Ochsner Health to accelerate '65 Plus' elder care clinics expansion with Novant deal

Jul 14, 2023

The 65 Plus clinics are being marketed to seniors as an alternative to existing primary care.

Ochsner Health said Thursday that it will partner with Novant Health, a health care provider based in Winston-Salem, North Carolina, to accelerate the expansion of its "65 Plus"-branded clinics, which are targeted at people 65 and over.

Ochsner opened the first of its new clinics in May 2022 and now operates three, with another being built. The 65 Plus clinics are designed for those on qualifying Medicare Advantage plans and offers both primary care and a range of healthy lifestyle services, including nutrition education, fitness coaching, mental health counseling and community events.

They are being marketed to prospective patients as an alternative to their existing primary care arrangements, with Ochsner promising longer visit times with primary care physicians as well as additional facilities and services.

The first 65 Plus outlet was opened last year in Covington, on North U.S. 190 — a 10,200-square-foot facility with 11 exam rooms, a gym, and a host of medical and wellness services.

Ochsner also is in the midst of a $2.8 million conversion of the former Gordon's home decor store in the Magnolia Shopping Center in Metairie into a 19,500-square-foot clinic.

In September, Ochsner also opened a 12,000-square-foot, $3.15 million 65 Plus facility in the Baton Rouge area.

Its first out-of-state 65 Plus unit in Pensacola, Florida, opened in early July 2020 and will be part of the new partnership with Novant. The two partners have not yet determined what territory their deal will cover, nor how many facilities they intend to build, according to Ochsner CEO Peter November. They have agreed generally that the joint effort will be in "the Southeast" but will not include Louisiana, he said.

Both Ochsner and Novant operate as not-for-profit health systems, which means they are financed primarily from bond debt rather than by equity, and they enjoy tax benefits in exchange for providing a certain amount of charity service.

Ochsner had total operating revenue of $5.9 billion in 2021, the latest year for which figures are available. Novant's total operating revenue for the same year was about $7.4 billion.

Capturing share

The partnership strategy is to capture a larger share of the growing market for elder care as the U.S. population ages, according to an Ochsner press release announcing the deal.

"Studies have shown that 17% of the population, or more than 1 in every 6 people, were over the age of 65 in 2020, and this number is projected to increase substantially by the year 2040, when this age group is estimated to reach 22% of the population," Ochsner said. "This rapid increase presents new challenges and opportunities for health systems and health payors alike."

Ochsner said it is looking for other partnerships similar to Novant and "future focused co-investments" that will help it compete in the U.S. health care market as it consolidates and moves more toward digital-based care.

Consolidating market

While dominant in their respective markets, Ochsner and Novant are dwarfed by the biggest health care companies in the U.S., such as Kaiser Permanente, which had more than $95 billion in revenues last year, or HCA Healthcare, which had more than $60 billion.

Ochsner and Novant's combined assets total around $20 billion, which means they have much greater leverage to borrow to fuel their expansion of the 65 Plus network than if either were building one on their own.

November said his focus in terms of the expansion was less on the financial aspect as on expanding care for the community.

"We see the future of trying to always get stronger in value-based care and keeping people healthier and at home with their families," he said.