Ten Years from Senior Aging Apex, What to Watch For
Skilled nursing alternatives such as assisted living, independent living, and memory care communities can only address a portion of the growing population.
Don Bivacca
5/1/2020
The year 2029 will mark the last of the baby boomers turning 65, and by
2035, for the first time in U.S. history, the elderly population will
outnumber children, according to the U.S. Census Bureau.
With the growing elder population comes new stressors to
communities and caregivers. Currently 65 percent of seniors get their
long term care needs from family and friends, according to the Institute
on Aging. With the expected doubling of the senior population in the
next 10 years, caring from family and friends will not be sustainable.
A recent study from the Institute of Medicine highlights growing
crises in cases of dementia, substance abuse, and mental illness such as
depression among America’s older adult population, which will require
professional alternatives to address. The COVID-19 pandemic is only
accelerating comprehensive change and crisis in the industry.
To meet the long term care needs of the baby boomers, social and
public policy changes must be enacted soon. Alternatives such as
assisted living, independent living, and memory care communities can
only address a portion of the growing population. Skilled nursing
centers, retirement homes, and home health care will have to adjust to
new regulations and payment mechanisms. With these challenges come
opportunities for entrepreneurs and operators.
Competition for this population will be fierce as there will be an
increased focus on marketing the hospitality and amenities of facilities
versus the type of care they now provide. Here are several predictions
that may begin to move toward fulfillment in 2020 and beyond in
preparation for the future of the senior living industry.
■ More care will be provided.
Senior living communities will
expand health and welfare services to ensure they keep their residents
in place, in lieu of sending them to a multitude of costly health care
providers and other organizations. There will be a greater appetite to
insource things such as therapy-based services, nutritional and social
counseling, and diagnostic services as a source of revenue, compared
with contracting them out.
■ Opportunities will exist for lower-cost, higher-quality communities.
Currently
there are few low-cost providers, as assisted living communities
typically cater to individuals with disposable income. That has to
change. The elderly population boom will require operators to cater to a
different socioeconomic class of seniors in need of care.
Regulations and payment mechanisms such as Medicare and Medicaid
will challenge the government on how to balance the additional resources
compared with the cost required in the future. Innovative solutions
with an emphasis on communal living that provides synergies and cost
efficiencies will become more common, allowing seniors to be part of a
vibrant senior community.
■ Home care may become a more common solution to aging in place.
With
the conversion to Patient-Driven Groupings Model (PDGM) in January that
will change reimbursement for home health, providers will be reimbursed
for remote patient monitoring, which will allow more seniors to age in
place at home with the use of wearable health-tracking devices that will
alert home care providers of changes in seniors’ health status before
adverse events happen. Providers will have the opportunity to be
reimbursed for the totality of the patient’s unique characteristics,
compared with the number of therapy-based visits as in the past.
■ Labor will be a big issue.
With many states and companies such
as McDonald’s, Target, and Amazon raising the minimum wage to $15 per
hour, compared with $11 per hour for home health and personal care
aides, the competition for employees has put a strain on senior living
operators to recruit and retain employees. This coupled with the U.S.
Bureau of Labor Statistics’ expected growth rate for home health workers
of 36 percent from 2018 to 2028 translates into a need for 7.8 million
new jobs. Recruitment and retention will be pivotal for the success of
operators in the future—and to that end, as COVID-19 shifts the economy,
will there be new recruitment opportunities for the industry?
■ Existing facilities will need to adapt to an older population.
There
will likely be an increase in bed conversions or bed additions in
senior living and continuing care retirement communities to accommodate
expected increases in age-related chronic conditions or diseases.
Currently, one in four people over the age of 80 is affected with
dementia, according to Alzheimers.org, including Alzheimer’s disease,
which should lead to expansion in memory care units in the senior
communities. Dementia is one of the most expensive and time-consuming
health conditions to care for in the United States.
According to Johns Hopkins Medicine, 70 percent of older adults
with dementia live outside of skilled nursing facilities and are cared
for by family and friends, which will change with the increase in the
over-80 population.
■ Consolidation is coming.
Senior living is already flush with a
variety of capital sources, new operators, and other entrants looking
to cash in on the sector’s favorable demographic trends. As new players
continue to enter the space, they are inevitably priming themselves and
the industry for even more consolidation over the next few years.
Smaller operators may be motivated to sell their properties as their
labor costs and expenses in general increase, thus hampering their
ability to grow the scale of their businesses. Therein lies an
opportunity for larger providers.
Operators’ quest for liquidity as it applies to scaling their
businesses will also play a significant role in further industry
consolidation, suggests Ed Kenny, chairman and chief executive officer
of Des Moines, Iowa-based Life Care Services. This certainly will be
amplified and put on the fast track in the aftermath of COVID-19.
■ Technology infusion.
Most industries have been through a
technology disruption in the past 10 years; what’s ahead for senior
care? There is already an influx of new technology: Early detection
systems for dementia, for example, and technology for security and
safety (such as fall precautions and alerts) could lower costs and risk.
Virtual robotic assistants may help with daily activities. Expanded and
new phone apps can help handle reminders and alerts for medications and
health screenings, and GPS systems and devices can help locate seniors
if they wander.
Don Bivacca serves as a managing director at
Healthcare Management Partners, a leading turnaround and consulting
firm in the health care industry. With more than 30 years of experience
driving successful operations of health care organizations, Bivacca also
leads HMP Senior Solutions, a subsidiary of Healthcare Management
Partners that specializes in operating senior care facilities and
helping them manage new and expected industry challenges. He may be
reached at dbivacca@hcmpllc.com or 615-601-2109.