Distinct from home- and community-based services (HCBS), another leading-edge way that Life Plan Communities have been broadening their service lines and revenue streams is by starting Early Advantage Programs, which may also be referred to as Early Admission or Early Acceptance Programs. Until now, this blog series has focused on the former (HCBS), and Love & Company’s recent webinar spent a good deal of time discussing how and why a provider may branch into home health, home care and hospice.
In this piece, we will focus on Early Advantage Programs, which are a relatively new idea with a great deal of promise. Developing an Early Advantage Program is a much easier task than launching an HCBS program, as Early Advantage Programs sell existing services and do not require the infrastructure that HCBS do, though they may require regulatory approval depending on the state in which you do business.
Plus, once up and running, an Early Advantage Program is similar in operation to a Life Plan Community, so the learning curve is not as steep as it is for adding home care, home health or hospice to existing service lines. This tends to make the initial time, staff and capital investment lower for Early Advantage Programs, although in turn, there may be a lower ceiling for the revenue Early Advantage Programs generate compared to HCBS. Of course, many communities do both, and HCBS services at the same rates as residents pay can be a great perk and cross sale opportunity. Regardless, evaluating the risk/reward is an important step before launching any new program.
Here, we’ll examine the Early Advantage Programs of two senior living providers: Carolina Meadows in Chapel Hill, North Carolina, and Westminster-Canterbury on Chesapeake Bay in Virginia Beach, Virginia. Kevin McLeod, President & CEO of Carolina Meadows, will explain what is working—and why—for the Early Advantage Program he oversees, and Ben Unkle, President & CEO of Westminster-Canterbury on Chesapeake Bay will do the same.
Carolina Meadows’ Early Advantage Program (Kevin McLeod)
Membership in our Early Advantage Program reached 116 members by the end of 2020. We limit eligibility to people who live within 25 miles of our campus in Chapel Hill, so that they remain a convenient distance for when they want to enjoy our amenities before moving here.
Like most Early Advantage Programs, we take a financial assessment of the individual or couple at the time of initial deposit. Once approved, the individual or couple is guaranteed entry to Carolina Meadows when they decide they would like to move in, subject to their relative position of their priority number in relation to other residents’ priority numbers assigned to them upon joining the waiting list.
Right away, we consider them a full-fledged resident and they are granted the same benefits and services as the people living on campus. This includes all amenities and healthcare services, which we provide on a fee-for-service basis as we do for all residents.
Early Advantage members are allowed a lifetime maximum of 10 free healthcare days prior to moving into the campus should the need arise. We also provide two free monthly transportation visits to doctors’ appointments or shopping visits for all Early Advantage members who desire transportation assistance.
We determined two key factors to the success our Early Advantage Program has had: timing and pricing.
While developing our Early Advantage Program, we took a deep look at our market and competitive landscape. As Rob Love noted in an earlier article, this is a crucial step before beginning any HCBS or Early Advantage Program. With that in mind, we made sure that we were entering the market at the right time. We came to market right behind the Early Advantage Program of a Life Plan Community competitor in our area and locked in 200 people on the waitlist quickly. In fact, we also currently have a healthy waiting list to join our Early Advantage Program.
As another step to assuring the competitiveness of our Early Advantage Program, we worked with A.V. Powell for help on the actuarial side to make sure that our Early Advantage Program was priced appropriately. We have held the pricing of our Early Advantage Program entry deposit and monthly fee the same for about three years:
- $13,500 entry deposit per person ($27,000 per couple)
- $575 monthly fee per person ($1,150 per couple)
The entry fee deposit is credited toward the entry fee when a person moves into Carolina Meadows. We may explore pricing changes soon. However, when you adjust pricing, you must first make sure that the program will continue to provide value for the Early Advantage Program member.
Overall, we’ve found our program to be a want-driven program now, which prepares people for the need-driven choices they’ll be making later. A major reason that people buy into the Early Advantage Program is for the assurance of healthcare. We assign each Early Advantage Program member a priority number that solidifies their future position relative to other residents when the time comes for them to move into independent living or higher levels of care. As such, the priority number has become a coveted asset to our prospective residents. This has created a bit of a bottleneck on occasion, but we have been able to work out any logistical challenges.
As prospects enter into our sales funnel, we’ve noticed that most of them want to join the Early Advantage Program, as they value the assurance that it provides. Plus, they can meet new friends before moving here.
Westminster-Canterbury on Chesapeake Bay’s Early Advantage Program (Ben Unkle)
Our Early Advantage Program is not as large as the one at Carolina Meadows, as we only have 57 current members. However, we have not yet heavily marketed the program outside of our standard lead base.
There are a few notable differences in our Early Advantage Program compared to the one that Kevin offers. This is another reason that it’s so crucial to understand your market area and clearly define your organization’s overall goals before launching one of these programs.
We charge a much higher entrance fee for the Early Advantage Program. Early Advantage entrance fees are credited toward the full entrance fee when a person makes the move onto campus as a full resident, but entry fees are only 50% refundable if one never joins our campus community. Thus, the entry fee serves as a substantial commitment on the part of the member toward an eventual move to Westminster-Canterbury over other communities competing for their business.
Furthermore, we charge significantly more in entrance fees and much less in monthly fees. We find that people are more price sensitive to monthly fees, and we do not have a golf course or tennis courts on campus like Carolina Meadows does for country-club like benefits. Although, we have one heck of a beach club with two pools, a gym, programming, and ample Lifelong Learning opportunities.
Currently, our LifeCare entrance fee is $100,500 per person with a $176 monthly fee. Our fee-for-service entrance fee is $51,500/$53 monthly. Couples are double each price.
Our fee-for-service Early Advantage Program members get the assurance of future capacity in our healthcare settings and a 10 percent discount on healthcare services if needed over rates charged to outsiders. LifeCare members pay healthcare rates for assisted living and nursing that are pegged onto independent living fees. For most members, guaranteed access to five-star healthcare services on-site is far more appealing than taking one’s chances with standalone assisted living and nursing centers off campus.
The healthcare access assurance has worked well for organizations like ours to generate revenue from existing campus amenities and investments, particularly if there is excess healthcare capacity. We have short-stay rehab that can easily be expanded and scaled back to adjust to our future needs quickly. Real-world experience shows that Early Advantage and Life Care at Home customers use the nursing home far less than one would expect compared to existing campus residents.
Remember, the program appeals to them because they wanted to stay home longer. They think they like it at home better, and some just want an “assurance” of quality future healthcare should they need it, knowing our existing residents would get first priority and we have no obligation otherwise to take older adults who are not “members.” This way, Early Advantage members essentially become daytime residents, but still sleep at their houses.
We’ve found there are healthy supplemental margins to be made by giving assurance of future healthcare to people who worry that they may be crowded out of top-rated assisted living or nursing at your community.
Challenges of Early Advantage Programs and advice for starting them
Despite the high overall potential and success that Kevin and Ben have witnessed while managing their organizations’ Early Advantage Programs, they have experienced challenges along the way.
“How do we keep Early Advantage Program members engaged in year one, two, three and four?” Kevin noted. “They’ve already bought in and are paying a not-insignificant monthly fee, so they need to feel that they’re getting value from the program even if they’re low on the waitlist. One thing that has worked for us has been sending surprise gifts to Early Advantage Program members. They’re thoughtful and make an impact.”
However, like everything else, Kevin explained how the pandemic has compounded matters.
“The problem right now is keeping people engaged, which has been tough during the pandemic because even Early Advantage Program members couldn’t visit the campus except to pick up their meals. We’ve had to get creative to make Early Advantage Program members feel included, like by giving them access to the resident portion of our website so they can access the online programming and events we’ve hosted.”
Ben sees the challenges with Early Advantage Programs at an even higher level.
“I think honestly we don’t yet know what we’re really selling in terms of the motivating itch we are scratching. Part of expanding your offerings is to understand what you’re really selling with an Early Advantage Program. Guaranteed assurance of future quality healthcare has value, but that may not be what really motivates people to join as much as we thought it would or should. Some just want to pay the Early Advantage entry fee to get a higher apartment selection priority or as bridge insurance in case a disqualifying event happens while they are in the sales and selection process. This is such a new concept, and we need to listen to what the customer wants and be clear about how we’re delivering that with these programs.”
No matter what an Early Advantage Program’s exact structure looks like, Ben and Kevin agreed that it cannot be looked at as your Life Plan Community’s easy “side hustle” for more cash. Program members are your future customers. Providers need to put their best foot forward and impress them with carefully thought-out programs. Although Early Advantage Programs don’t require as much infrastructure as HCBS, they do require close attention to members and their needs, which can be challenging when they may spend little time in the community.
For a deeper look at the Early Advantage Programs of Carolina Meadows and Westminster-Canterbury on Chesapeake Bay, we encourage you to watch the recording of Love & Company’s recent webinar, “Beyond Our Walls: Opportunities for Expanding Life Plan Community Services.” The session also includes a valuable Q&A on the topic with fellow senior living thought leaders. Click here to access the recording.
For more articles in this series, click here.
For more insightful articles from Love & Company covering the entire spectrum of senior living topics, click here.