Turnover Rate of Millenials in the Hospitality Industry

Hello everyone, and a heads up/warning for the eventual wall of text.
I'm a long time staff member of the 'red' retail pharmacy chain; beginning my 5 year journey with this company fresh out of highschool as I went to persue my pharmacy degree.
With 2 years as a technician, and 3 years with an internship through my home store, the absolutely unacceptable working conditions, terrible staff treatment, general disrespect towards all aspects of this profession, and the gross underpayment of all positions within the pharmacy ecosphere has made me make the incredibly heartbreaking decision to remove myself from the pharmacy program I was enrolled in, 2 years into my proffessional schooling.
After struggling to keep up with my peers and having the repeat a multitude of classes due to near criminal levels of incompetence and a shear lack of mental and physical health knowledge from the staff at my attending university, combined with my growing disdain and hatred towards the profession and its ever growing, and ever expanding conquest to put profits over the lives of both patient and practicioner, I took a (useless) Bachelor's Degree in Pharmaceutical Sciences and left the Doctorate program behind.
With the job market in its current state, and the world still within the throws of a seemingly neverending pandemic, I have yet to find the courage to leave my position as a Technician. The board of pharmacy of MA refused to allow me to transfer my 3 years work experience as an intern towards a technian license, so I'm starting from page 1 all over again in the eyes of the board, and my workplace.
I've been chronically underpaid this entire time; with excuses thrown my way at every inpass I find myself in with not only my store manager, but the district manager and intership coordinators as well. A recent complaint made to contacts higher than those listed prior has lead to the revelation that I have been improperly paid for near my entire 3 years as an intern; making less than most starting technicians in many cases. The company made claims that these issues would be rectified, and had they known sooner, it would have been fixed without issue. I've been complaining about these issues for literal years with no progress until recent. My compensation for this mess? A dollar raise; one that will quickly become the going minimum wage rate within Massachusetts over the next few years. I've also been promissed quite a great dea of backpay; which as of now, months into this war, I've yet to see.
Our turnover rate is hilarious; with new technicians being hired to replace the ones that quit the week before after typically less than 4 months on active rotation, mainly due to the overall lack of attention they're given, the abusive attitudes of the store manager, and the neglect of upper management and cooperate as a whole.
We fill more than 800 scripts on a daily basis and typically see a max body count consisting of 4 technicians, perhaps an intern, and a single pharmacist... Which you'll likely say doesn't sound that bad right? Here's the issue; that number of staff only exists on days when a visit from the BoP or upper management is scheduled; a typical day seems at max, 3 techs and 1 pharmacist with a typical daily 'supply' consisting of just 2 techs. The weekends? Max 2 techs, but usually just 1 of us for the entire shift. Cooperate somehow doesn't believe people come in on the weekends and thus give us a smaller budget to allocate to those days.
The drivethrough is a joke; angry customers demanding everything be served to them on a silver platter within 5 minutes like some sort of fast-food service, irregardless of the multitudes of issues their prescription likely contains. With insurance problems, unrealistic turn-around time expectations, obvious medication diverters/abusers, language barriers, and general disrespect towards the entire industry from the customer base, having this "convenience" option available within the walls of a medical practice is absolutly unacceptable and only further delegitimitizes the practice within the eyes of the impatient and overly stimulated public. Getting screamed at for the "10 minute wait" for being at the end of a 9 car-link line becomes very old, very fast; made even better by those who refuse to pull out of the line while we finish their prescription we told them on the phone would take an hour's waittime 5 minutes ago.
Aside from general disregard by cooperate towards the working conditions experienced by the staff, and the unrealistic expectations forced upon us all through the use of an incredibly problematic and potentially law breaking metric's system, the general attitude that the public as a whole has towards not only the techs, but pharmacists as well, is frankly disgusting. The amount of abuse we face at every step of the way; from irrate Doctors who refuse to correctly write prescriptions/accept their mistakes on those given to us, to impatient patients, to overexpectant management, leads to a highly hostile work environment that has mentally drained me to the point of seeking psychiatric help.
The constant phone calls that must be answered post haste less we receive punishment from cooperate, to the aweful programs we force upon our patient-base at risk of again, further punishment, to the continued cutting of hours for reasons to be reasonably explained, to the lack of proper communication between upper management and staff, to the further and further creep of more and more responsibilities to the underpaid and understaffed workers, to the hightened danger of the profession throughout and ongoing pandemic, to the forcefull nature of the technician vaccine trainings (with again, no wage increase for additional responsibilities/health risks), to the inability to propersly train new staff, to forcing said untrained staff to work whole shifts without guidance, to forcing technicians to skip breaks in order to keep up with demand, to staying unpaid hours to keep things in check, to being constantly harassed outside of work by neverending texts and phonecalls to make up for shifts of those who quit/called out last minute... I can ramble on for hours, and have done just so to upper management only to be told that essentially, nothing is going to change.
The bottom line is all that matters here, and we desperately need these unethical practices to stop.
Please, anyone within the governance of the pharmaceutical industry; I beg you to investigate these retail giants. We need real help, and real change, but the only way for that to happen at this point would likely require the intervening of a power that can force said change to happen on a legal/policy level.
I truly feel this bubble has to pop at some point, when enough becomes enough and this utter disgrace and undervaluation of what is the backbone of the medical world can be rectified. If things are to continue in the direction trends show them heading, I fear for not only our staffs' working conditions, but our patients' health. These expectations are no longer possible to achieve.
I apologize for this long winded post that probably seems like it leads nowhere, but I can no longer remain silent and complacent with 5 years worth of frustration weighing so heavily on my mental state. I wasted years of my life, and hundreds of thousands of dollars towards persuing a career that has ultimately, broken me as a person, and destroyed my near life-long dream of becoming a Doctorate of Pharmacy. All my future plans have long since gone out the window, and feeling hopelessly lost within this world would be considered an understatement.
I just wanted to be heard, and to get at least a miniscule amount of emotion out into the ether. So I apologize again for this wall of text, and I apologize for the sheer mass of angst unleashed upon this reddit.
I truly hope we can make a change: I want to be proud of my Technician role. I wish I could have been more, but it is far too late for that now. Perhaps, when I'm in a better headspace I will return to school and aim for a career within a hospital setting, but for the time being I will be stuck here.
Thanks for making it this far, and I hope those of you with like mind/similiar experiences and frustrations can find comfort in knowing you're not experiencing these heartaches alone. Let's try to be strong together; for ourselves, and our patients.

I think its hardly a surprise to anyone that bars and restaurants and those who staff them are not doing well right now. Many of us who had the good fortune of being able to come back from furlough came back to jobs that where a shadow of their former selves though with reduced hours, revenue and an increased workload to accommodate proper sanitation procedures. I work at one of the larger breweries in Seattle and our business has been consistently down 40-60% across the board vs last years metrics.
There are alot of changes to our and other bars business structure and I feel like it might be helpful to understand the "whys" behind these changes that seem to be a source of friction for some of our guests.

• Time limits on tables

We would love for you to be able to hang out all night and enjoy the bar with your friends but us doing any measurable quantity of business right now depends on table turnover. If I have a table given to only two guests who proceed to have 2 beers each over the course of 2 hours while they talk, that is a table that I could have potentially turned over multiple times to larger or thirstier parties.
This is the hospitality industry though and im not mad if thats what you do. The current social and economic climate right now is weighing heavy on alot of people so being able to go out and have a few beers with friends in a place other than your quarantine cube is important and I really enjoy being able to work in a position that can provide even temporary relief from the woes of the world. I realize the above example is partially at odds with this philosophy but understand that this is also a business and my livelihood so a balance between hospitality and pragmatic business practices must be struck.

• Wearing your mask when not at your table

I had a guest the other day who kept walking over to say hello to friends at another table (without his mask on.) I asked him to put his mask on several times to which he frustratingly exclaimed "whats the big deal, its only for a second and I only go out like once a week, im fine."
This is a classic example of one of the must frustrating aspects of service right now. This customer has clearly only thought of himself and how his actions might impact him and him alone.
I dont make it a habit of dressing down customers unless they need to be cut off but since we are in the midst of a pandemic I opted not to let it slide. I told him that it was great he reduced his potential exposure to once a week but that as bartenders and servers we have potential exposure every day, and every time we have to deal with someone like him our exposure risk increases.
There is a psychological phenomenon that happens called mechanistic dehumanization, and anyone who has worked in the service industry has experienced it, guaranteed. It's not to say that everyone who exhibits those behaviors isn't doing it on purpose, but I've just assumed people don't think things through.

Dehumanization can also take a “mechanistic” form in which humans are likened to objects or automata and are denied qualities such as warmth, emotion, and individuality (Haslam, 2006). Such “mechanistic” dehumanization is more likely to occur in interpersonal interactions and organizational settings. It is frequently discussed in the contexts of technology (Montague and Matson, 1983), medicine (Szasz, 1973; Fink, 1982; Barnard, 2001), and other domains such as sexual objectification (Fredrickson and Roberts, 1997; Nussbaum, 1999) in which people are often perceived as inert or instrumental.

Being on the receiving end:

When people are mechanistically dehumanized by being treated as objects, as means to an end, or as lacking the capacity for feeling, they tend to enter into “cognitive deconstructive” states that are characterized by reduced clarity of thought, emotional numbing, cognitive inflexibility, and an absence of meaningful thought (Twenge et al., 2003; Bastian and Haslam, 2011). Experiencing this form of dehumanization leads to pervasive feelings of sadness and anger. Also dehumanizing are status-reducing interpersonal maltreatments such as condescension, degradation, or being treated as embarrassing, incompetent, unintelligent, or unsophisticated (Vohs et al., 2007), which lead to feelings of guilt and shame (Bastian and Haslam, 2011).

This is the phenomenon to which I attribute the jadedness that can sometimes be pervasive in the service industry.
TL:DR Your bartenders are people too you absolute chucklefuck.

• Sanitation practices

If you're wondering whats taking your server so long to either get to you or why there are empty tables in plain view while you wait it all comes down to sanitation ! I cant speak to the practices at other bars but at our brewery when a table leaves, we spray it down (seating included) with peroxide, which takes 60 seconds to achieve full effect then wipe the table down again with a diluted bleach solution. Clearing the table then allowing time for it to be sanitized and ready can amount to a little bit of a backup when we are at capacity.
We also sanitize the bathrooms once every hour, as well as any other surfaces guests may come into contact with. This takes priority over making sure you've had your 5th pinecone IPA and we usually atleast try to verbally touch base with a "ill be right with you guys" in the meantime.
We have also replaced all our central air filters with MERV13 filters and increased the rate at which the air within the brewery circulates.
As far as personal sanitation, I wash my clothes after every shift and shower immediately upon getting home. I live with my GF and dont want to potentially spread anything to her which she then carries to her job etc. Im fortunate enough to have a washer and dryer in my apartment, but for someone that has to a pay to use washer / dryer that could add up if they wanted to pursue the same level of sanitation.
In Summary
Many bartenders and servers (im gonna say most) are working jobs that have reduced hours, reduced pay, increased workload and increased risk and since we where just told by the senate that no further relief is incoming, now planning for a dark winter ahead (literally and metaphorically.) I know you're tired of covid. We are all tired of it and the increased restrictions and procedures but they are there to help keep you (and us) safe.
What is an inconvenience to many of you is to us a constant source of uncertainty. What will business be like today ? Will I make any money ? will our business survive another month of this much less a winter ? Its stressful and even being level 2 cicerone certified and having a library of cocktails rattling around in my brain wont help me find work in the industry because it dosent exist right now. I cant even use the extra time to take classes to get work in another industry because I have no money to pay for them.
There is a sizeable amount of people that come in that have decided that since theyre over covid it is magically not a threat anymore.
If I or any of my co-workers get covid we cant work for 2 weeks minimum and at worst we might shut down temporarily to sanitize. Not to meniton ya'know, all the associated potential short and long term health effects.
WA state has done a great job of keeping the numbers down as compared to many other places in the country and I applaud and recognize that effort but we still have to keep it up and not slack off.
Thank you to those people who do understand all this but most of all if you take one thing away from this please just be nice to us right now. Bars, restaurants and the people that staff them are very much hurting right now and just trying to get through the year and the pandemic in one piece mentally and financially.

from the SEC:
https://www.sec.gov/Archives/edgadata/1801170/000119312521029637/d66346dex991.htm
click for all the tables/images.
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EX-99.1 2 d66346dex991.htm EX-99.1
Exhibit 99.1
In Response to Short Seller Firm’s Questions
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Andrew Still-Baxter 18 min read
From:
Vivek Garipalli, CEO and Andrew Toy, President of Clover Health
Clover’s mission is to improve every life. We do that by scaling the Clover Assistant platform across physicians to drive a meaningful positive clinical impact towards as wide a percentage of our membership as possible. We align our incentives for the Clover Assistant by embedding our software platform inside of the business of our Medicare Advantage plan. As we improve outcomes, and lower costs, Clover can pass those savings on to consumers, improving the attractiveness of our plans and spurring rapid growth. We ultimately seek to transform healthcare for each and every one of us.
Clover welcomes questions about our business, as it gives us the opportunity to share our vision and to address any skepticism, whether founded or unfounded. As you will see from our detailed,
point-by-point response to the short seller firm’s questions, the alleged “report” is rife with ad-hominem attacks, sweeping inaccuracies and gross mischaracterizations. Importantly, the short seller firm did not contact Clover, and we had no knowledge of the short seller report prior to it being made publicly available. In our view, it belies a desperate attempt for publicity while sacrificing any regard for the truth.
In addition, we would note that the report’s title specifically calls out the involvement of “The King of SPACs,” Chamath Palihapitiya, and accuses him of a dearth of diligence. This, as we will show, is completely untrue, and we suspect this was done in order to sensationalize what is otherwise a rather underwhelming piece of research. Given the market’s latest views on short sellers, we believe that Hindenburg, which takes pains to call out their altruism in saying that they are not short on CLOV stock, is foolheartedly seeking to redeem itself by posturing as a white knight of the financial markets.
We’ve put together this response as rapidly as possible. We hope you will find it extremely informative.
##

1. Did Chamath and/or Clover know about the ongoing DOJ investigation? If so, why was it concealed from investors?

Chamath and Clover were fully aware of the DOJ inquiry.
To be clear, Clover does not believe it is, or has been, in violation of any rules or regulations related to the inquiry.
We went through both an IPO and de-SPAC due diligence process, and this subject received extensive focus and attention. Consistent with the views of Clover’s outside counsel, Social Capital’s outside counsel, and independently retained outside counsel of third parties, including IPO underwriters’ counsel, we concluded that the fact of DOJ’s request for information was not material and was not required to be specifically disclosed in our SEC filings.
How could a DOJ inquiry not be considered material information? As heavily regulated organizations participating in Medicare Advantage, Clover and its peers receive frequent requests for information from regulatory bodies. These are typically confidential. We promptly respond to these requests as and when they come in. As the short selling firm points out, the DOJ also often reaches out to ex-employees, including by civil investigative demands, as part of their information-gathering process.
For absolute clarity:
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Clover Health believes it has made all appropriate disclosures, which were reviewed and vetted by outside counsel to all parties.
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Clover has not received any civil investigative demands or subpoenas from the Department of Justice.
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Clover has received a request for information from the Justice Department, to which, as we do with all requests from regulatory bodies, we responded. This was on a voluntary basis.
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Clover has conducted a detailed review of matters potentially addressed by the DOJ request for information and has concluded that it is in compliance with all laws and regulations material to its business.
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Up until the publishing of the short selling report yesterday morning, Clover was unaware of any other ongoing investigations of the Company, its officers, or any companies with which they are affiliated.
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Following the report yesterday, Clover received notice of an investigation from the SEC. We believe this inquiry is based on the short selling report issued yesterday morning.

1. Is Clover aware of any other regulatory investigations into the company or Vivek Garipalli and his related companies? If so, what are the details?

Clover is unaware of any other ongoing regulatory investigations, except, as noted above, following the short selling firm’s report yesterday morning, Clover received an inquiry from the SEC. We believe this request is based on the short selling report issued yesterday morning.

1. Has Clover received any subpoenas or civil investigative demands from regulators? If so, how many and from which regulators?

No. Clover has not received any civil investigative demands or subpoenas from the Department of Justice. Clover has received a request for information from the Justice Department, to which, as we do with all requests from regulatory bodies, we responded on a voluntary basis.

1. Why does Clover’s subsidiary, “Seek Insurance” operate a website called “SeekMedicare.com” claiming to offer “independent” and “unbiased” advice on selecting Medicare plans without disclosing that it is owned by a Medicare plan provider, representing a blatant conflict of interest?

Seek Medicare is a startup that was incubated and set up as a separate company from Clover — it has its own management team, outside investor (a nationally-recognized public company), board and employees. Clover and the outside investor share in governance of Seek at the board level, including decisions such as the nomination of the CEO. Clover has the right to appoint a Board Member (currently Andrew Toy, Clover’s President & CTO), the outside investor has a right to appoint a Board Member (currently an employee of the outside investor), and the third Board Member, the CEO, must be mutually agreed upon. In addition, this investor has a unilateral contractual option to convert its investment into 50% equity ownership of Seek.
It’s not unusual for payors to create or have stakes in FMOs. What makes Seek different is its fundamental belief that Medicare consumers are simply not well-informed and that hurts their ability to get affordable, great healthcare. Seek is purpose-built to deliver against that problem. In order to make sure it could effectively pursue its goals, Seek was set up as a separate company, and it has raised nearly all of its capital from the outside investor.
At Clover, we obviously want everyone to pick a Clover plan, but we want to earn that business by providing great and affordable healthcare coverage. The most important thing is that Medicare eligibles end up in the right plan for them.
One final note here: Seek is a brand new startup, and its website is still in version 1.0. Please take a look back next week when its planned version 2.0 comes out.

1. Clover’s subsidiary, Seek Insurance, claims on its website “We don’t work for insurance companies. We work for you” despite literally being owned by Clover, an insurance company. What is your response?

While Seek is an affiliate, as we said, it operates separately from Clover, with its own financing and its own goals, which are to provide neutral, objective advice to Medicare eligibles and to empower, educate and assist them. Seek offers Clover plans but, more importantly, Seek also offers many more coverage options. In fact, in every market in which Seek operates, Seek endeavors to offer at least 80% of available plans in that market.
Even though Seek began very recently, it was able to stand up its agency in the most recent AEP and also launched a pilot in ~100 retail locations in six states, with a focus on markets in Georgia, New Jersey and Texas.
If you want to see the objectivity of Seek, we think the results of Seek’s initial sales period speak for themselves:
Percent of Seek sales, by insurance plan, in the most recent AEP:
1.
Cigna: 20%
2.
Humana: 20%
3.
CVS/Aetna: 17%
4.
Clover: 13.5%
5.
UnitedHealth Group: 11.3%
6.
WellCare: 8.5%
7.
Horizon: 5.7%
8.
Other (unrelated to Clover): 4.0%
In terms of scale, applications from Seek totaled less than 1% of the total applications Clover received in the most recent AEP.

1. How much has Clover paid B&H Assurance, the undisclosed outside brokerage firm run by Hiram Bermudez (its Head of Sales) since inception?

Clover has paid approximately $160k directly to B&H since 2017.
Hiram has disclosed the following in connection with his B&H relationship:
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He does not receive any compensation, direct or indirect, from B&H Assurance for any work related to Clover.
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He maintains a 50% ownership interest in B&H Assurance, which he has owned since before he joined Clover.
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Hiram’s only work on behalf of B&H Assurance is monitoring compliance and negotiating contracts, from time to time, with parties that do not include Clover.
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He maintains an ownership interest in B&H Assurance so that, in case he separates from Clover, he has the option to go back to the brokerage agency he co-founded and not have to start over.
As a general matter, Clover engages with brokers in each of its markets in order to distribute its plans. This is standard operating procedure in the Medicare Advantage space. Broker payments are statutorily defined by state insurance regulators, broker scripts are actively monitored by both internal compliance and CMS — including via “secret shopper” and other methods — and we take our obligations to CMS, our members and potential members very seriously. We believe our marketing materials and the brokers that represent us accurately reflect and portray our plans to our members and potential members and do so with transparency and integrity.

1. What portion of Clover’s business has been referred by B&H Assurance since inception? How many members?

Approximately 8,200 of our current members were referred by B&H Assurance to Clover.
While B&H has been a strong producer, we strongly disagree with the statement that B&H alone has “fueled” Clover’s growth. We believe that all Medicare Advantage plans have key producer relationships, and to say those relationships somehow illegitimately fuel growth is a misnomer.
We believe Clover plans are appealing because they are often amongst the lowest cost plans in our established markets, and they offer the same cost-sharing for in-network and out-of-network primary care and specialist visits. As we expand across the country, we intend to establish relationships with additional brokers and key producers.

1. Former employees told us that the relationship between Clover and B&H Assurance was transferred into the name of Hiram Bermudez’s wife “for compliance purposes”. NAIC filings confirm it was transferred into his wife’s (maiden) name weeks after the go-public announcement. What is the explanation for this?

The statement underlying this question is false and misleading. The reason that B&H Assurance’s appointment list does not include Clover is that B&H has what is referred to as a “downline” relationship with Ritter Insurance Marketing, which contracts directly with Clover (note that it appears B&H does contract directly with a number of other plans based on the cited NAIC record page). Rather than a nefarious circumstance, this is also a standard construct in the Medicare Advantage world.
Further, the statements interpreting Yesenia Rivera (Bermudez)’s NAIC profile are incorrect in their conclusions: (1) there was no transfer of any relationship between Clover and B&H Assurance from Hiram to his wife; (2) the NAIC filing simply shows that on August 14, 2020, Mrs. Bermudez was directly appointed by Clover Health to be able to sell Clover plans as an agent.
For context, Hiram underwent a major organ transplant surgery at the end of last summer due to chronic kidney disease. He, thankfully, is doing very well healthwise after the surgery. Hiram informed us that he and his wife made a decision for her to go through broker certification so that, if his condition deteriorated further, she would be able to take over his 50% ownership in B&H.
No one should ever feel compelled to share this type of personal and private health information publicly, but we deeply respect Hiram’s desire to disclose this to make clear he had no malicious intent. Hiram is highly mission-oriented and an amazing teammate at Clover, and pathetic attempts to slander him are shameful.

1. Will Clover produce the agreement showing the transfer of the relationship into Hiram Bermudez’s wife’s name? Who signed off on the agreement and which senior members of management knew about the deal?

See previous response.

1. Is Clover aware that disclosure of significant transactions with key senior employees is something investors like to know about, so they can be made aware of potential material conflicts of interest?

Consistent with applicable laws and regulations, Clover has conflict of interest policies requiring employees to disclose any existing or potential conflicts of interest. Clover follows SEC rules and regulations regarding the public disclosure of these relationships.

1. Was Chamath aware that the DOJ was looking into issues of potential upcoding when he mentioned, unprompted, on CNBC “they don’t motivate doctors to upcode or do all kinds of things in order to get paid”?

We agree (as does Chamath) that upcoding is a significant problem in the Medicare Advantage industry, and Chamath was fully aware that we have built the Clover Assistant to address the problems in the approaches used by other insurers.
To be clear, Chamath’s statement that “we do not motivate doctors to upcode or do all kinds of things to get paid” is accurate:
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We pay Clover Assistant Primary Care physicians a fixed, flat payment per office visit.
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Unlike other plans, we never compensate more for agreeing with the Clover Assistant. We never pay less for disagreeing with the Clover Assistant. This payment is fixed and guaranteed, and physicians use their own judgment on what they believe is clinically correct in relation to their direct understanding of the patient.
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Put another way, a clinician could choose to disagree with every suggestion, which means there are no additional diagnoses and no additional risk adjustment codes, and they still get paid the exact same amount as if they did agree. There is NO financial motivation that we provide to physicians to answer in any particular way.
•
This is why we specifically do not believe in capitation contracts the same way that others do. These contracts often share risk adjustment back to physicians — i.e., an indirect way to reward them for coding more. Clover does not support those types of strategies.
To be clear, the focus of the Clover Assistant is driving clinical value. Because of its important role in early and improved detection of disease burden, accurate risk adjustment is one of the byproducts of clinical engagement with the Clover Assistant. Notably, however, much of the content in the Clover Assistant has absolutely nothing to do with risk adjustment. More than 50% of the clinical data we capture through Clover Assistant visits has no risk score impact whatsoever.
Here are just a few examples of the Clover Assistant driving clinical value:
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Colorectal Cancer Screening
Medication Therapy Management:
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For Chronic Kidney Disease
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For Statins
Addressing risk:
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Fall Risk
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Mortality Risk
Covid — 19 Response
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Mail Order and Home Drug Delivery

1. Clover reported that “onboarded” physicians used Clover Assistant for 92% of member visits in 2019, but never defined “onboarded”. We found that less than half of Clover’s in-network doctors are considered “Clover Preferred”. What is the definition of an “onboarded” physician? What percentage of Clover’s in-network doctors actually use the Clover Assistant?

This is a good question. Similar to enterprise software, there are two phases of bringing on physicians to Clover Assistant:
Contracting: Where we explain the benefits of Clover Assistant to the physicians and they have agreed to use the software.
Onboarding: Where the physicians have received their initial training and have created their accounts, and we have answered their questions. Basically, they’re ready to use the software. We also refer to the physicians as the “Live” physicians.
We use the Onboarded/Live number (as opposed to Contracted) when discussing engagement because that correlates to the physicians that are trained and ready to use the Clover Assistant. We typically have a pipeline of Contracted physicians waiting to be onboarded at any given time, and our goal is to go from Contracted to Live within 60 days.
Speaking to the second question, currently 22% of all in-network Primary Care Physicians are Live. This correlates to 4% of the total in-network physicians (including PCPs, specialists, etc.), but the Clover Assistant is currently built as a tool for PCPs, so we believe 22% is a more useful number.
That said, we don’t view either of those figures to be particularly relevant to the scalability and impact potential of the Clover Assistant. Instead, we focus on membership coverage. More specifically, as of YE 2020, 56% of our membership were attributed to one of those 22% Live PCPs. An additional 11% are attributed to a PCP who is contracted but in the onboarding pipeline (bringing us to 67% total coverage for Clover Assistant as of YE 2020).
This is because as we bring on physicians, we focus on contracting and onboarding those with more Clover members first, so a disproportionate number of our members are attributed to Clover Assistant-Live PCPs. As we continue to deploy the Clover Assistant, we intend to bring on the remainder of these physicians and we expect to see these numbers converge more. Right now we’re very proud of that 67% coverage number of all Clover members as of year-end 2020.

1. If Clover’s software is so “delightful” to use, why does Clover have to pay doctors extra ($200 per visit) just to use it?

We think this is a big part of the innovation model of Clover and why it’s so important that we build this tool internally as a payor.
The Clover Assistant is a SaaS-type enterprise clinical decision tool, but rather than charge physicians to use it (like regular software startups), we instead reimburse PCPs to encourage them to use it and to recognize the incredibly important role PCPs play in assessing and taking care of our members and controlling costs. PCPs receive less than 5% of total medical expenses in the US, and we believe that to solve the ballooning health care expenses in our country, we need to shift more of our focus, resources, and compensation to primary care doctors.
To be clear, the “extra $200 per visit” is not incremental or “just to use” the Clover Assistant, but represents the overall payment that covers both the PCP office visit and the use of the Clover Assistant. This translates to roughly twice the traditional Medicare fees paid to PCPs for an office visit, more in line with fees paid to specialists.
Most critically, this is a flat fee. We don’t pay them more to agree with us, or less when they disagree. A lot of programs effectively do this, and that creates moral hazards like upcoding or trying to skimp on care. We pay the flat fee because we want to reward PCPs for great data-driven primary care without creating those moral hazards and bad incentives.
Speaking to the delight point — we measure this in an objective, standard way in the form of Net Promoter Score surveys. We run these surveys within Clover Assistant for all Clover Assistant users on a quarterly basis to see how we’re doing in terms of user satisfaction and delight. We’ve traditionally received a score between 55–63 which we think is excellent — particularly for healthcare.
Here’s a screenshot of our NPS survey:
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Clover Assistant NPS Survey
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Our most recent NPS results from the end of last year.
As you can see, most of our Clover Assistant survey respondents give us very high ratings. There are a few “middle” scores, and there are, of course, some detractors who give us low scores. When we receive detractor feedback, we strive to send our Product and User Research teams to interview these users to find out how we can do better. We’re not perfect, but our fast iteration rate (releasing a new Clover Assistant version on average every 3–4 weeks) helps us continuously improve our platform.

1. Multiple doctors explained that it was difficult to remove prior diagnoses from the Clover Assistant. Is Clover aware of this? And can Clover guarantee that in future versions of the software doctors will be able to remove prior diagnoses, so as to ensure accuracy and cost efficiency?

For clarity, every diagnosis that appears in the Clover Assistant is for physician consideration, and they can choose to tell us they don’t think that diagnosis is currently relevant. Here’s a screenshot of how it’s shown.
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Every suggestion made is based upon clinical data that we have at Clover and personalized for each specific patient. Then the physician can tell us whether they can confirm the diagnosis. If they cannot confirm, they can easily select that option (shown above), and we ask them to share the reason why so we can update our internal data.
Note that when a physician tells us a diagnosis is not currently relevant, we do not show that diagnosis again that calendar year unless there is a new reason to believe that the diagnosis applies (e.g., new clinical data).
We may also resurface a diagnosis the following calendar year for reconfirmation. There’s a reason for this: many chronic diagnoses may come and go in terms of their diagnosis state. For example, diabetes may resolve (removing the diagnosis) if a patient loses weight, but if the patient puts the weight back on, diabetes will come back. Or, active cancer may go into remission, then unfortunately return. As such, it’s clinically appropriate to track these previous diagnoses.
Bonus Question: Is Clover Assistant actually helpful to physicians in providing better care above and beyond their EHR?”
This wasn’t actually in the list of questions addressed to us but was implicit in the short-selling firm’s commentary, so we wanted to hit this on the head, too.
We are incredibly proud of the ways, in only a few short years, we have been able to build the Clover Assistant platform in order to support PCPs in providing better care for our members. The Clover Assistant is not attempting to be an EHR; rather, we are focused on building a product that is supplemental to the EHR and driven by physician feedback.
We’ve supported the rapid transition to remote visits during the outbreak of COVID-19 this past spring, we’ve supported members getting their medications delivered to them when they couldn’t leave their home, and we’ve gotten clinical information otherwise not available to PCPs into the hands of those most equipped to utilize that information.
We also surface evidence-based protocols specific to a member’s disease profile. To be clear, we do this in order to help our members receive the right medications, access the right testing, and achieve better outcomes. By doing so, we pay more money now in order to decrease costs and patient suffering down the line.
If you take a look at our most recent investor presentation, you can easily see a view of that functionality on page 10. On page 19 of the same deck, you can also see a view of the Clover Assistant’s impact outside of accurate diagnosis capture.
We are just starting this journey, and know that, like with any software, there are plenty of opportunities for fine tuning and further improvement. But we are motivated by those challenges and solicit that feedback from the healthcare community and our in-network physicians regularly.
— The Clover Product, Clinical, and Engineering Leads

1. A former employee explained that Clover handed out gift cards to doctors and nurses to generate patient leads, a practice prohibited by CMS. These gift cards were justified as being for everything but recruitment, including “morale,” a “thank you,” “motivation,” and “friendship.” How do you respond?

Clover does not provide gift cards to doctors and nurses to generate patient leads.
Clover prides itself on a strong culture of compliance. If we were to discover any violation of CMS regulations or any applicable law or regulation, our compliance department would take decisive and strong corrective action.

1. Does CEO Vivek Garipalli deny that his CarePoint hospitals at one point charged the highest emergency room prices in the entire nation?

It is important to note that CarePoint is a separate and independent business entity, with different management teams, investor structures, and boards of directors. We do not comment on its operations. We also do not respond to ad hominem attacks against our officers.

1. Why did CEO Vivek Garipalli make a secret $1 million donation to the Mayor of Jersey City?

The aforementioned contribution to a PAC has been reported in the media. Like any private citizen, Vivek makes contributions. As our first market, New Jersey is near and dear to us, and Vivek believes the Mayor of Jersey City has done a commendable job of attracting businesses and developing affordable housing policies.
Vivek also donates to other causes in New Jersey and elsewhere — such as a $1MM contribution to the Goodwill Rescue Mission homeless shelter in Newark, NJ.

1. Why has Clover had such extensive executive turnover, with 3 CFOs, 3 COOs, and 2 General Counsels in the last 4 years?

Clover has evolved significantly over the past four years, and we needed different people with different skill sets at each stage of our journey. We are grateful for the contributions of every one of our employees, past and present, and are proud of our current management team. As is evident from our team’s background, they bring extensive experience across their areas of expertise. We believe we should always be looking to bring on more and more talented and mission-oriented individuals as we evolve and grow.
In particular, we are grateful to our co-founder Kris Gale for his work as the original Clover CTO to build the fundamentals of the Clover data platform. When Andrew Toy, our current President and CTO, came on board, one of the first things he did was focus on the creation of a way to turn data into improved care by physicians. The result of that was the Clover Assistant.

This is an excerpt from a paper I wrote for one of my classes.
We will outline the classical theory of rent and then apply it to the urban real estate market. In so doing, we will discover that there exists an objective basis for rents to rise in the ‘long run’. The classical theory of rent is based upon a ‘pure’ system of capitalist agriculture. Such a system is composed of three persons, a landlord, a tenant farmer, and a laborer. These three persons claim incomes of rent, profits, and wages respectively; the purpose of the theory is to explain the existence of the first form of income. Given that capitalism only emerged concurrently with the abolition of serfdom and the disempowering of the nobility, this is by no means obvious. For reasons which shall be explained, David Ricardo was able to make advances in the theory by explicitly denying the possibility of its existence. It fell to Marx to refute this — i.e., to assert the possibility for the existence of an absolute rent — but this necessitates a basic understanding of value theory, to which we must turn. Having explained this, we will be able to explain the existence of absolute rent. We will invert the usual order of things by explaining differential rent afterwards. Then we will be able to apply this knowledge to cities.
For Adam Smith, the price of any reproducible commodity may be subject to day to day fluctuations in the quantity supplied and the level of effectual demand, but there was a ‘central price’ (or a value) around which these fluctuations occurred. If there was a funeral and the demand for black clothing suddenly shot up, this would explain why the price of black clothing would increase, but it would not explain why black clothing had a price in the first place, or what that price would be abstracted from this ‘shock’ such that supply and demand were in equilibrium. This central, or equilibrium, price he called the ‘natural price’, which is more or less the cost to society of producing the commodity; “what it really costs the person who brings it to market”, he says. This could be determined by ‘adding up’ (in the expression of Piero Sraffa) “what is sufficient to pay the rent of the land, the wages of the labour, and the profits of the stock employed in raising, preparing, and bringing it to the market, according to the natural rates”. Within an industry, the competition between firms for market share is such that prices tend to converge around the natural price for the simple reason that anyone selling above the natural price will be punished by their competitors underselling them, and any extraordinary profits made by selling commodities produced at a cost beneath the natural rate will encourage emulation and attract new competitors such as to lower the natural rate. A firm which is relatively less efficient will be forced to sell at the price set by their more efficient competitors and accept a lower rate of profit. The astutely logical David Ricardo, however, notes a consequent error in Smith’s theory of relative price determination. Any theory of the distribution of incomes must logically follow a theory of the production of those incomes (i.e., value), and yet Smith’s theory seems to suggest that a change in the profit-wage ratio (a phenomenon of distribution) would change the natural price, i.e., the value of the commodity (a phenomenon of production). But the error is deeper: Smith is explaining market price by way of price. Ricardo therefore retheorizes the ‘natural price’ as the labor (value) embodied in the commodity; the cost (price) of producing a commodity follows from this. If, say, the labor-time expended in producing x quantity of corn is equivalent to the time expended in producing y quantity of gold bullion, and the time required to produce x quantity of corn is subsequently halved, then it follows that the golden price of x quantity of corn will now be y/2.
Returning to Smith: any increase in the market price above the natural price signals an underproduction of the commodity relative to the effectual demand, and any diminution in the market price such that it falls beneath the natural price signals an overproduction relative to effectual demand; the former indicates the possibility for a surplus profit, as producers are able to enjoy the benefits of a price being ‘bid’ up, and the latter indicates that the producers must part with a portion of their profit to sell their products. In a competitive market, these are transient phenomena because the behavior of producers changes in response to these ‘signals’. Ricardo, extending the reasoning of Smith (who had himself extended that of Cantillon), theorizes the manner in which this happens: investment flows into wherever the profits are highest, and flows out of wherever profits are lowest. The credit system in particular facilitate this by allocating money towards the profitable industries, either by allowing for the entrance of newcomers, or (in the case of capital-intensive industry), for firms to expand their level of production if they had excess capacity that can now be absorbed at the new price; the effect is an increase in the supply in the next time period. They likewise withdraw their funding from the unprofitable industries, and firms in those industries either reduce their level of production (in the case of capital-intensive industry), cease expanding by reducing investment or otherwise exit the market, or, if they are below the average productivity, go bankrupt; the effect is the same, a diminution of supply in the next time period. The quantities of a commodity supplied thereby adjusts itself to demand, and thus from the chaos of individual firms and individual investors making individual decisions, changes in prices serve as signals that allow for society’s needs to be met.
So there are two important consequences of competition: an average price at different profit rates within an industry, and an average profit rate at different prices between industries. But regarding the latter, Ricardo becomes enmeshed in a contradiction in trying to account for this most important result. The profit rates of industries differing in their capital-intensity should be different, such that those which use more labor relative to capital should have higher rates of profit — this follows from the labor theory of value. Yet they are equalized, such that capital earns profits not according to how labor-intensive the industry it was invested into is, but according to its size. It took Marx to resolve this problem. Marx’s solution is incredibly simple, even if rarely understood: the transformation of values into prices of production, which he defines as the cost price plus the average rate of profit. The market prices orbit around these transformed production prices, i.e., not the labor value. The consequence is that commodities of a “high organic composition” (relatively greater ‘constant capital’, i.e., capital-intensive) systematically sell at prices above their value, whereas commodities of a “low organic composition” (relatively greater ‘variable capital’, i.e., labor-intensive) sell beneath their value. Let us give an example. If we were to imagine, for instance, two capitals, one composed of 90c + 10v, and the other composed of 10c + 90v, the value compositions are 110 and 190 respectively, assuming a rate of surplus-value of 100%. But their transformed production prices with equalized profit rates are 150 (i.e., 100 + 50s). Marx ironically calls this “capitalist communism”. The result are the ‘three aggregate equalities’: total values equal total prices, total surplus-value equals total profits, and the aggregate rate of surplus-value equals the aggregate money rate of profit. Should one ask, why do commodities sell at prices of production? The answer would be that the mechanism through which this happens is precisely the one of competition we outlined above, where competition leads to capital flowing from industry to industry in search of higher profits with the outcome that the profit rate equalizes.
And naturally, it is subject to the same turbulent character such that profits are only ever tendentially equalized in the same way that value is only ever accidentally equivalent to price. Tsoulfidis ingeniously notes that the equalization takes longer for capital-intensive industries owing to their higher investment requirements (such that, contrary to the expectations of monopoly theories, their prolonged periods of surplus profits are balanced by prolonged periods of depressed profits characterized by excess capacity).
In the same way that the empirically-observable profit rate equalization called into question the ‘embodied’ labor theory of value, the fact that the worst cultivated land is able to earn a rent cried out for explanation; corn sells at a price corresponding to its cost of production plus the average rate of profit plus a rent regardless of the fertility of the land. The only obstacle, it seems, to cultivation would be if the land was so unfertile as to not even be capable of yielding the average rate of profit, in which case the land would cease to be tilled as higher profits could be found elsewhere at the same cost. The fact that rent is a component of its price (as Smith would have argued) meant that corn sells not around its price of production, but around its value. That is to say that, unlike other industries with a low organic composition of capital, it escapes being forced to sell ‘its’ commodities beneath their value. Ricardo was led to deny the existence of rent on the marginal land, seeing in it an impossible violation of the law of value. Marx thus argues that the possibility for the existence of absolute rent is to be found in a violation of the above-described process of production price formation. How? Given that land is not a reproducible commodity — one cannot open up a factory which produces more land, any more than one can open up a factory which produces aged bottles of wine or genuine Picassos — and is consequently scarce, it is monopolizable. A bank can invest however much money it so pleases into seeds, fertilizers, corn planters, tractors, and paying out wages for field hands, but it first must consult the landlords of the world, who collectively hold the land of the world as their monopoly. This payment for the utilization of a scarce resource is absolute ground rent, and landlords demand it for all land. Landed property therefore establishes an insurmountable barrier to entry, such that no competition could ever punish the landlords for demanding the payment of a rent because it is logically impossible to cultivate corn without paying rent so long as they hold land as their private property. When the landlord and the capitalist tenant farmer merge into one person, i.e., when the tenant farmer owns the land, their profits and rents simply merge together into a single stream of income.
The theory of absolute rent, therefore, has within it the kernel of a theory of a more general monopoly rent. Such a theory features prominently in the post-Keynesian tradition (e.g. in the price theory of Michał Kalecki), but the difference between the two, however, is that Marx did not anticipate that other forms of monopoly rents would ever be of long standing. A firm with reduced costs consequent an innovation in the mechanization of production, for instance, would thereby put pressure on rival firms to innovate by threatening their market share. The absolute rent charged by a landlord, by contrast, is a permanent feature of the economic life of capitalism because capitalism necessitates the existence of landed property; so even if the organic composition of corn production is raised, this monopoly rent would remain. The limit to a monopoly price and rent, Marx notes, is set by the level of effectual demand and the respective power of consumption; demand for housing is relatively inelastic given it is a necessity and is, in the language of New Keynesianism, “sticky-down”, which turns into a consistent stream of surplus profits for landlords. One of the corollaries of such a permanent barrier to entry, Marx noted, was that agriculture would long remain largely labor-intensive. The consequence would be that productivity in agriculture would tend to lag behind productivity in manufacturing, which (in addition to the fact that there are natural limits to increasing the productivity of the soil without causing anthropogenic erosion and degradation) could account for why diminishing returns to agriculture appeared to be such an obvious fact to the prior economists. On this note, we may turn to the theory of differential rent.
Given that the cost of producing corn is set at the margin of cultivation, as opposed to by the average ‘firm’, some soil is capable of producing a given quantity of corn at a lower cost. Indeed, one may hypothetically establish a table through which soil is ranked according to its natural fertility. The difference between the non-marginal and the marginal land constitutes a differential rent. It does not matter if the majority of land under cultivation is superior to that of the marginal land (which is indeed the case), because the cost is nonetheless set at the margin. Some farm land, meanwhile, may be closer to the market at which corn is sold than other farm land, and given that transportation costs are, again, set at the margin, the relatively closer land earns another form of differential rent, which we might call locational advantage rent. This theory was formulated already by William Petty, prior to von Thünen. Both of these Marx calls ‘Differential Rent I’ because they are consequent to naturally-established reduced costs. Marx calls differences in cost arising from unequal ‘doses’ of capital allowing some farmland to produce at lower costs ‘Differential Rent II’.
Prior economists assumed that the rate of growth of the world’s population tendentially exceeded the rate of growth in agricultural productivity, i.e., the Malthusian population principle, such that as the demand for corn increased with population growth, more land would have to be thrown into cultivation to meet their needs, but it would tend to be less and less fertile. Thus, the price of corn tendentially increased with population growth because the demand would grow faster than the supply, because, i.e., corn production is characterized by diminishing returns. The consequence is that the radius between the most and least productive land grows, and with it the differential rent appropriated by the landlord on non-marginal land. This tendency could be checked by improvements in the productivity of agriculture, in reducing the costs of transportation, and in allowing the free importation of corn, but this would only be forestalling the inevitable, and would otherwise, Malthus (erroneously) believed, simply encourage further population growth*. Eventually, given that the subsistence cost of living must tend upwards as the price of corn increased, capitalists would be forced to pay relatively higher wages, lest the working class starve to death, decreasing the profit share. Combined with the general increase in rent, Ricardo reasoned, profits would be ‘squeezed’ at two ends and society would arrive at the “stationary state” where further growth was impossible. It is my contention that the mechanism described by Malthus and Ricardo was wrong, together with Ricardo’s explanation of a falling profit rate, but that the phenomenon of increasing rents has been a real one.
[*This is Cantillon’s ‘wage-fertility dynamic’: a reduction in the cost of corn, in this case consequent an increase in agricultural productivity, would raise the real wage of the laborer, and encourage them to have more kids. The increase in population would then undo their wage increase as the supply on the labor market increased and the price of corn was bid up.]
To this we turn, but first, given that we mentioned earlier that value theory explains the prices of reproducible commodities, we must first ask how the price of land is determined. Supply and demand do indeed play their role, but land still has a central price even if it does not correspond to a price of production and hence labor value. It is in fact set in the same way that the price of a security is set according to Marx: capitalization. In this case, the landlord capitalizes the ground rent. The land price is (Political Economy) “equal to the sum of money which, if it were lodged with the bank, would produce in the form of interest an income of the same amount as the rent obtainable from the land in question.” To give an example, at an interest rate of 3%, a rent of $20,000 per annum may be capitalized as $666,666 dollars. The rent itself is determined by the marginal, economical usage of the land. This is set by potential profit that the land could be used to obtain, not an actual one, and the gap between the two is called the rent gap; thus the rent of land in the countryside is determined by the cost of corn, and Smith further notes that if one lives on a lake, one must pay for the fish they could catch, if one lives in wine country, they must pay for the vineyard they could maintain, etc. The city does not offer anything so convenient as the price of corn to use for calculating rent, but it remains as the potentially profitable land usage (no doubt determined through ‘higgling and haggling’). Over and above this, landlords charge their tenants lease money, which is a form of an interest payment on improvements that are made to the land. The tenant, i.e., pays rent on the land, and lease money (interest) on the building in which they live and its various accoutrements. The two streams of payment are unified into a single “rent” payment, though they are analytically distinct in the same way that the rent of the landlord is separate from the profit of the tenant farmer (even if they are one person). When an apartment complex is bought and sold, the price of the building is added to the price of the land.
In examining the urban real estate market, we have to begin with an understanding of the production of space in capitalism, characterized by uneven and combined development, and with it both competition and division of labor along geographical lines. We may theorize the city as developing along the lines of a ‘center’ and a ‘periphery’ in the same way in which cities themselves are ‘centers’ vis-à-vis the countryside, that the Northern coastal region of the United States is the ‘center’ vis-à-vis the South, and the imperialist First World is the ‘center’ vis-à-vis the Third World.
As far as our analysis is concerned, we need only concern ourselves with the tendency towards locational clustering because it can shed light upon differential rent. The circuit of capital begins with a mass of money, which is used to purchase a particular set of commodities, including human labor-power, which are brought together in a particular space, at which a particular technique of production produces a new set of commodities possessing a higher magnitude of value, which are brought to a market to be sold for a quantity of money greater than the initial sum. This process necessarily involves human beings and commodities traveling through time and space, and the greater the time and the distance, the slower the turnover of capital and the lower the mass of profits which can be accumulated during a given period. To reduce these costs, firms tend to concentrate in certain locations. Massive quantities of surplus capital, searching for a profitable outlet, may be mopped up by a ‘spatial fix’ in the extraordinarily slow construction of an increasingly larger physical landscape. Capital is able to enjoy a common infrastructure in a double sense: one in the built environment, and one with regard to people; people tend to cluster around the firms, and the ‘center’ is able to enjoy a steady stream of migrants from the periphery. The latter infrastructure is composed of the institutions and other facilities necessary for the creation of a skilled, educated, and healthy labor force, and a cultured consumer aristocracy. This agglomeration of capital, especially capital of a high organic composition, and skilled labor creates ‘production hubs’ enjoying privileged positions within a global division of labor. The costs of training this work force are not borne by the firms, but by a well funded school system and universities — sometimes in entirely different places (e.g., as when educated immigrants move to an American city or suburban high school students attempt to leave their ‘small town’). The markets of the centers are larger, if not in an extensive, then in an intensive sense; the lucrative profits derived from the urban market are then reinvested in the city, and the market correspondingly expands with it, in a vicious loop. The bourgeoisie of New York and San Francisco swell to an unimaginable mass, creating a novel mode of life entirely in their image. It is a dizzying mode of life, in which time annihilates space — the only constant being that of ephemerality. Such a population constitutes a tax base which is capable of reinforcing its own superiority with regard to their infrastructure. This latter point is able to be extrapolated more broadly, as any minute locational advantage is able to multiply itself into geometrically larger and larger advantages following the logic of the accumulation of capital, and a “stream of tribute” perpetually flows into the global city from the global countryside.
In economics, there is the concept of government deficit-running “crowding out private investors” by decreasing the available quantity of loan money and otherwise pushing interest rates up. Analogously, the center of the city is rather crowded, with the same effect. The quantity of land available for development is scarce and is already home to people and buildings. Yet every single year the mass of capital wanting to ‘tap into’ the market increases, and millions upon millions of workers migrate to cities across the world in search of employment at the firms offering the highest wages. Cities serve as the drain for the uprooted surplus populations of the countryside created by the primary (or ‘primitive’) accumulation of capital. That is to say, the demand for land in cities increases while the supply remains the same. In fact, as Ricardo might have anticipated, this is a simple consequence of human population growth, abstracting from the fact of rural-urban migration. These people naturally cannot all be absorbed in the given quantity of land, and on the other hand the entirety of this mass of capital cannot be fully absorbed — especially given the a) already relatively high rate of ground rent due to the commercial development of the center, and b) the need for amortization to be completed, which in the city center takes longer because construction costs are higher* — and thus the immediate consequence is the external expansion of the city, in which roads are paved and new buildings are constructed, and the outskirts of the city encroach further upon the countryside. Capital may satisfy itself by building new housing, or in expanding commercial outlets consequent to the newly arrived population. Typically this is carried out in an unplanned manner as ‘urban sprawl’, which was historically made possible by the invention of mass transit that had allowed workers to live at a greater distance from the firms which employed them; globally this process is typified as slum formation.
[* Construction costs are higher in cities because the only way to get around the scarcity of land in a given location is to build up, which is why skyscrapers have emerged and grown taller over the course of capitalism's development.]
We can represent this as akin to an increase in the corn land under cultivation, and thus an expansion of the city suggests that the distance of the radius separating the best and the marginal (metaphorical) corn land under cultivation increases. The locational advantage of any plot of land within a city is subject to diminishing returns the further from the center one travels in several respects. Spatially, it is distant from the lead firms, hospitals and universities; consequent the lower level of investment, whether private or public, it will not enjoy the infrastructural quality characteristic of the center; and the market afforded by its population is typically lesser. This translates into increased differential rent on the land and higher rates of lease money for housing in the city center. The latter despite the fact that the landlord was not the one to undertake the improvements made possible by public investment, such that a tenant must pay the landlord for the privilege of living near a subway, whose construction the landlord had nothing to do with.
The potentially profitable usage of land increases the closer one is to the center for reasons that should be clear by now. Such land, therefore, not only may serve to be employed for the purpose of housing people, but for commercial enterprises. The latter of which have the resources rendering them capable of bidding up the price of land to levels presumably unable to be matched by any small group of people or small businesses. This creates additional upwards pressure on rent given what we had said of monopoly prices. Harvey also notes the fact that if the ground rent able to be derived from housing on the marginal urban land is not deemed worthwhile by landlords, they will let any housing unit fall into decay and abandonment so long as it has been amortized. Indeed, quite often lots towards the periphery of the city are simply held by investors as a form of speculation until they can be sold at a great profit. In understanding this, one must keep in mind that the speculator forgoes a possible income stream during a given period of time in the hope of earning surplus profits in the future; we will briefly touch upon psychological aspects of land speculation later. These facts ensure that the scarcity of land in cities translates into a scarcity of housing, even such as when there is a stock of physically existent vacant buildings. This ‘artificial scarcity’ of housing displays a cyclical character, where it typically is preceded by and in turn precedes housing construction booms; it is the corrective of an ‘undershooting’ necessarily following any period of ‘overshooting’ which has the effect of maintaining the relative power of urban landlords as a class.
This can all be discerned by simply comparing the prices of lots of land at the center of the city, at the periphery of the city, and then in the countryside. The closer one travels to the center, the more expensive land becomes.
There is an exception to the conical pattern of real estate prices that we have hitherto assumed, however, such that a ‘valley pattern’ is observable. Cities, or rather their center, may also expand ‘internally’ through the process of gentrification. This process follows one of ‘filtering’, which we shall now explain. Neil Smith divides this into four phases. During the first phase, a neighborhood is constructed. The value of the properties during this phase tendentially fall and the ground rent tendentially increases. This decline in value comes from improvements in the productivity of the construction industry and wear and tear. Wear and tear can be divided between the minor changes necessary for the house to not decrease in value, whereas structural repairs are necessary lest the house cease to have any value whatsoever. Given that these houses are usually sold to individual homeowners, wear and tear is no serious problem. The value of the property is typically, therefore, maintained, if not increased through improvement. But this cannot remain true of the entirety of the neighborhood’s buildings over the course of decades. The local market begins to decline, accelerated by the richer inhabitants moving out. Slowly, more and more of the neighborhood is converted towards rental tenancy. This marks the second phase, where, given the landlords are only interested in maintaining the houses insofar as they can receive ground rent, there is an acceleration in the wear and tear. Indeed, the landlords are aware of the declining prospects in the market, which gives them no great incentive to try to maintain property values at their prior level. Banks are less likely to offer mortgage loans for the neighborhood and sales slow down. Investment, therefore, slows down in the neighborhood. If a landlord does indeed maintain the property, he would have to charge a higher rent for it, but such tenants are not forthcoming. The third stage, historically, consists of blockbusting. The more well to do tenants, typically white, are convinced to sell their properties, and to leave before racial minorities arrive. Their houses are purchased at relatively low prices and subsequently resold to said racial minorities at higher interest rates or otherwise converted towards tenancy. When it becomes impossible to squeeze ground rent out any longer without necessitating an investment, the fourth stage arrives, where the under-maintence which had turned into disinvestment ends ultimately in the abandonment of the property. Insurance fraud may follow if the landlord can get away with it.
The outcome of this process is the aforementioned rent gap, which is able to be converted into a surplus profit in a process called gentrification. At the end of the process of filtering, the real estate values are extraordinarily low, there is relatively little demand, so the real estate is on the market for fire-sale prices and hence there is a gulf between the ground rent actually capitalized through the current land usage and what it could be. It is precisely this fact that then makes the neighborhood desirable for developers. They are able to purchase the property at a price low enough to warrant taking out mortgage and construction loans for new buildings such that they are able to earn more than the average rate of profit after the consequent interest payments; indeed, banks reverse their policy of redlining when this fact comes to their attention. This profit is either made upon the resale of the property, or incrementally through renting it out. Typically developers buy up large chunks of real estate for renovation, which speeds up the process. Occupier developers play their role too, and their presence is indicative of the entry of bourgeois settlers. During this process, the prior landlords by no means fail to underestimate their newfound power. They are able to raise their rent, and even gain a material incentive in driving out their old tenants because they are capable of selling what used to be regarded as worthless property to developers at a profit quite handsome for themselves. If they do not raise their rents, they would be a “loser by the trade.” The ‘local market’, having been subject to a sudden inflow of money, sees a localized inflation, which creates further pressure for the native inhabitants to leave.
The fact that interest rates have been so low, save for the period of the Stagflation and the Volcker shock, has facilitated this process in another way in addition to the stimulus given to taking out loans and mortgages. We have noted earlier that land prices are formed through a capitalization of ground rent. We offered an example with a 3% rate of interest. If we were to reduce the rate of interest from 3 to 1%, the land yielding an annual ground rent of $20,000, which was $666,666, would now be worth $2,000,000. Capitalism is marked by a tendentially falling rate of profit as capitalists are spurred on by the pressure of competition to economize on labor costs, thus raising the organic composition of capital. Given that only the variable component of capital is productive of surplus-value, the production of surplus-value correspondingly diminishes (relative to the outlay) as the weight of constant capital increases relative to that of variable capital. Numerous empirical studies have since confirmed the validity of Marx’s prediction of a falling rate of profit, and it is worth noting that it was universally accepted amongst economists of both the classical and neoclassical tradition until the Cold War rendered such a theory politically suspect. One of the seemingly peculiar features of Marx’s economics is his denial that there is such a thing as a ‘natural’ rate of interest analogous to ‘natural prices’; this is peculiar because, to neoclassicals (following Knut Wicksell), the natural rate of interest is the rate at which savings and investment are brought into equilibrium. But there is an analogous, ‘Tookean’, idea in Marx: interest is nothing more than a fraction of the rate profit, and changes in the relative proportions of the interest rate and the profit rate of enterprise govern the rate of investment. It follows that the only limit to the interest rate is the production of surplus-value. Therefore, if the rate of profit tends to fall in the long run, then the interest rate must also fall with it. That has indeed been the case except, as we noted, during the 1970s and 80s consequent the inflation of the post-war boom. Thus Teinosuke Otani notes that:
“If the rate of interest falls, the fictitious prices of the various sources of income, which are established through capitalisation according to the rate of interest, will in turn rise. The same is true of land price, which is a fictitious price capitalised on the basis of the rate of interest. This means that the development of capitalism necessarily encompasses a trend towards a fall in the rate of interest and a tendency for land price to rise [my emphasis]. Moreover, with the development of capitalist production, the actual fee paid by the leaser to the landowner comes to contain various elements in addition to the ground-rent in the original sense that we just examined (although we cannot address the topic of those elements here), so that land price is a fictitious price that is the capitalisation of the total sum of the fees from all the elements involved and thus has a tendency to rise further. What all this means is that the portion of social wealth appropriated by landowners—those individuals with no relation whatsoever to production, whose possession of one part of the surface of the earth is socially approved—expands with the development of capitalist production, so that the “value” of the partitions of the surface of land that they own also rises.”
The implications here cannot be understated. Coupled with stagnant wages, the housing crisis will only grow worse.
We will conclude this section with some brief comments on the course of the capitalist business cycle. Land, like securities, as we have noted has a fictitious price, and thus its price is subject to the wild fluctuations of man’s animal spirits. During the upward phase of the business cycle, money is cheap, profits are great, investment is increasing, and not only is consumption increasing consequent the increased investment, but it does so at a relatively high rate as the savings induced by the prior recession dissipate, and prices rise. The multiplier effect appears to be a most beautiful thing on the way up. Not only does the demand for land increase, but people anticipate future increases in the demand for land — there is therefore increasing amounts of speculation in land, and the illusion takes hold that real estate prices can only go up. This is a most distressful time for tenants. When a recession occurs, credit freezes up, interest rates climb, and the prices of houses deflate; but it seems that they do not deflate as much as they had inflated in the prior boom. Indeed, it seems that the policy of the monetary authorities have changed from “anti-cyclical” to being “pro-cyclical”, such as to continue inflating asset bubbles. How this can end is truly anyone’s guess [!], but an important consequence I would like to deduce is that tenants will perhaps find it easier to bring political pressure upon landlords in the coming decade, should they become organized.

For the past two decades, Australia’s housing market has mostly been a one-way bet on rising prices.
Now, with the effects of coronavirus shutdowns reverberating through the economy and the nation set for its worst recession in 90 years, the concept that owning property is a license to print money is under threat.
While the Covid-19 pandemic has upended property markets from Canada to Singapore, Australia is more vulnerable than most to a housing slump. It has one of the world’s highest levels of household debt, the nation’s banks are heavily exposed to mortgage lending, and many mom and pop investors rely on income from rental properties, which are also under pressure.
“Australia’s had an obsession with residential property for a long time,” said Richard Holden, professor of economics at the University of New South Wales. “A lot of people have a lot of their wealth tied up in residential property. I’m pretty worried.”
Overexposed Australian banks' mortgage books are equivalent to more than 80% of GDP
Sources: APRA, ABS, Bloomberg
Note: Includes Westpac, National Australia, Commonwealth and ANZ Bank
Commonwealth Bank of Australia, the nation’s largest home lender, estimates that under a short, sharp economic downturn this year followed by a quick recovery next year, house prices will fall 11% by March 2023. In the worst-case scenario of a prolonged recession, prices could plunge 32%.
That’s a marked reversal from before coronavirus hit, when house prices were back near boom-time peaks, having rebounded rapidly since a 21-month slump bottomed out in June. Longer term, home values have tripled since the turn of the century, propelling Sydney and Melbourne into the ranks of the world’s least-affordable places to buy.
Rescue Package To help avoid a calamitous decline, banks have rolled out a huge assistance package, with almost 430,000 borrowers given a six-month payment holiday. All up, banks have deferred A$211 billion ($138 billion) of loans, including to businesses. Meantime, more than 6 million workers are receiving government wage subsidies of A$1,500 every two weeks.
That has helped avoid a flood of forced sales that could drag down the entire market. Property listings in Sydney are down 27% from a year ago, according to data provider CoreLogic Inc.
Along with would-be buyers vying for a smaller number of properties, there’s other factors helping prop up the market. Interest rates are at a record low, and most of the hundreds of thousands of jobs lost are concentrated among younger people in low-income work like hospitality and retail, who tend not to be homeowners.
And after a brief pause during the height of social-distancing restrictions, open-house inspections and public auctions have restarted.
“The banks, and by extension the housing market, are fairly well firewalled at present, and it would take a lot to outweigh this,” said Tamar Hamlyn, co-founder of fixed-income investor Ardea Investment Management. “The most likely scenario is slowly lower prices in a low-turnover market, as in the absence of any forced selling it’s quite likely that the various buffers in place can prevent a shakeout for the time being.”
Aftershock Still, even as Australia starts to emerge from the shutdowns, the after-effects will linger for years. The central bank expects unemployment will peak at 10% this quarter, be at 9% at the end of this year, and hold above 6.5% for the next two years.
And while banks are going all out to support existing borrowers, they are tightening the screws on new customers, placing less weight on variable income like bonuses and overtime when assessing borrowing capacity, and being ultra-cautious about people who work in hard-hit industries.
“Banks aren’t going to lend based on a ‘future return to normality,’ they will lend on the now,” said Redom Syed, the founder of mortgage broker Confidence Finance. “A major shock to lending markets is coming.”
Then there’s the sudden drying up of immigration, which has been one of the key drivers of house prices, particularly in Sydney and Melbourne where new arrivals tend to settle.
On a net basis, more than 470,000 immigrants moved to Australia over the past two years. Now, with borders shut and international travel unlikely to resume anytime soon, the government is forecasting immigration will slump 85% in the year starting July 1.
Immigration has been a key driver of Australian house-price growth “Migration is going to the biggest feature of what drives housing market dynamics,” said Paul Bloxham, chief economist for Australia at HSBC Holdings Plc, and a former central bank official. “We see weaker demand for owner-occupied property, weaker demand for rental property and weaker demand for property for students.”
Read more: Australia’s Closed Borders Harken Back to Pre-Globalized Economy
Landlords are also facing an uncertain future. Unlike in the U.S. and Europe where big firms such as Blackstone Group Inc. and Vonovia SE own thousands of apartments, Australia’s rental market is largely a cottage industry of mom and pop landlords. For many, the monthly rent doesn’t cover their loan payments -- and instead they count on tax breaks and price growth to turn a profit.
That leaves them in a precarious position if tenants can’t pay rent. While evictions have been suspended for six months, there is no financial support for renters, and instead the government has urged landlords and tenants to negotiate rent breaks themselves.
Meantime, tens of thousands of international students are stranded overseas, leaving their rental apartments empty, while the shuttering of tourism has seen AirBnB units flood back to the market.
Sydney Rents “We are well aware of a surge in short-term accommodation now being advertised for long-term leasing,” said Louis Christopher, managing director at consultancy SQM Research.
Rents in Sydney have fallen about 6% from a year ago, and will decline further if high vacancy rates are sustained, he said. “That’s good news for tenants but a disaster for landlords.”
Then there’s the question of what happens later this year when the government and banks start to unwind the extraordinary level of support propping up the economy. With a household debt-to-income ratio of 187%, Australia is one of the most indebted countries in the developed world.
“That’s the cliff edge,” said Sarah Hunter, chief Australia economist at BIS Oxford Economics. “If the economic recovery isn’t established by then, there is the risk of a big stumble.”
https://www.bloomberg.com/news/articles/2020-05-21/australian-housing-isn-t-the-one-way-road-to-riches-it-once-was?sref=s0L1qQ1H

Hi everyone. This post might seem somewhat unusual to many of you, however, I’ve already seen dozens of similar posts here, so I guess it will be okay if there’s one more post of that kind. Personally I don’t really consider this thing motivational/inspirational or anything, but at the same time I believe that everything written below might actually help some people or at least cheer them up regardless of circumstances. I would want everybody to read this until the end. I know it might be time consuming, but still...
I worked in the tourism industry for nearly 4 years and managed to build a pretty successful career there within such a short time, all on my own, without anybody’s help (I’m not trying to show off or whatsoever). At the very beginning I felt like that was exactly what I wanted to do, I actually thought it was 100% my thing. I wish you knew how wrong I was, but at the end of the day, can a 17-year-old with little life experience be smart? I don’t think so. I was absobloodylutely fascinated by each and every single aspect of the job I had and neglected all the limitations. I started as a Tour Guide and finished as a Senior Operations Manager. I couldn't even imagine myself working at a travel agency as the start was pretty much unexpected and impromptu.
As far as you all know, work in this particular industry implies loads of constant communication with people from all over the world (including those you don't know). At 17 I was an extravert, so I have to admit that I was super chuffed. Later I realised how silly and wrong I was. Hundreds of mental clients whose requirements and desires were just otherworldly, aggressive colleagues (I can understand them though), toxic environment overall... all of this started to bring me down and literally opened my eyes. Every summer I had to work super hard 24/7. I'm a multitasker used to working in a busy environment, but I also need spare time for personal stuff. Work-life balance was nonexistent.
Obviously some of you who work(ed) in the tourism industry might have had a completely different experience which is understandable. I believe that tourism could be a good career start, but I don't think that it's exactly what one should dedicate their whole life to. Again, it's just my personal opinion, so if you have a different point of view, it's absolutely okay. If a person is social and enjoys constant communication as well as loves meeting new people every now and then, tourism might actually be very good for them.
However, I feel like those 4 years have almost completely changed my personality. Once an open, friendly and social teen, and now a distant and somewhat aloof guy. At the same time I have to admit that it was a great lesson for me. The whole thing helped me sort out my priorities and determine what exactly I wanted to do, which field I desired to grow in. I've gained and developed loads of useful skills that do help in real life. Negotiation, active listening, verbal and written communication... the list could go on and on. I also managed to significantly improve my German and Spanish. I mastered Excel, Amadeus and many other software programmes, high proficiency in which is needed almost everywhere now.
It was a great start, but I just feel like I could actually make a career change much earlier, perhaps at 19. Last December (when I was 20) I had two burnouts in a row because I couldn't cope with all that stuff at work anymore. It was so damn overwhelming, holidays didn't help at all. Anxiety and depression started to creep up on me. I ended up being rushed into hospital and getting medical treatment there. That was the moment I decided to quit. Forever.
After Christmas holidays I gave my boss a resignation letter. He was really upset, but understood me and wished me good luck. I took a notice period and then left. I'm currently doing my Master's (one more year left), so I focused on my studies and chose not to look for a job. Moreover, I sort of knew and could predict that covid-19 was going to spread across the globe and damage every country's economy. I also knew that tourism would collapse and consequently fall apart. It's happened. All of my former peers are unemployed at the moment.
I promised myself and everybody else that I would never get back to tourism no matter what. I needed a career change. I'm a naturally creative person with decent copywriting, editing and proofreading skills, so I though that it would help. I've been doing a lot of freelance work in the past 5 years, and this definitely has improved my creative skills. In addition, the second travel agency I worked for often asked me to collaborate with their marketing department in case they wanted to launch another campaign. I really enjoyed it, and both my boss and the head of marketing department started to assign loads of various tasks to me including making videos, writing advertising articles, launching marketing campains etc. I'm good at video content creation/development probably because it's been one of my primary interests for years now. I started to work with Sony Vegas and Adobe Premiere Pro when I was a teen. I loved it, I really did. I've been making so much stuff using these two since then... I had never even though that one day it would become my job.
In March I started to look for a job. I was afraid that I would never find a job in a different industry, at the same time I didn't want to work at a call centre nor be a cleanewaiter etc, although I could. I started to apply to various jobs, I literally lived on LinkedIn, Indeed, Glassdoor and other websites as well as kept monitoring different companies' websites in order to stay updated on new vacancies. Guess what? Either rejected or ignored! No calls/emails, no interviews... absolutely nothing! I felt so devastaded, so I desperately started to apply to all jobs ignoring things like company's name, job description and employee reviews. There was still nothing.
I've been quite active here as well since then. I've been trying to get help/advice here. In June I received 7 calls and 4 emails, proceeded to 3 interviews with 3 different companies. I was ghosted by the first two after the inital interview, the third one first said they liked me and then they rejected me for no reason and didn't really explain anything. I couldn't deal with it any longer and wanted to die. Rejection followed by another rejection followed by ghosting and so on.
At the beginning of August I had an interview with a small IT company, and they made me a job offer, but there was absolutely no info about them on the Internet, plus I found people who worked for them on LinkedIn, they told me that the turnover rate was quite high, working conditions were poor etc. I rejected the offer. I even started to think about getting back to tourism or a similar thing, but then I accidentally came across a website of a pretty large well-known company that was founded back in late 1940-s.
There was a role I liked. I sort of knew it was useless to apply, but still did. Suddenly a person from the marketing department called me, we had a very brief phone conversation, and the guy said that he'd passed my data on to the HR managers. They called me later that day, and we had a phone interview. I thought it was the end, but... they arranged a Skype interview with me, the hiring process started. I honestly didn't expect that. I feel much better now. They made me an offer, and I accepted it. I've already finished my very first week at work, I have to admit that I’ve enjoyed every moment of it! The whole process has been extremely complicated, but it's all in the past now. Great people, good working conditions, opportunities for career growth, loads of benefits, nearly 3 months off, high salary, work-life balance... what else do I need?
I've already written a lot of stuff, so I just want you guys to know that you shouldn't worry about anything. Apply, keep applying. I know it's tough, especially now, but please go for it! You never know what can happen. A job can come from a place you'd never thought it would come from. Believe in yourself, forget the phrase 'to underestimate oneself'. Tailor your CV, write cover letters, your time will come. Be genuine, honest and modest, always tell the truth. Try to be as friendly and polite as possible. Employers admire it. I would also recommend to apply directly on the company's website or by emailing them, it might significantly boost your chances. Don't overthink. If you want more advice or have ay questions, do not hesitate to contact me. Remember: each person is great and unique in their own way. Work hard, and it will pay off. Do your best. Very best of luck to everyone x

Goldman Sachs hosted its Eighth Annual Private Real Estate Conference on October 7, which included 10 panels of leading real estate companies on the topics of New York Office, Strip Centers, Malls & Outlets, Industrial, Apartments, Single Family Rental, Healthcare, M&A/Private Equity, CMBS/Debt, and Real Estate Technology.
2020 Private Real Estate Conference takeaways
Outlooks by sector. Key takeaways by sector include the following, where additional panel-specific details are described below. Exhibit 1 shows a summary of cap rate and SS NOI outlook comments by sector.

• New York Office: The consensus across the panel was that same store office NOI would be flat to down slightly in 2021 on higher operating expenses. Panelists expect to see a flight to quality and noted that leasing and pricing trends will vary significantly by location and asset.
• Retail - Malls & Outlets: Panelists expect occupancy to improve in 2021 versus 2020 levels, and that NOI in 2024 could be 5-10% lower than in 2019, which is a more optimistic outlook than the average currently published GS Mall and Outlet models.
• Retail - Strip Centers: Panelists expect 2021 occupancy to be lower than 2020, leasing spreads to come in, and tenant improvements to remain high, which is generally consistent with our models. While financing is available for the property type broadly, a bid-ask spread is limiting transaction activity.
• Industrial: Panelists believe the pandemic permanently changed consumer e-commerce habits, which should continue to support strong demand for industrial space, with an outlook for SS NOI growth in 2021 to be at least as high as in 2020.
• Apartments: Panelists believe the pandemic has exacerbated the urban to suburban trend and expect to see urban markets to recover as the economy normalizes. Across the panel, 2021 NOI growth is expected to be flat to marginally lower.
• Single Family Rental: Panelists expect the SFR market to remain tight with demand exceeding supply which will result in continued upward momentum on rent rates and occupancy. Overall, the panelists were more bullish on the near and long-term outlook than we had been expecting which reinforces our positive view on the single family rental market.
• Healthcare: Panelists expect the near-term focus to be on recovering occupancy that was lost during the pandemic and remain optimistic on demand drivers over the long-term.
• M&A/Private Equity: Panelists noted that low interest rates, an accommodative interest rate outlook and a weaker US dollar have accelerated global capital flows looking at real estate with a particular focus on certain real estate sectors and geographies that have stronger fundamental outlooks.
• CMBS/Debt: Underwriting standards remain cautious for hotel and retail assets, but capital availability is back close to pre-COVID levels for less distressed property types. In 2019, the lending market was highly competitive and borrowers could set terms, but since the onset of coronavirus the pendulum has swung to the middle as lenders have reacquired pricing power.
• Real Estate Technology: Panelists agreed that COVID has underscored the importance of technology in real estate and catalyzed its adoption.

Exhibit 2 shows each panel plus the speakers and corresponding companies. For more background information on the speakers and companies, please see Private Real Estate Conference: Key themes to watch published October 2, 2020.
New York Office

• Tenant utilization: Panelists noted that office utilization across their portfolios was in the upper-middle teens. This is an improvement from before Labor Day but below panelists' expectations as issues such as transportation and companies not wanting to be the first to return hinder the re-population of offices. Panelists highlighted that office utilization was significantly higher across suburban portfolios, largely due to tenants ability to commute to the office in their personal vehicle. Within the suburban portfolio, panelists noted that they are seeing small and medium-sized occupiers (tenants) returning to the office relative to larger tenants. Going forward, panelists expect assets near transportation hubs to be more attractive to tenants.
• Leasing: Leasing activity remains muted, according to our panelists and recent CoStar data (see our Office in Pictures report published 10/6/2020), especially for smaller tenants as they take a wait-and-see approach. Of the leases that have been signed during the pandemic, panelists saw a roughly 10% decline in net effective rents, and noted that there could be further downside. Increased concession use (e.g. free rent and tenant improvement) rather than an adjustment to face rates has reportedly driven the decline in net effective rents. Panelists noted that leasing and pricing trends vary significantly by location and asset quality as proximity to transportation hubs and the age of the asset are becoming more meaningful. Panelists also noted that some recently signed leases included clauses that give the tenant flexibility to increase/decrease their footprint as their real estate needs change.
• Collections: Panelists reported that collections remain strong within their office portfolio with collections in the mid to upper 90% range. On the retail side, panelists reported that collections continue to be challenged with urban retail tenant collections at ~50%.
• Demand: Panelists noted that technology companies continue to look for opportunities to grow in New York to have access to its strong talent pool. Panelists expect demand to be impacted by working from home, but believe it is too early to tell how meaningful the demand impact will be. Panelists commented that densification, which has been occurring over the past decade, is likely going away and tenants will be adjusting their space to facilitate creative and collaborative spaces.
• Building design: Panelists expect to see a flight to quality which they expect will result in the out performance of modern, class A assets. Tenants may also prefer buildings with more technology to monitor health and wellness metrics like air quality. Additionally, the layout of office spaces will likely shift to create a more collaborative environment where employees can safely congregate.
• Future of NY Real Estate: From the panelists' point of view, the broader recovery of the New York real estate market will be driven by an increased focus on life science, studio and industrial sectors. The consensus across the panel was that New York remains an attractive market for companies to access a well-educated talent pool and therefore, companies will continue to locate there. However, panelists noted that New York will need to focus on remaining competitive relative to other rapidly growing cities across the US and should partner with government leaders to effectively help New York to emerge stronger and more competitive out of the current downturn.
• Supply: When asked about the impact of the pandemic to supply, panelists noted that some real estate inventory could be converted to alternative uses. For example, hotels could be converted to residential and retail space to last-mile delivery and office, although regulations/re-zoning measures are complex and costly. Panelists noted that there could be some office space converted to residential.
• Same store 2021 NOI expectations: The consensus across the panelists was that same store 2021 office NOI would be flat to down slightly on higher operating expenses.

Retail: Malls & Outlets

• Rent Collection: Panelists concurred on there being a meaningful increase in rent collection during 3Q20: 2Q collections averaged in the 20%-25% range, while 3Q was 70%-75%, and at least one of the panelists expects to collect 85%-90% of 4Q rents. Both recognized headwinds facing the sector including closure/selective opening of some tenant categories (cinemas, recreation, etc.) and non-payment of rent by certain national retailers. Both representative companies believe that force majeure clauses do not apply in current circumstances and have begun legal proceedings against those in default.
• Rent Deferrals: Panelists agreed that most of the unpaid rent has been deferred (rather than abated), where deferrals were awarded based on the time period for which tenants were shut and the headwinds facing particular industries. Granting of deferrals was contingent on strong payback agreements and this rent has started flowing-in. Speakers expect to collect all due rent by mid to end 2021. Although both panelists recognized that some concessions were made, permanent lease adjustments were avoided.
• Tenant Bankruptcy: Panelists agreed that their current watchlists are smaller than they were a year ago. Their views were in-line with public companies' general commentary that they could foresee some bankruptcies, and the pandemic has only catalyzed the process. Given their clarity regarding expected bankruptcies, panelists' companies have been able to move quickly on finding replacement users.
• Leasing Activity: Panelists noted travel restrictions as being one of the major factors prohibiting progress on lease agreements since retailers generally intend to complete a site-visit before finalizing a lease. Speakers agreed that while overall leasing volumes remain below 2019 levels, in part due to reduced business travel, activity in 2020 has been stronger than expectations as of Spring 2020.
• Occupancy: YTD, panelists notes that outlet occupancy is down about 8%, in-line mall occupancy is down about 2%, but that overall mall occupancy is down more due to closures by JC Penney and Lord & Taylor. Given the concentration of bankruptcies in the current year, both speakers expect occupancy to increase in 2021. Mr. Congel noted that for regions in which their property is the dominant mall or power center, portfolio vacancy has been muted. Both panelists view the takeover of bankrupt retailers by landlords as a positive, as stores remain open, albeit at lower rents.
• Occupancy cost: Speakers noted that Outlets and Malls have historically had occupancy cost of about 10% and 15% respectively. While occupancy cost for Malls is expected to remain steady, that for Outlets may decline marginally to a range of 8%-9%.
• NOI expectations: With 2019 as the base and looking out five years to 2024, panelists expect NOI could be 5%-10% lower, where NOI at smaller properties could decline 5%, and super-regionals could witness close to a 10% decline. At a sector level, these outlooks are more optimistic than the current GS mall and outlet model assumptions.
• Financing: Panelists concurred that retail financing is mostly on hold, as lenders look for positive trends in operating metrics (sales, NOI, traffic, etc.) before releasing liquidity. However, lenders have been accommodative in extending loan terms, in some cases by three years. To the extent sector-wide challenges persist, speakers expect to receive extensions going forward. For instance, one of the panelists is reported to have received an extension on mortgage loans to October 2021 (while the other noted that none of his companies' properties require refinancing currently).

For our current views on Mall and Outlet REITs, please see Differentiating within Retail; resume coverage – Buy SPG, BRX, KIM; Sell MAC published on July 1, 2020.
Retail: Strip Centers

• Rent Collection: Panelists noted that their 2Q20 rent collections were in the 75-80% range, improving to 80-90% in 3Q20 and expectations are in excess of 90% thereafter. A panelist noted that the greatest risk to returning to normal rent collection levels in the near-term were the pressures of insolvency amongst tenants, as the pre-petition rents were unlikely to get collected. In other cases, tenants who hadn't agreed to landlord rent relief programs were self-abating their rents. Another panelist mentioned his greatest concern was restaurants, and in particular local family-owned restaurants which may be particularly vulnerable as the weather turns colder and outdoor dining becomes less viable.
• Rent Deferrals and Abatements: Panelists varied in the amount of agreed deferrals they had within their portfolios with some as high as 10% of rents, and others much lower than that. However, panelists agreed that deferrals far outsized abatements, where abatements were generally reserved for tenants in challenged categories, or who were specifically likely to go bankrupt. Panelists generally agreed that the outcome of deferrals will be seen over the next six to nine months, and could likely depend on whether additional mandated shutdowns occur as well as the results of holiday sales. Panelists mentioned that the remaining unresolved rents which have not been collected at this point are often the result of large national tenants seeking a larger mix of abatements versus deferrals, while landlords remain insistent on the opposite ratio.
• Small shop bankruptcies: Panelists noted that they had not seen very many small shop bankruptcies yet, and as a result had not seen a significant rise in small shop vacancy. They noted that smaller tenants had been resourceful which was keeping them afloat. However, as government assistance programs roll-off and if no new forms of support are implemented, small shop tenants could likely face significant challenges ahead (particularly in the next six to nine months). Panelists reiterated their concern for restaurants and retailers who had previously leveraged outdoor capabilities, but could face challenges as the weather turns colder.
• Leasing conditions: A panelist noted that the pool of replacement tenants were focused in essential users including hardware stores, auto parts retailers, liquor stores, grocers, and fast and casual restaurants. However, the depth of junior box and large anchor box replacements is less than it was in prior years as fitness tenants and off-price tenants had less open to buys, which is a particular challenge for the third and fourth choice properties in given markets. Another panelist agreed, but noted that the demand for small shop space remained roughly comparable to prior years (and better than expected) as many tenants were seeing the current environment as an opportunity to take space in the best centers in a given market. In particular, retailers like Burlington still had open-to-buys, however lease execution wasn't as quick as prior years.
• Leasing activity (volumes and spreads): Panelists noted that leasing volumes ranged from 75% of prior year levels to roughly similar to prior years. In terms of leasing spreads, panelists mentioned blended spreads remained up high single digits (which is 200 bps lower than prior year leasing spreads for one panelist). Panelists did note that where there is more pressure is on the renewal side where tenants spreads were generally relatively flat. In cases where rents are being kept flat upon renewal, some landlords are pushing for percentage of rent upside within leases if certain sales thresholds are met. Tenant improvement costs were generally in-line with prior years on a same space basis, however as tenant turnover increases, TIs for the portfolio as a whole could increase.
• Rent and occupancy expectations: Panelists generally agreed that 2021 occupancy would be down versus 2020. One panelist noted that occupancy could be flat in 2021 versus 2020 but down relative to 2019, and another believed leased occupancy could be flat versus 2020 as leasing fundamentals improve (but that physical occupancy would be lower). Panelists generally believed that leasing spreads would be flat to down in 2021 (relative to 2020 spreads).
• Financing: A panelist noted you can still get financing on open air shopping centers, but that the underwriting has tightened and lenders are unwilling to look at pre-COVID NOI (focused on in-place). Another panelist noted that banks are agreeing to extensions for shorter amounts of time than in the past.
• Transactions: Panelists noted that there are currently limited transactions in the space due to a bid-ask spread rather than a lack of investor appetite. Panelists generally indicated interest in acquiring if opportunities presented themselves. For now, sellers are holding firm on pricing based on pre-COVID NOI levels (and consistent cap rates). Panelists noted that more opportunities could arise if CMBS lenders start forcing borrowers to sell, but that was likely to occur over the next 12-18 months. Panelists generally expect cap rates to remain relatively consistent, or even to contract based on interest rate movements (in particular, for grocery-anchored centers in infill markets), but expected underwritten NOI levels to come down (with higher vacancy) and therefore, all-in prices to decline. One panelist expects cap rates could rise overall for shopping centers as the risk premium for retail assets rises (but noted that there could be bifurcation between grocery-anchored assets versus others).

For our current views on Strip Center REITs, please see Differentiating within Retail; resume coverage – Buy SPG, BRX, KIM; Sell MAC published on July 1, 2020.
Industrial

• Supply growth: Panelists noted developments have ultimately continued in 2020 despite economic headwinds, and 2021 is also expected to have relatively high supply (CoStar forecasts 1% in 2021 versus 1.8% in 2020 and CBRE expects about 2% in 2021). However, panelists were comfortable with supply growth forecasts because these new developments have high pre-leasing rates (approximately 40%) and overall supply expectations may be skewed as many of the new developments are 1 mn square foot boxes. Additionally, industrial supply growth is expected to be offset by 1) strong demand from e-commerce and on-/near-shoring of inventories given trade uncertainty and 2) previous consolidation of industrial companies (e.g., PLD’s acquisition of LPT/DCT portfolios) means there are fewer developers in individual markets. Panelists noted Los Angeles, Dallas, and Houston have lots of speculative development, but most US markets, including secondary markets, have healthy supply/demand dynamics.
• E-commerce as a demand driver: Industrial panelists were optimistic about the industrial real estate demand outlook, driven by continued e-commerce growth. Panelists believed the pandemic both accelerated e-commerce growth and made the transition to e-commerce permanent as consumers’ expectations and behaviors were changed. Panelists estimate that for every $1 bn increase in e-commerce, 1.25 mn square feet of warehouse space is needed, implying there could be 700 mn square feet of industrial absorption from e-commerce in the next five years. Additionally, panelists expect e-commerce tenants to continue renting instead of owning their warehouse spaces as it is likely more accretive to them to reinvest capital to expand their own business versus buying real estate.
• Same store NOI: Panelists expect 2021 same store NOI to be higher than 2020, supported by rental rate growth, demand, and controlled speculative development. Although 2020 rent growth has been slightly lower than recent years given some economic uncertainty and “blend and extend” lease renewal trends, cash leasing spreads have still been healthy in the 10% range and near-term lease expirations are an attractive growth opportunity. Panelists are somewhat more focused on occupancy versus rent growth. Operators have also found potential tenants are more focused on finding a property size and location that fits their supply chain strategy versus focusing on price as rental costs are a relatively small part of their overall operating costs. Tenants may also be more willing to renew their lease, even with higher rents, as they may have made expensive technology investments in warehousing/manufacturing infrastructure inside the property.
• Retail conversions: Panelists expect there to be some conversion of retail properties to warehousing space, but they did not expect it to be a widespread trend given conversion challenges. Redevelopment headwinds include rezoning and the current retail building's size/layout may not provide sufficient loading/clearance space (particularly in anchor boxes). However, panelists noted smaller retail properties could function as less expensive last mile warehouse space if there was reduced demand for the property as a traditional retail location.
• Transactions: Although the transaction market paused for a few months at the beginning of the pandemic, transaction volumes have been recovering. Domestic and international investor interest in US industrial properties continues to be high, and panelists expect 2021 transaction volumes to be in line with 2019 levels. Cap rates are also expected to remain flat or possibly compress depending on interest rates and the timing of economic recovery and vaccine development.
• Rent collections: Industrial rent collections have been strong (mid to high 90% range), especially relative to other property types, and panelists noted rent collections now are comparable to 2019 levels. Operators saw some differentiation in rent payment between large and small tenants (<10k square feet), but they noted most of the deferrals in their portfolios were driven by larger tenants that generally decided not to pay rent in the first few months of the pandemic rather than small operators who could not afford rent.

For our current views on industrial REITs, please see our industrial REIT re-launch, published September 29, 2020.
Apartments

• Pandemic exacerbated urban to suburban trend: Prior to the pandemic, employment and population growth had been stronger in sunbelt markets relative to coastal urban markets (see Initiate on Residential REITs published 11/8/2019). Since the pandemic, suburban and sunbelt markets have demonstrated greater resiliency relative to urban and coastal markets (see our report US Multifamily Market in Pictures: Sunbelt Outperforming published 9/18/2020). Panelists noted seeing continued strength in suburban markets relative to urban centers and that they have positioned their portfolios to participate in that trend and the pandemic has not changed their capital allocation strategies. Post the current pandemic, the panelists expect urban centers to recover because of lifestyle preferences but expect their suburban markets to continue to perform well.
• Fundamentals remain resilient: Panelists commented that operating fundamentals have held up relatively well throughout the pandemic. Panelists reported improving occupancy from initial pandemic lows, increased retention and noted experiencing increased leads and generally stable rent collections with bad debt / delinquencies averaging 2%. The panelists' geographic exposure is primarily focused on sunbelt markets with some exposure to the northeast and southern California.
• Supply weakening and development time frame lengthening: According to our panelists, supply growth is moderating driven by construction delays, projects being postponed, access to financing and initial market uncertainty. Panelists noted that construction timelines have been extended because of permitting delays resulting from slower government response times as well as pandemic related restrictions limiting the number of people on construction sites. Panelists reported access to construction financing has also become more difficult as developers are staying in construction loans longer because of the low cost of financing tying up capital of regional banks. Additionally, panelists have experienced increased material and labor costs, which may also be slowing new starts. Panelists do not foresee supply growth being an issue for the sector over the next few years.
• Transaction market and cap rates: Panelists reported slowing down acquisition activity early on during the pandemic, but have been subsequently looking for acquisitions. Panelists indicated that cap rates for well located, suburban assets remain stable and may see some compression as there remains meaningful amounts of capital looking to be deployed in multifamily. In markets that have seen greater distress (e.g. urban, coastal markets), panelists are seeing potential opportunities. Panelists expect cap rates to be relatively stable in 2021 due to low interest rates, slowing supply growth and operating fundamentals.
• Same store 2021 NOI: Panelists commented that they expect same store NOI to be essentially flat to slightly lower in 2021 relative to 2020 driven by higher expenses. Longer-term, the panelists were very positive on the outlook for the multifamily sector given the positive demand trends and slower supply growth.

We remain positive on sunbelt markets relative to urban markets within multifamily. For our views on multifamily REITs, please see Remain positive on sunbelt vs coastal; more positive on single family rental published September 8, 2020.
Single Family Rental

• Fundamentals extremely strong: The panelists unanimously agreed that SFR demand was strong going into the pandemic and has since strengthened, despite the challenging economic backdrop and impacts of the pandemic. Panelists reported occupancy at or near record highs, which has allowed for continued strength in rent rate growth. Panelists noted increased retention rates, acceleration of urban to suburban migration trends and limited single family supply as key drivers of strong occupancy. Panelists expect the SFR market to remain tight with demand exceeding supply resulting in continued upward momentum on rent rates and occupancy. However, panelists reported that increases in occupancy from current highs may be marginal as turn around times approach theoretical lows. The one area highlighted as somewhat of a concern by the panelists was rent collections, which have remained strong, but could be negatively impacted by increased unemployment. Overall, the panelists were more bullish on the near and long-term outlook than we had been expecting and reinforces our positive view on the single family rental market.
• Urban to suburban helping drive demand: Panelists explained that prior to the pandemic, there was a noticeable trend of consumers moving from urban to suburban areas. We believe the migration trend was being driven in part by increased number of millennials entering family formation ages and moving out of urban core areas to suburban areas with increased space. In the panelists view, the current environment may have pulled forward some future demand, but they expect the aging millennial population to be a key demand driver. SFR demand has also benefited from consumers needing more space to work from home.
• Acquisitions and industry consolidation: Panelists believe acquisitions remain an attractive opportunity for capital with strong returns given the low cost of capital, opportunity for leverage and fundamental outlook. Additionally, panelists noted that the SFR market is one of the largest real estate asset classes and remains highly fragmented. Panelists continue to see significant opportunity for external growth through acquisitions with plenty of opportunity for large scale operators to continue to expand and leverage their scale.
• Build for rent another avenue for growth: Many of the panelists are also using build-for-rent strategies as an attractive source for external growth, especially for lower price points where target consumers may not have sufficient capital and credit to purchase a home.
• Technology investments leading the SFR market forward: Panelists commented that technology is driving continued maturation of the SFR model and will continue to drive the evolution of the SFR industry. Technology is used across the life cycle of SFR from sourcing and buying a home to rent to managing expenses and capital improvements to establishing rent rate to pricing a property on the exit. Panelists expect to continue to invest in technology platforms and data to improve operations, source and retain customers, and acquire properties. Panelists believe there are still more efficiencies to gain through the use of technology.
• Institutional ownership expected to grow: Panelists expect institutional ownership of SFR to continue to expand as the asset class continues to develop and mature.
• 2021 NOI outlook: Panelists expect same store NOI to increase in 2021 relative to 2020 driven by continued rent rate growth and strong occupancy. The key area of concern expressed by the panelists was the general outlook for the economy and continued weakness in unemployment, which could lead to higher delinquencies and bad debt expense.

For our current views on single family rental REITs, please see Remain positive on sunbelt vs coastal; more positive on single family rental published September 8, 2020.
Healthcare

• Operating trends - senior housing: Panelists commented that their senior housing businesses have experienced similar occupancy declines as some of the public operators, noting that occupancy had declined ~600bps relative to pre-pandemic levels with expenses rising 3%-5%. One panelist noted that occupancy may have bottomed and flattened out; the focus going forward will be on recovering occupancy lost over the last six months by increasing efforts to help residents feel greater comfort as well as resuming amenity offerings as quarantines are lifted, which help attract residents to the property. Panelists expect demand to recover driven by the need for assisted living facilities as people age.
• Operating trends - Medical office, acute care: Panelists reported that elective surgeries and emergency room visits have rebounded but are not yet back to pre-pandemic levels. Long-term acute care reportedly has benefited from the need of some COVID-19 patients requiring longer recovery periods.
• Secular tailwinds remain intact: The US Census Bureau estimates the US population over 80 years old will expand at a 3.9% CAGR over the next 10 years. The panelists remain optimistic about the long-term secular demand growth but noted that the apex of that growth is still 6-10 years away. As the population ages, panelists expect healthcare spending to remain strong, which will support demand for senior living, medical office and acute care facilities.
• Tele-medicine: While tele-medicine has increased, patients still need in person treatments and procedures, which panelists expect to help support demand for healthcare real estate. Within senior housing, panelists believed tele-medicine would be beneficial as it would reduce transportation and expenses for routine doctor appointments.
• Transactions / cap rates: Within medical office and acute care properties, panelists commented that cap rates have been relatively stable. In senior housing, panelists commented that there have been very few transactions during the pandemic, so it is difficult to say where cap rates have moved. Panelists noted that there is capital interested across the broader healthcare real estate sector, which has benefited valuations.
• 2021 NOI outlook: Generally, panelists expected senior housing same store NOI to be modestly higher in 2021 than 2020, but still below 2019 levels. Across medial office and acute care, panelists expected 2021 same store NOI to be slightly above 2020 levels driven by positive rent rate growth partially offset by higher operating expenses.

M&A / Real Estate Private Equity

• Investor interest: According to our panelists, investor interest in real estate remains strong across real estate sectors (e.g. industrial, life science, certain residential) and geographies (e.g. suburban, sunbelt) that have not been as impacted by the pandemic and where fundamentals have held up. Panelists noted that low interest rates, accommodative interest rate outlook and a weaker US dollar have accelerated global capital flows looking at real estate with a particular focus on real estate sectors that have stronger fundamental outlooks. Retail, specifically regional malls, have seen little investor interest according to our panelists. Panelists noted that investor interest also varies by geography within a specific asset class. For example, our panelists noted that investor interest in suburban and/or sunbelt multifamily, where fundamentals have held up, has been strong relative to urban and/or coastal multifamily where fundamentals have been weaker.
• Financing and cap rates: In general, panelists noted that all in cost of capital is lower now than prior to the pandemic as a result of lower rates. Panelists differentiated across real estate asset classes noting that property types (e.g. industrial, certain multifamily) proving to be more defensive and predictable have seen cap rates compress from pre-pandemic levels whereas property types with increased uncertainty (e.g. hospitality, office) have seen cap rates widen.
• Public versus private valuations: Panelists noted that public versus private valuations differ by sector and geography. Panelists expressed that they see an interesting disconnect in public and private market values within the office and multifamily sectors, where public market valuations have declined more than what has been experienced in private markets. Panelists noted that industrial real estate was trading more inline with or at a premium to net asset values. From a geographic perspective, panelists cautioned against generalizing and extrapolating trends from one geography to another.
• Operating fundamentals: Panelists noted that they expect rent to decline ~1% YoY in 2021 within their multifamily portfolio resulting in modestly lower NOI after accounting for bad debt and concessions. Within office, panelists noted seeing increased vacancy and lower net effective rents, particularly in New York and San Francisco, but noted seeing stronger fundamentals in suburban and sunbelt markets. Panelists expect that office will recover in time but will see a marginal impact from work from home on demand for office space.
• Areas of focus over the next 12 months: Panelists had similar and differing views on where they plan to spend time in 2021. One consistent area of focus for 2021 across the panelists was multifamily. Other areas of focus in 2021 for the panelists included industrial, life science, office and lodging.

CMBS/Debt

• Debt markets open for non-distressed property types: Access to funding remains challenging for hotel and retail property types, but capital availability for better performing sectors (including industrial, cold storage, and multifamily) has moved back close to pre-COVID levels. The office sector falls in between these extremes – funding is available, but uncertainties around longer term trends are leading to conservative underwriting restrictions around loan proceeds.
• Lenders reacquiring pricing power: Commercial mortgage lending had become highly competitive by 2019, with loan spreads at historic tights. Lenders are in a better position to negotiate pricing and terms in 2020 as some industry participants have downsized market share.
• Supply of affordable housing remains constrained: Luxury multifamily properties were potentially becoming over-supplied prior to COVID, but the supply of affordable workforce housing remains limited. Opportunities appear to remain for lending against affordable multifamily properties across gateway and secondary markets.
• Opportunities in transitional lending: Interest rates on floating rate transitional loans have remained stable through the coronavirus episode while benchmark LIBOR rates have declined, suggesting compensation from spreads has widened. Transitional loans potentially offer relative value vs. lending to stabilized properties at current levels.

Real Estate Technology
The four companies involved with the Real Estate Technology panel were Knock, SmartRent, Building Engines, and VTS, where the first two cater to the residential sector and the other two are relevant to broader commercial real estate. For a description of each company's business, please see Private Real Estate Conference: Key themes to watch published October 2, 2020.

• Impact of COVID on technology adoption in real estate: Panelists agreed that COVID has underscored the importance of technology in real estate and catalyzed its adoption. In addition, they also view these changes as a permanent evolution, not just temporary solutions. On the CRE side broadly, panelists noted that trends in flexible office (managing office supply and work from home arrangements), amenities (shifting focus from convenience to health and safety), and automation are set to accelerate. From a multifamily perspective, as the sector had been performing well in the run up to the pandemic, technology adoption had taken a backseat. However, COVID has revealed operational efficiencies that property managers can achieve in this space.
• How are panelists adopting their products in response to COVID: Panelists pointed out that COVID has encouraged customers to try new technologies, which had previously been the biggest challenge for presenting companies. Panelists' firms have responded to COVID by including new features and solutions such as self guided tours, increased data on COVID impact (such as what proportion of rent relief requests were COVID driven), and floor plan management (solution for an office building having top floors with permanent, long term leases and lower ones with flexible space).
• Rental premium for smart homes: Detailing the impact of property technology, one of the panelists noted that the premium at the low end is $25-$35/month/unit, while at the upper end, in urban core areas, premiums can expand to over $100/month/unit. In addition, another speaker reported technology increasing the conversion of leads to leases by 20%-30%.
• Transaction market: Two of the four panelists concur that for CRE in general they expect the property technology industry to consolidate going forward. On the other hand, the other two noted that for multifamily in particular, property technology companies had been acquired by bigger firms, upon reaching a certain scale. However, they believe there is room for more participants in the market and would like to see more emerging companies grow in scale and take the IPO route rather than get acquired early on.

https://street-guru.com/

Vexatious Aspects of Mental Health Billing
Let’s face it, the healthcare industry is vast and complex, even more so for mental health providers. This is especially true when it comes to the billing process.
The variety in the types of services, the time, scope and restraints put on mental health treatments make the billing process quite demanding. If a patient visits his or her medical doctor, the doctor will likely perform standard tests and services, such as measuring a patient’s height and weight, checking blood pressure and perhaps drawing blood. Such tests tend to be standardized across patients, differing only slightly among patients and all taking nearly the equivalent amount of time. As a result, billing is also repetitive and standardized.
With mental health providers, however, services vary way more extensively. The length of the session, the approach to therapy and the willingness of the patient to partake make it far more difficult to standardize treatment and billing.
Moreover, the manner in which insurance companies look at mental health is noticeably unlike the way they look at more traditional medical practices. For example, insurance companies can determine how long treatments are allowed to take and how many sessions can take place each day, making it challenging for mental health clinicians to balance effective billing with adequate patient treatment.
Additionally, the requirement of pre-authorization has resulted in more difficulty and complexity for mental health billing.
The differences between medical billing and mental health billing are also magnified by office budgets. A large group practice might hire dedicated employees to focus wholly on medical health billing, but with mental health, it’s more commonplace to have small group or solo practices with limited administrative support for billing and other office duties. Some providers will even try to do the billing themselves but sooner or later, this will become overwhelming and produce time management problems, not to mention lost income.
All this makes the billing process quite demanding for mental health professionals. They need to make sure that they can keep income levels high while also assuring that each and every patient gets the utmost quality care.
Truth is, no one gets into the mental health field because they enjoy wading through insurance industry bureaucracy. People become mental health professionals because they want to help others. However, providers cannot help others unless they collect sufficient funds to run their practices and pay themselves.
It’s rather predictable, without a dedicated staff member to keep up-to-date on healthcare billing codes, changing regulations and the billing practices of each insurance company, rejection rates will climb.
Put simply, there are fewer pitfalls involved in medical billing versus mental health billing because medical health billing is more straightforward.
Avoiding billing issues is vital to the well-being of your business
As a mental health clinician, being paid for the services you provide to patients is paramount. Unfortunately, due to the frequency of insurance claim denials today, payment is not always assured for your services. Payer sources use denials and rejections as tools to force clinicians to hand over hard-earned dollars.
Let’s briefly look at some of the more common billing pitfalls.
Seeing Patients Too Often.
Serving and billing a larger number of patients than you could credibly see during a typical workday is one billing pitfall. For instance, seeing and billing 50 patients and using the same code for these patients could be a red flag to an insurance company. Similarly, if you work in a psych hospital for half of your workday and then are at a clinic for the second half of your workday where you claim to see 50 patients, this also is not considered feasible.
Clients Seeing Multiple Therapists
Another billing pitfall happens when a client is visiting multiple therapists. This can occur if a client must see a therapist in the same facility as his or her doctor, but he or she is also meeting a private therapist or counselor for personal reasons, such as the client prefers sessions with the private therapist. A payer source will not want to pay for two different therapists for a single client.
Frequently Using the Same ICD-10 Code
Using the same ICD-10 code too often is another common billing pitfall for mental health professionals. Variety is key in billing to avoid audit risk. When you bill the same diagnosis code for all of your patients, such as anxiety disorder, this is considered a red flag.
Specific Codes That Raise a Red Flag
Another billing pitfall surfaces from the use of specific codes in mental health billing that can raise red flags. Billing too many specific codes for your services can create problems for your practice. Three of the codes to be aware of are billing code 90837 (individual psychotherapy); billing code 99215 (established patient visit); and billing code 90853 (group psychotherapy).
Treatment Plans
The final billing pitfall for mental health professionals lies in treatment plans for patients. Not completing a treatment plan is a definite way to not receive payment or to be required to pay back money to a payer source after an audit.
Documentation and billing errors can also occur when a claim is missing progress notes and does not include a plan for the patient’s long-term care.
The bottom line is that billing issues for mental health professionals can lead to reduced revenue, unproductive time and further stress.
Maybe it’s time to get help with your mental health billing
Okay, it’s been demonstrated that billing for mental health differs greatly from billing for medical services. We’ve also determined that mental health professionals often operate on a smaller budget than medical facilities and many offices employ a small staff.
As a result, taking on the billing needs of patients can stretch counselors and staff members thin, which can ultimately impact client service.
Reducing the time for billing and coding procedures can, however, be harmful to offices focusing on mental health services as insurance companies will quickly deny a claim that is not filed or coded accurately.
Such is the dilemma faced by mental health professionals today!
Okay, what are the benefits of outsourcing your billing process?
Most healthcare providers don’t possess the time or know-how to manage the billing process. Plus, very few have the means to take on an in-house billing team. This especially holds true for the mental health provider.
By outsourcing such things as your statement preparation, data entry, filing and follow-ups to a third party, your practice benefits in the following ways.
Reduction in unpaid claims
We get it. Nothing is more wearisome than disputing with the insurance company over unpaid claims. When you work with a billing service, not only will the number of unpaid claims go down, but they’ll also contest the ones that get rejected. Billing services take the irritation of dealing with insurers off your plate. That involves looking into claim rejections, tracking full payment of partly reimbursed submissions, and keeping up on approved claims that have not yet been paid. In short, third party billing services help you take command of your receivables once and for all.
A billing service will submit your claim accurately the first time
You’re clearly aware that proper coding is vital if you hope to be reimbursed promptly. The traditional therapist billing software utilized by a third-party billing service starts by authenticating the client’s insurance coverage. Next, they accurately code the claim and submit it straightaway. Not only will claims be clean the first time they are submitted but as mentioned above, you’ll witness a dramatic drop in rejections and partial payments. This will increase cash flow and help keep your focus on your patients.
Offer cost-effective solutions
With outsourced billing, your organization can free up in-house resources substantially. Rather than tasking your employees with time-consuming billing duties, they can work on things such as quality assurance and improving patient care.
Help to reduce your expenses
Mental health providers can reduce their office expenses by using the services of a third-party biller as well as the existing software. All you need is a PC and access to the internet. The majority of practice management software is all-inclusive, even over the internet and is part of the service provided. No costly software updates or support fees. No hidden costs or added charges.
Improved communication
When you work directly with insurance companies, you’ll most likely be able to work with them only during their specified business hours, which may not even be in the same time zone as your practice. It’s also to be expected that you’ll end up talking with a different agent each time you call, obliging you to describe your circumstances again and again. When you use a billing service to help push through your claims, you’ll do away with these aggravations.
More time to provide direct care
Every minute spent tracking down claim information in the course of your business day is a minute you’re unable to devote to providing direct care. This disruption forces you to miss out on would-be income opportunities. Let’s say you charge $100 per hour and devote one business hour every day on billing. In this instance, you may be losing up to $500 every week. When you recoup this lost time by employing a billing service, you’ll be growing your income potential and, in many cases, producing added revenue that exceeds the cost of the billing service.
When should you consider outsourcing?
When your practice’s billing process is inadequate
When your practitioners and staff are not technologically sound
When your practice has excessive staff turnover
When your practice is new
Or, putting it another way, the real cost of billing is not the payroll expense. It’s really all the charges that were not billed in the first place or were not followed up after billing.
An expert billing service would pay for itself.
Conclusion: Outsourcing mental health billing can allow offices to focus on patient services while realizing higher returns for services provide.
What should you look for when searching for a mental health billing service?
It pays to take your time and be discerning when assessing possible providers for your outsourced mental health billing. Before you make your decision, make sure to find out if the provider has the following capabilities and the wherewithal to do the job.
Ensure they offer specialty-specific mental health solutions. Failing to identify and understand the complexities of billing for this specialty can lead to needless holdups.
By all means, verify that the company has substantial experience and the necessary know-how in the medical billing industry plus a demonstrated track record of improving the revenue cycle for their current customers.
Your provider ought to have a policy of keeping up with industry trends as a means to ensure your practice is constantly making use of cutting-edge technology.
Another crucial issue is that the company provides suitable staff training. Inadequate training leads to added mistakes, further slowing the revenue flow to your organization.
Finally, and perhaps most important, you need an assurance the provider will keep the lines of communication open. You can expect them to contact you straight away in case of a problem, and they also need to respond promptly to any inquiries you have concerning bills and provider reimbursements.
In the long run, outsourcing provides so many benefits, you can visualize expanding your practice more rapidly than your business plans called for at the outset, since a third-party billing expert will be taking care of your revenue cycle management while you focus on patient care.