Talking Heads, Tom Schuett, The Schuett Companies, Inc.—A New Model for Services Delivery

10 min read

For many low-income seniors, access to quality, affordable in-home care is a pipe dream. If a tenant qualifies for services under Medicaid it normally means a trip to the nursing home, which nobody wants. In progressive Minnesota, where thinking outside of the box is a way of life, developer Tom Schuett has developed a business model that allows him to provide round-the-clock home healthcare to his tenants while getting reimbursed by the state.

Schuett is President and CEO of The Schuett Companies, Inc., a family-owned business headquartered in Minneapolis that his father John E. “Jack” Schuett founded over 40 years ago. The company manages 16 multifamily properties, much of it Section 8 housing, ranging in size from 24 units to 121 units.

In 2011, Schuett launched CompassionCare Services, LLC as a separate company and hired a registered nurse to coordinate the delivery of services through a network of home health aides. The success of his program is attracting widespread attention in the affordable housing development community.

Schuett sat down with Tax Credit Advisor to discuss the origins of CompassionCare and how it works.

Tax Credit Advisor: Why did you create CompassionCare?
Thomas Schuett: I was working on a couple different developments back in 2006 and 2007 when an architect asked me in an offhand way, ‘Why don’t you guys provide services in your buildings? You’re one of the largest senior housing providers in the state.’ It was a passing comment, but I thought about it and eventually I started pushing a very large boulder up a very long hill trying to convince my father that this was something good for our family’s business. If you look at the demographics, not just in Minnesota but nationally, there is a huge need for affordable care. Developers build assisted living facilities for private pay, but little is being done for low-income Americans. The Baby Boom generation is the wealthiest in the history of the world but there are people on the verge of retirement who have little or no savings. Developers need to recognize this and make the delivery of services to senior residents a bigger priority.

TCA: How did you establish CompassionCare?
Schuett: After starting the licensing process, I hired a registered nurse to help us evaluate next steps. We selected the largest property in our portfolio, a 121-unit building in Moorhead, MN, and we said, “If we can’t succeed here, then we don’t belong in the healthcare business. In Minnesota, we are reimbursed through Medicaid, but it’s a volume-based business. You need a large enough population of elderly people who need services in one location for it to make sense. We started in that building and we have been providing services 24/7, 365 days a year since March 2011.

TCA: Describe the licensing requirements involved in starting a home health care company. Also, how difficult was it to get approvals?
Schuett: Getting the proper licenses was not as difficult as I had envisioned, but it did take time. When we hired the nurse, we were still five to six months away from launching CompassionCare, so we had time to work through the issues. At the time, Minnesota had what was called a Class F license. You registered buildings where people would receive services. It was called “Registered Housing With Services Establishment” and a Class F license allowed us to provide home health in the registered buildings. Today, they have a more generalized license which allows us to not only provide services in the buildings that are registered but allows us to go out into the community, which we see as a huge advantage in the rural areas that we serve.

TCA: Are the people who provide these services geriatric care managers or nurses? What is their background?
Schuett: Most of them are home health aides. We have six or seven registered nurses, a couple LPNs (Licensed Practical Nurse), administrative staff, and the home health aides, who are the boots on the ground personnel. Training is required. The RN does face-to-face training with them when they start and they must complete an online program. The State of Minnesota also requires a detailed background check for every employee, which they conduct.

TCA: Do the home health aides discuss financial wellness, or do they just provide assistance with activities of daily living?
Schuett:The home health aides do not discuss financial matters. In order to use our services, whether the person lives in our building or is a member of the general community, the county assesses them first and then determines if they qualify for a Medicaid waiver. Then our nurses do their own assessments to schedule services between us and the county.

TCA: What type of government oversight/compliance is involved?
Schuett: We survey residents annually and submit the results to the county. The state also performs random site visits to ensure companies, like ours, are compliant. We started CompassionCare in 2011, but our first site visit wasn’t until 2014. I’m going to brag a bit because the state told us they normally find 30 to 35 “findings” with a new home health agency but they found only two with us, which were very minor. I attribute this to having a very valuable, very intelligent and very organized registered nurse who is doing a phenomenal job at our properties.

TCA: Can you describe what the revenue stream looks like for an individual CompassionCare client?
Schuett: It’s very different depending upon acuity and personal situations. For some clients, we come in once a week and perform general housekeeping, which sometimes benefits us as much as them. The opportunity to go in and clean people’s units and be reimbursed before the unit is damaged beyond repair is huge. Maybe there has been an inspection on the management side. They tell the tenant, you really need to keep this unit clean, but the individual can’t because of a disability or condition. However, they might be able to go to the county and, if they qualify, hire us to come in and clean the unit and better maintain its physical soundness. Or, we can go in and help with bathing, meal preparation, grooming, and medicine administration. Services reimbursements can range from $50/month to $3,000/ month depending upon what we’re doing. The demographics clearly indicate that we need more affordable housing for seniors with services. States also are beginning to realize that a large part of their budgets are going to the Department of Human Services. Early placement in a nursing home on a national level averages about $7,500/month and for most of those people we can provide those same services for maybe $2,000. States can see a dramatic cost savings. We’ve been part of a joint effort in Minnesota, with the Housing Finance Agency and Department of Human Services to work on a model that can help the state utilize other senior housing properties to provide services, save money and prevent moves to nursing homes.

TCA: Could this model be replicated nationally?
Schuett: It’s really a state by state situation. It depends on how your state administers Medicaid waivers. For this to work, people need to think outside the box and be creative and open to new ideas. We have a very good HFA Commissioner, Mary Tingerthal, who has been very supportive of what we’re doing and has written a white paper on affordable housing settings with services. Minnesota is very progressive and a thought leader in senior housing models.

TCA: Your services focus on Activities of Daily Living, but can your home health aides offer assistance if a tenant needs medical attention?
Schuett: We do provide training on administering medications. If a home health aide visits someone who is acting strangely, perhaps they went off one or more medications, one of the nurses will be alerted and immediately come out and assess the situation.

TCA: Do you offer the same services at every property?
Schuett: Unfortunately no. There is a big gap between a 121-unit building and a 24-unit building and the service revenue stream that is required to keep staff paid and things going. If everyone in a 24-unit building needs services that would be fine, but when you have only one or two people then it doesn’t work. We are participating in a demonstration program to address this problem.

TCA: Oftentimes access to affordable transportation, grocery delivery services, and entertainment and social interaction are services that elderly people need, but don’t have easy access to? Is that something you help with as well?
Schuett: Yes, we do run errands for residents and provide rides to appointments. If a county nurse feels that someone needs more social interaction, we get reimbursed for visiting them. Meals On Wheels also delivers to our properties.

TCA: What results is it producing for your portfolio and residents?
Schuett: Well, we are making money at it and we feel that the environment we provide our tenants is a better one because they have access to healthcare right in the building. We are working with a physicians group that practices tele-medicine where a doctor can remotely conduct a physical or exam. The doctor doesn’t physically need to be in the room, but the room is set up so that he can look at a person’s blood pressure, pulse, or view a wound. The person who we are speaking with is already doing this at various locations around Minnesota and so far it has been very successful. It’s hard to find a doctor who wants to travel to remote places, like Blackduck or Floodwood, where we have properties.

TCA: Historically, people paid for in-home care services using long-term care insurance. Do you view the CompassionCare model as a possible replacement for this type of insurance?
Schuett: I don’t think our model eliminates the need for long-term care insurance. People sometimes reach a point when they need more care than we can provide. The only options left for them can be quite costly, which is where I see a benefit for long-term care insurance. You do raise an interesting point which I have been thinking about for some time. If we take someone who is 65 and doesn’t need services for 17 years, but because of our programs, activities and education, we can delay or prevent them from going on Medicaid, what value does that create for the state? It’s not insurance per se, but if we can do that with a population of our residents, I think it does reduce the need for expensive long-term care policies.

TCA: Having worked actively at the intersection of housing and health care, are there changes you would like to see in the policy environment that would facilitate better / more efficient delivery of services?
Schuett: The Affordable Care Act is really pushing individuals’ care back into the home and it has created what are called Accountable Care Organizations. These can be multi-billion dollar health providers that are regional in nature and responsible for particular outcomes in a community. ACO’s are looking for relationships with providers, such as CompassionCare. If they run a hospital and one of our residents goes into the hospital and is discharged, but needs to be readmitted within 30 days with the same diagnosis, that hospital doesn’t get reimbursed for any services. So ACO’s are looking for companies, like us, who can come in and ensure outcomes. We can make sure they stay on their meds, or help them with whatever conditions they have, so that they don’t wind up back in the hospital.

Darryl Hicks is vice president, communications for the National Reverse Mortgage Lenders Association and a 24-year veteran of associations managed by Dworbell, Inc., the management company of NH&RA.