Avamere Health Services: Boomer Boon
Corporate Spotlight
Written by John Zorabedian   
Saturday, 01 March 2008
Avamere Health Services: Boomer Boon - American Executive - RedCoat Publishing
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Kiernan Thompson
For years, the healthcare industry has been insulated from market forces by government reimbursement through Medicaid and Medicare. Now, the increasing demands of consumers, especially those in the aging baby boom generation, is changing the way healthcare is delivered.

Avamere Health Services: Boomer Boon - American Executive - RedCoat Publishing
Rick Dillon, One of Avamere’s Principal Owners and Vice Chairman of its Board of Directors
With the oldest baby boomers now entering retirement, elder care providers such as Avamere Health Services, an operator of 26 skilled nursing facilities in the Pacific Northwest, are facing greater expectations for privacy and comfort. “They expect more; they expect better services, better surroundings,” said Rick Dillon, one of Avamere’s principal owners and vice chairman of its board of directors. “It’s incumbent on providers to meet those needs, or the baby boomers will look elsewhere. They’re not willing to just fit into the status quo.”

Avamere, with 2007 revenues of $250 million, has grown rapidly over the past five years through acquisition of senior living communities and construction of new facilities. The company also owns several ancillary service companies, including a contract rehabilitation company, a hospice company, a home health company, and medical supply and mobile diagnostic companies.

“Our growth strategy involves attempting to acquire facilities and ancillary companies that will fill in our spectrum of services,” Dillon said. “We look at the communities we already serve; and see if the need is there for more services.”

To meet the particular demands of the baby boomer retirement boom, Avamere has invested considerably in upgrading older facilities and new construction projects to create facilities with more private rooms and a more comfortable, less clinical atmosphere in its skilled nursing and assisted-living homes.

In January, Avamere completed construction of an independent-living community, a 93-unit “boutique” retirement facility called The Stafford, in Lake Oswego, Ore. The Stafford offers studio, one- and two-bedroom apartments, as well as 12 assisted-living units, in a complex that more closely resembles a luxury hotel than a traditional retirement home.

“I feel like our company is headed in the right direction with this consumer driven evolution,” Dillon said. “We have always been a first adopter. We try to cater to the tastes of the individuals that are now coming into our facilities.”

Regulatory burden
As a provider of services in one of the most tightly regulated industries, Avamere has developed internal controls that allow it to stay ahead of the increasing burdens for improving quality of care for its residents. A staff of consultants regularly monitors the company’s facilities for red flags and conducts mock surveys to prepare the staff at its facilities for inspections by state surveyors.

At its skilled nursing facilities, the consulting staff works with nurses and staff to monitor quality of care issues such as incidents of pressure ulcers, a common problem among bed-ridden nursing home residents. “We have a consultant staff that I think is second to none as far as reputation here in the Northwest in their knowledge,” Dillon said. “They really stay on top of things. They know how to identify trends in a facility when something seems to not be going the right way and put together a corrective action plan.”

Dillon said the mission of the consulting staff is to find areas where care can be improved, not just in anticipation of state surveys but as a way to exceed regulatory requirements. “We don’t want to just meet the state regulations; we want to meet or exceed consumer expectations as well,” he said.

And although meeting consumer expectations is critical for attracting residents, much of Avamere’s revenue is still derived from government reimbursement. Dillon and his principal partner, Rick Miller, have assumed significant roles with industry organizations this year to advocate for better reimbursement rates, as well as lobbying for other industry concerns such as liability insurance. Miller is chairman this year of the American Health Care Association, representing the long-term care industry in Washington, DC, and Dillon is current president of the Washington Health Care Association.

Dillon and Miller brought in new management last May, including a new CEO and COO, to handle day-to-day responsibilities, allowing them greater time to focus on advocacy at the industry level. “We’re highly dependent on government reimbursement through Medicare and Medicaid,” Dillon said. “It’s hard to create predictability in our industry because we’re always on a two-year cycle between state governments and the federal government determining our fate as it relates to reimbursement changes.”

To handle skyrocketing liability insurance premiums, Avamere now insures itself through a captive insurer. “Liability insurance for skilled nursing and assisted living became almost unaffordable through a traditional insurance plan,” Dillon said. But self-insurance is risky. “We’re constantly looking at that to see if that’s the best for our situation. We will continue to monitor that,” he said.

Avamere’s internal auditing through its consultants is also a risk management strategy. And by seeking continuous improvement, Dillon said the company can stay ahead of the curve on both consumer expectations and government regulations. “When we’ve developed new facilities, we have always analyzed what has worked for our clients and what hasn’t,” he said. “With each new facility, we’ve developed ourselves; we’ve improved on the last one, and that sets us apart. I don’t want to be in the business if we’re not doing that.”
 
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