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LTC Bullet:

LTCI Brass Needs NIC

Friday August 11, 2000


Long-term care insurance executives should consider attending the National Investment Center's (NIC's) 10th Annual conference in Washington, DC on September 13-15, 2000. For information on the organization and registration forms for the conference, check out NIC's web site at

Now, why should you invest some precious profesional time to find out what these folks are doing? Answer: if they don't get their act together, the consequences for LTCI may be serious. If they do, the opportunities for LTCI may be very great! Here's the story:

Founded in 1991, the National Investment Center's mission is to facilitate "efficient capital formation for the seniors housing and care industries through research, networking, and providing business and financial information." NIC claims to be "a valuable resource to lenders, investors, developers/operators, and others interested in meeting the housing and healthcare needs of America's seniors." Their conference this year is called "Into the Next Decade: Reconnecting Capital With Seniors Housing and Care." The promotional material reads: "Join more than 1,200 executive-level decision-makers . . .as we examine the mechanisms for rejoining capital with seniors housing and care."

Just more hype and hoopla? We don't think so. Center for Long-Term Care Financing President Stephen Moses covered last year's NIC conference for "LTC Bullets." What he learned there gave rise to our major research study for the Year 2000: The LTC Triathlon Project. More on the LTC Triathlon, which is approaching completion, in a future Bullet. For now, here's the scoop on the NIC conference:

Most of the attendees represent two major sectors of long-term care: (1) the big providers, including nursing homes, assisted living facilities, and home health agencies, that supply long-term care services to the public and (2) the big financiers, including investment bankers and venture capitalists, who provide the debt and equity capital to finance the long-term care industry. These people definitely need to talk. In case you haven't noticed, almost nobody wants to invest in health care these days, much less long-term care. Hundreds of nursing homes and home health agencies have declared bankruptcy. Many assisted living companies are over-built and under-filled. LTC stocks across the board are in the tank. The credit markets are dry as a bone. Something definitely needs to be done if long-term care insurance beneficiaries are going to be able to find high-caliber long-term care services in the future.

What went wrong? The public long-term care payers (Medicaid and Medicare) clamped down on costs and quality. Cuts in the Balanced Budget Act of 1997 savaged the nursing home and home health industries. Private payers who are willing and able to purchase care are few and far between at all levels. Private insurance is almost non-existent as a revenue source for long- term care providers. In a nutshell, long-term care in the United States is dying for lack of financial oxygen.

What needs to be done? To anyone involved in long-term care insurance sales or policy, the answer is pretty clear: target scarce public resources to the genuinely needy and implement strong public policy incentives for everyone else to purchase long- term care insurance or otherwise plan ahead to pay privately for their care. Is that the way the financiers and providers of long-term care see it too? Not if you judge by last year's NIC conference!

What surprised Steve last year was that these sophisticated, top-level, high-powered money moguls seemed naive about the steady disintegration of public financing sources for long-term care. They were still clinging to Medicaid and Medicare as old, reliable payers--hoping against hope--despite the evidence that these programs were tapped out and cutting back severely. Furthermore, most of them knew little or nothing about long-term care insurance and much of what they thought they knew was wrong.

This year, the financiers and providers of long-term care are in much more trouble then they were last year. In the words of one on-looking wag, they got caught "with their buildings up and their pants down." The devastating effects of public financing cutbacks in the absence of a reliable private financing source are approaching a climax. Desperation is opening many eyes to possibilities never before considered.

Therefore, the time is right to foster communication between long-term care financiers, providers and insurers. The individual or company that can help long- term care providers regain or enhance their profitability (thereby attracting more investment) will be richly rewarded. Long-term care insurers may be able to help in the short run by paying cooperative providers for medically and financially qualified leads (e.g., the healthy spouses, family members and friends of residents or patients). Long-term care insurers can definitely help in the long run by supplying many more private payers (beneficiaries of LTC policies) to providers. Unfortunately, none of this will happen unless insurers are at the table with financiers and providers tackling these problems and forging good, mutually beneficial public policy solutions.

That's why the Center for LTC Financing is interviewing 50 of the top players in each of the key sectors of long-term care (the financiers, providers, and insurers). We plan to bring them together this Winter in an "LTC Summit Conference." We want to foster communication, engender cooperation, forge an action plan, and then hand off specific recommendations to the industry's many powerful trade associations (AHCA, AAHSA, NAHC, HIAA, ACLI, NIC, etc.) for their consideration, advocacy and implementation. As we said, more on this "LTC Triathlon Project" later.

For the very same reasons, however, we encourage LTC insurers to attend the NIC conference this year, listen to what the financiers and providers have to say, tell them what you have to offer, and explore how you can work more effectively together in the marketplace and in the public policy arena.