Venturing in Senior Care: Observations and Predictions for 2024 and Beyond

Daniel Kaplan
10 min readDec 13, 2023

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The end of the year typically brings about reflection on what has passed and optimism for the future. For those of us fortunate enough to be investing in the future of senior care and aging, 2023 gave us much to digest: Optum proposed a $3.3bn acquisition of home health giant Amedisys, regulators released a list of 10 drugs covered under Medicare Part D selected for first-ever price negotiations, Medicare Advantage (MA) enrollment surpassed 51% (31m) of eligible beneficiaries, and CMS released minimum staffing standards for long-term care (LTC) facilities that was met with fierce opposition from the LTC industry and lawmakers alike.

The table is now set for 2024, and it looks like we’ll be needing a butter knife, soup spoon, and cake fork in addition to our typical utensils, so let’s dig in. Observations and predictions for 2024 and beyond are coming in hot, fresh from the kitchen.

Observations

Senior living is continuing to inch closer to the healthcare system. I’ve written about this before, and I’ll write about it again. Senior living is a predominantly private-pay industry where healthcare is delivered on a daily basis to high-acuity residents and yet, the industry is disconnected from healthcare payment models.

  • In senior living, the shots are called by those who hold the cards: real estate capital. As the majority of properties were financed using floating rate loans, and interest rates (SOFR) have risen from a trough of 0.01% (spring ’21) to 5.32% (December ’23), operators are experiencing material increases in fixed costs as real estate investors seek to protect their returns. In short, operators need new revenue streams to pay their staff a livable wage, invest in technology, bolster occupancy, and deliver the best experience, both social and clinical, to their residents.
  • New revenue streams can and will come from healthcare partnerships. Early examples include operators partnering with ACOs, joint venture MA plans marketed to residents, IE-SNPs, and CCM/RPM-focused partnerships as a way to begin the transition. Just in this past year we’ve seen several new market entrants including Centered Care, Troupe Health, and Savoy Life while earlier entrants such as Serviam and Curana are continuing to gain traction.

Affordability of care and seniors experiencing homelessness are now permanent parts of the national discourse. I highly recommend reading the Pulitzer-worthy series called Dying Broke published by KFF and the New York Times. I’m not going to recap the articles, but I do want to share my opinion on the data that’s out there. Too many people talk about the boomers being the wealthiest generation in history. They talk about it because it’s true (pg. 11), but sometimes the truth is nuanced and multifaceted. So, in light of how much it costs to age in America, let’s talk about income, net worth, retirement, and poverty.

Genworth Total Cost of Care Calculator — https://www.genworth.com/aging-and-you/finances/cost-of-care.html/
https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Retirement_Accounts;demographic:agecl;population:1,2,3,4,5,6;units:have;range:1989,2022
  • In 2020 the poverty threshold, as defined by the US Census Bureau as the minimum income required to meet basic food and non-food requirements, for single adults age 65+ was $12,413 and $15,659 for married couples. MedPAC’s July 2023 Data Book states that 13% of older adults live below poverty while 36% live within 200% of poverty. Shockingly, 62% of all older adults live within 400% of poverty, that’s $49,652 for single individuals and $62,636 for those married.
  • In short, most older adults can’t afford more than a few years of assisted living without significantly depleting their savings assuming they have savings at all. Many can’t even afford one year. Let’s not even talk about home care or nursing homes. This is a national crisis.

Dementia is now part of the global narrative. Globally, dementia cases are expected to increase 166% from 57.4m in 2019 to 152.8m in 2050. More troubling is the projected 330% increase in countries with a low sociodemographic index. See below data from The Lancet’s study of country-level dementia prevalence forecasts from 2019 to 2050. Of note is the variability of projected increases: “the smallest increases were projected in high-income Asia Pacific (53%) and western Europe (74%), whereas the largest estimated increases were in north Africa and the Middle East (367%) and eastern sub-Saharan Africa (357%)”.

https://www.thelancet.com/journals/lanpub/article/PIIS2468-2667(21)00249-8/fulltext

Poorer countries will likely bear the brunt of increased dementia cases stemming from factors like BMI and nutrition, education, income, and smoking.

What, if anything, can we do to help these countries? Surely we can work now to curb the inevitable through reducing the social and economic inequities that lead to dementia, but what about care delivery? Could components of models like GUIDE (discussed below) be applicable and actionable to these countries in the future?

And what about the new pharmacologic treatments for dementia —Lecanemab, Donanemab, and Aducanumab. These disease-modifying therapies use novel mechanisms to slow the rate of cognitive decline and reduce amyloid plaques, the protein that accumulates in the brains of people with certain dementias such as Alzheimer’s disease. Could these drugs set a new standard for dementia care worldwide and help make our dementia-specifc care models (discussed below) more effective? One thing for sure is that cost will be an issue.

https://www.kff.org/policy-watch/new-alzheimers-drugs-spark-hope-for-patients-and-cost-concerns-for-medicare/

Predictions

Disease and condition-specific models will be a major focus for CMMI in 2024 and into the future. Over the last decade, incredible progress has been made in primary care, both on the regulatory and entrepreneurial/investment fronts. The foundation for what I like to refer to as “primary care 2.0” has been poured (Oak Street Health, ChenMed, Iora Health, CenterWell, etc), and while a major focus for CMMI is still centered on innovation in primary care (eg: MCP), more attention is now being paid to disease-specific reimbursement/clinical models in both primary care and specialty care.

  • Step 1: retool primary care 1.0; step 2: make primary and specialty care work better for those patients with specific disease states and their (often under-resourced) providers. Of the 7 models that CMMI currently has announced, 4 are focused on specific disease states: Radiation Oncology Model, BPCI Advanced (extending the current bundled payment models for advanced clinical episodes such as cardiac care, gastrointestinal surgery, and orthopedic care), Medicare Intravenous Immune Globulin (IVIG) Demonstration, and the Guiding an Improved Dementia Experience (GUIDE) Model.
  • Each of these innovation models create material, actionable opportunity for entrepreneurs, investors, payers, providers, and patients alike (eg: Rippl Care, Thyme Care, One Oncology, Remo Health). Over the coming years, I expect to see CMMI release more models targeted at disease states in pulmonology, cardiology, oncology, obstetrics and gynecology, and urology among others.
  • Shoutout to Dr. Daniel Arteaga for making this important note on the above: complementing these disease-specific care models and “primary care 2.0” will be culturally-specific, language-concordant care. It’s happening in care delivery innovation with Seen Health and Zócalo Health, it’s happening in the payer world with Clever Care (and their community centers), and it’s happening in the public markets with ApolloMed’s (AMEH) focus on serving Hispanic/Latino, AAPI, and Black/African American patients, who accounted for 75% of AMEH’s patients in 2022. Older adults reflect the racial and ethnic diversity that make our country unique, and it’s time that our healthcare system adapts to better serve them.

Entrepreneurs and investors focused on early-stage care delivery will continue to favor wrap-around care models. Patient acquisition is capital intensive for early-stage companies. Why build a patient panel from scratch when it’s easier to scale by partnering with existing primary care physicians (PCPs) and specialists who already have patient panels, but lack the additional resources and infrastructure to bill new CPT codes and participate in new models of care (such as GUIDE)? The sales pitch to providers is straightforward: “We’ll help you bill more and get your patients the care they need”.

  • To go deeper, I’m liking the interdisciplinary team-based (IDT) models that are coming out of startup-land. Many of these models such as the Collaborative Care Model (“CoCM”), pioneered at the University of Washington and favored by companies such as Cerula Care, Concert Health, and Diverge Health, started in academia and are just now being capitalized, tech-enabled, and commercialized. In addition to being capital efficient, many of these wrap-around models with beginnings in academia also come with existing evidence bases making it easier to sell to providers and raise venture capital.
  • To take things a step further, some of these IDT-based models are creative and deliberate evolutions of existing evidence-based models. Take Author Health for example, a company with a virtual-first, hybrid care model for the serious mental illness (SMI) population. Author’s model builds upon CoCM’s team-based, PCP wrap-around approach but features a more robust IDT. This makes sense as CoCM is built for “common mental health conditions”, and Author is focused on SMI. Author, launched in June ‘23 via a $115m Series A led by General Atlantic, Flare Capital, and Humana, is taking a capital-efficient approach to patient acquisition by initially partnering with CenterWell Senior Primary Care, Humana’s captive PCP asset. Expect to see more companies launching with such evolved clinical models in the future.
Collaborate Care Model (CoCM) — Common Mental Health Conditions
Author Health Care Model — Serious Mental Illness

Medicare Advantage (MA) plans will continue to face pushback from health systems as reimbursement struggles continue, creating unintended access issues and narrower networks in certain markets. As I have explored previously on Venturing in Senior Care, there are often discrepancies between traditional Medicare fee-for-service (FFS) and MA reimbursement rates. At no point in the continuum of care, from primary care to post acute care, are FFS and MA rates ever at parity. Although the data is a bit stale, this JAMA study from 2017 states that the mean MA reimbursement rate for a mid-level office visit with an established patient was 96.9% of FFS. When extrapolated across MA’s 31m beneficiaries, small discrepancies become big headaches for CFOs. Scripps Health, a large health system in San Diego, is one of the higher-profile health systems to pull out of MA for 2024 claiming a loss of $75m for its 2023 MA contracts and affecting nearly 30,000 seniors in the region. In addition to reimbursement parity woes, the 13+ health systems that pulled out of MA contracts for 2024 also cited MA prior authorization issues (typically payment denials or delays for care that meets Medicare guidelines) as a determining factor for their decisions.

  • There are far too many seniors, possibly hundreds of thousands, grappling with narrower care options in 2024, and there is an opportunity for early-stage companies to help fill the void. MA plans will be looking to bolster their networks, and those providers who remain in-network will undoubtedly see an increase in patient volume despite many not having the technology and/or clinical resources to adequately care for thousands of new patients.
  • It is important here to point out that seniors in the state of Maryland, which has low MA penetration due to its all-payer model (MD-APM), likely won’t be dealing with sudden discontinuities in their care in 2024. With the exception of a small difference between Medicare and Medicaid, all payers — public and private — in Maryland pay the same rates for medical services provided by hospitals, primary care doctors, and specialists. I won’t go into too much detail here, but for those interested in learning more please click on the following links to CMS and Health Affairs. Might we see the American Hospital Association call for similar demonstration models in other states in the coming years?

There is still so much work to be done — globally and domestically — to transform senior care and aging. There are multiple, decades-long opportunities for the public and private sectors to tackle both independently and in partnership. One of the biggest opportunities here in America is reducing healthcare spending for the “frequent fliers”, the 5% of Medicare beneficiaries who account for 44% of spending, or the 10% of beneficiaries who account for 62% of spending.

MedPAC Data Book: Health Care Spending and the Medicare Program pg. 25 https://www.medpac.gov/wp-content/uploads/2023/07/July2023_MedPAC_DataBook_SEC.pdf

Who will quarterback tomorrow’s care for these patients, these parents, grandparents, and great grandparents, these friends and neighbors, these humans? In 2023, only 26.8% of Geriatric Family Medicine post-residency fellowships were filled, and only 44.5% of Geriatric Internal Medicine post-residency fellowships were filled (Match Results, pg. 16–17). By 2034, older adults will outnumber children. Let’s tackle these opportunities before they become problems.

Happy New Year.

If you’re building or thinking of building in senior care, I’d love to learn from you and see how I can be of assistance. Please shoot me a note on LinkedIn.

This article would not have been possible without the tremendous guidance and expertise gleaned from my many friends and colleagues throughout senior care and digital health. Thank you for sharing your passion, knowledge, and wisdom with me. Thank you for working every day to make the world a better place for older adults and their families.

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