphasize staff training and retention and employee management when they evaluate an operator to provide capital. All capital providers, no matter where they are on the stack, are going to be interested in what operators are doing in the staffing area. Operators shouldn’t be surprised if lenders ask questions around staff training and culture, and what they’re doing to attract and particularly retain quality employees. We’re making those kinds of assessments as we’re deciding how we want to partner with and provide capital.

Investment that Propels Patient and Business Health

Making smart investments in operations can streamline processes in a way that’s seamless for both clinicians and staff and patients or residents, improves overall care, and helps grow your business in a shifting marketplace. KeyBank provides capital solutions to the seniors housing and healthcare industry across a broad platform, making $3.8 billion in commitments to the seniors housing industry, including supporting infrastructure, technology and operations initiatives last year.

To learn more, contact: Brian Heagler, KeyBank Real Estate Capital Senior Vice President, Healthcare Finance 206-684-6234 or


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