Top Trends in Senior Housing
Top Trends in Senior Housing
Fear, uncertainty and doubt remain over what it means to grow old in America—and how to pay for it. The last few years in senior housing have been tough in some respects but fortuitous in others. The industry has faced a lack of construction financing, dips in occupancy numbers, increasing costs, government funding cuts and a weak housing market. These factors have led to many seniors staying in their homes longer and raising their acuity levels upon entry into a senior living community. Despite these challenges, interest rates have remained at historically low levels, enabling the senior housing industry and consumers some relief from the negative forces of the Great Recession.
After almost 4 years of economic challenges, the United States is starting to show further signs of recovery but increasing costs and funding cuts are the “new normal” for senior living. The senior living industry feels that this shift is not a new normal but is just the business reality of caring for aging Americans. With these signs and the slowly improving housing market, providers, communities and consumers are finding confidence as a new foundation congeals. This new foundation, while still drying, will provide the basis for assumptions and beliefs that will drive the next decade in senior housing and living. This foundation provides the construct for this year’s Top 10 Trends in Senior Housing for 2013.
Top Trends in Senior Housing
1. It’s the End of Skilled Nursing as We Know It……and We Feel Fine.
Senior living professionals have seen changes to the skilled nursing format coming for years and those changes have begun to take shape in earnest within the last 18 months.
In 2013, the demise of the traditional model of skilled nursing and nursing homes will begin to accelerate in senior living business as consumers begin to learn that a nursing home no longer has to be the final resting place for seniors. This alone is a stark change from the concept of “warehousing the elderly” that has been a stereotype of over 30 years.
The business model of skilled nursing is nearing functional obsolescence in a practical, physical, and economic sense. Additional cuts to Medicare and Medicaid expected in the future and a growing stock of vintage buildings that can’t support today’s care methods will further burden a dysfunctional model. Further exacerbating the challenges of operating skilled nursing in its traditional sense are the risk management measures, costs of insured and increased litigation risk.
Combine these challenges with an aging population and increasing demand and limited supply, the world of skilled nursing requires a drastic evolution. With more focus on “person-centered care” and returning people to their homes for comfort, nursing homes will start to appear as more of a surgical strike in the aging process versus the final resting place.
2. Affordable Housing Crisis for Seniors – Complex Link Between Federal Programs and Local Solutions
Today’s numbers of struggling seniors are staggering and growing faster every day. With almost 10,000 Americans turning 65 each day, the number of seniors who need specialized housing will only increase the need of affordable housing solutions.
Research from the Department of Housing and Urban Development finds that there are over 1 million seniors currently within the guidelines for “worst case housing needs” and increasingly more seniors are falling below the poverty level.
Housing programs and other social services have seen their funding cut in order to maintain other basic health and safety services at these levels. Local community leaders and activists must take charge and raise the issue to the local press and community so that citizens understand that solutions start in their local communities.
A strong, local housing program can provide a foundation for jobs, economic and community activities. Local solutions demand local leadership layered with federal assistance and programs, so while the two are separate and apart, they are both inextricably linked. Local leaders will need to emerge to provide the impetus for long-term solutions to bridge the gap in affordable housing for seniors.
3. Re-Thinking Longevity of Assets—Personal and Physical
Longevity will become America’s fiscal and moral enemy. Deterioration of mind, body and assets, both financial and physical, will need to be addressed as part of everyone’s plan. According to the Boston College Center for Retirement Research, the old retirement model used to call for replacing 80% of a person’s pre-retirement income as a target for planning asset consumption and utilization.
As the economy finds its footing, assumptions about aging and longevity will need to be recalibrated. As life expectancies extend further out, many of those assumptions will affect both individuals and corporations. Older, sicker people cost everyone substantially more money.
Calculations by the Employee Benefits Research Institution found that almost 44% of those born between 1948 and 1978 will not have adequate retirement income. This number, which spans Baby Boomers and Gen X, assumes that interest rates begin to rise in 2014. Even if interest rates and investment returns rise by 2014, this upward trajectory will be tempered with rising inflation and entitlement reforms on the horizon. The longevity of personal assets will need to factor into a community’s pricing power that will flow into economic decisions regarding the physical structure of the community as well as its professional care profile.
On the longer-term horizon, longevity will become much more of a moral problem stemming from providing care for someone whose body is deteriorating beyond enjoyment as well as responsible, fiscal decisions for maintaining a poorer quality of life.
4. Plugging In The Holes: Filling out the Continuum with Hospice & Home Health Care
During 2013, senior living owners and operators will examine their product offerings and determine their strategy to maximize occupancy, revenue and business opportunities for the future. The process will require operators to evaluate their strategy to attract new and replace existing residents through the use of home healthcare and hospice businesses.
The fragmented nature of home healthcare and hospice creates an opportunity for larger players to roll-up these companies and diversify their revenue sources by changing referrals to direct, incremental increased revenue opportunities.
Besides traditional senior housing owners and operators, business brokers and franchisers who focus on small home healthcare and hospice providers will be busy in 2013 attempting to build out their networks.
5. State Regulations Increase Dramatically for Senior Housing & Care
The next year will see a significant growth of new and additional state legislation for senior care, housing and other services. Why the growth of new legislation and regulation? Blame the local media outlets for sensationalizing the abuse of seniors and making elder abuse segments a regular part of local coverage.
Senior housing owners and operators will face more regulation over background checks, resident safety, licensing and training of employees. As more services are delivered to homes in the community, more challenges will arise as a limited number of state employees to monitor and control senior care are available to regulate this expansion of services.
The irony of increased regulations? More costs and burdens on employers and employees and those costs are eventually passed on to seniors and those paying for their care whether it’s adult children or the government.
Those are just some of the major trends we see in senior housing.
Written by George YedinakSenior Housing News - http://seniorhousingnews.com