The senior living industry is ripe for opportunity. With millions of people moving into the 65+ age bracket in the next several years, we’ll see many innovative business ideas come to fruition. There are numerous ways to serve this population, from technological advancements to creative building design.
Baby Boomers and the aging population
Today, more than 46 million older adults aged 65 and older live in the U.S.; by 2050, that number is expected to grow to almost 90 million. Between 2020 and 2030 alone, the last of the Baby Boom cohorts reach age 65, the number of older adults is projected to increase by almost 18 million.
With this change in demographics comes an increase in demand for healthcare. Most of us would prefer to age at home; however, many will ultimately require a skilled nursing facility, assisted living facility, independent living community, or continuing care retirement community. These places provide the necessary medical equipment and support for seniors who may have trouble with activities of daily living like buttoning clothes, mealtime, or administering medication.
Shifts in property type and growth rates
The industry has had positive growth over the past 10 years, though modest considering the boom in the population of older adults. The two primary ways for system growth have been through community expansions from existing campuses as well as affiliation and acquisition activity. Numerous single-site providers have grown into multi-site organizations, allowing them to scale their businesses and take advantage of previously impossible opportunities.
In the last 10 years, the average annual growth rate in total units since 2000 is 2.3 percent, with independent living and assisted living units growing each year, but a decline in the number of nursing care beds. Memory care units are becoming an increasingly important component of many senior living organizations. In the recent LZ 200 study, 64% offered specialized memory care units. Growth in this property type outpaces growth rates in other senior housing property types.
Building design and amenities
We all know nursing homes and other senior living facilities don’t have the best reputation. They are often seen as a last resort. That is changing as the Baby Boomers begin to move into this marketplace. This generation experienced a lifetime full of choice compared to their parents’ generation. From choosing what color they wanted for their new car to buying out different brands of shampoo to finding out which they liked best, this ability to have a choice is expected.
So when it comes to choosing where they will live for their next chapter of life, you can imagine that they aren’t going to settle for the local, basic, shade-of-brown nursing home. They want yoga classes, nature walks, live music, and more. Some of today’s luxury senior living communities look much more like resorts with golf courses and pools.
In addition to amenities, there’s also heightened demand for aesthetics. Interior design can greatly impact the buyer decision-making process for seniors. From Zen gardens and sensory rooms to trendy color palettes and open-plan spaces, creating an inviting atmosphere is crucial to reaching your target demographic.
As mentioned earlier, there has been a surge in building for memory care residents. This has also created increased competition for residents in the space. Senior living organizations strive for beautifully designed communities built specifically with memory care in mind to attract residents. For example, soothing but distinctive colors that help residents navigate the community; light, bright spaces bring the outdoors in; features that help promote dignity at a time when certain daily activities can be frustrating; and spaces that encourage socialization and community rather than isolation.
Home and community-based services
While most of the revenue for senior living organizations comes from residential units, we also see the expansion of services into home and community-based services. These services create vertical integration and capture a market earlier, before they may need to move into a senior living facility.
These services include home health, adult day care, continuing care at home (CCaH) programs, or PACE (Program for All-Inclusive Care for the Elderly). Approximately 42% of organizations surveyed in the LZ 200 offer some type of home and community-based services to non-residents.
Opportunities are abundant for technology to advance and enhance the senior living industry. Like the acute healthcare industry, senior living has a lot of catching up to do compared to how technology has made its mark on other industries over the last decade. Here are a few of the hottest areas for opportunity.
First, to effectively manage populations and their health, you must have effective and efficient data systems. This is an area that the entire healthcare industry is working on. Acute care health systems have invested trillions into electronic health records and other software.
Additional data software systems are available to improve efficiency and scale in other critical services such as lead management, billing, resident engagement, quality monitoring, care, and medication management.
Products and services for remote monitoring are receiving tremendous investment in the healthcare industry right now. These capabilities can address critical issues like safety for memory care residents, taking medication on time, avoiding mental health issues from isolation and so much more.
In summary, many senior living organizations continue to grow and evolve with the changing demographic and economic conditions. There are plenty of opportunities to take advantage of that could drive revenue, increase market share, and improve engagement and experience.
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