With skilled nursing in the dumps as a result of the 11.1% cuts to Medicare payments, most of the talk has turned to assisted living as the next area for growth for investors. During the National Investment Center for the Seniors Housing & Care Industry (NIC) conference in Washington, D.C., much of the “next big thing” focused on memory care and Alzheimer’s care.
The number of Americans age 65 and older diagnosed with Alzheimer’s is projected to increase from 5.1 million in 2010 to 13.5 million in 2050, according to estimates from the Alzheimer’s Association, and the need to provide care will only grow.
“We see it as the segment with the best growth opportunity and the most unmet demand now,” said Larry Gerber, CEO of EPOCH Senior Living, during an interview with SHN.
Based in Waltham, Mass., EPOCH is putting resources into new stand-alone facilities, calling it a significant initiative for its future growth. Recent data estimates show there are roughly 4,000 properties nationwide that offer memory care services, but the majority are part of skilled nursing, assisted living facilities, or Continuing Care Retirement Communities.
The costs of providing care to those diagnosed with Alzheimer’s is expected to increase significantly, growing from $127 billion in 2010 to $1.078 trillion by 2050, according to the Alzheimer’s Association. In 2009, the average assisted living facility charged an average of $4,556 per month for memory care, while traditional assisted living services were $3,216 per month.
Companies like EPOCH are putting resources behind a more unique setting, building three new stand-alone facilities dedicated to memory care.
“We see the ability with the specialized buildings, to really offer a better product and environment and really optimize the situation,” he said.
Such communities are less common, with only about 600 available nationwide, according to data from NIC. During the past five years, freestanding memory care inventory has increased at an annualized pace of 2.7% within MAP31. Construction currently represents 3.4% of existing freestanding MC inventory said NIC.
Obtaining care in these units is also more expensive, costing an average of $77,998 per year in 2009, according to the Alzheimer’s Association.
But the communities which EPOCH operates under the BRIDGES brand are designed specifically to serve the needs of the Alzheimer’s population. When a community was originally designed for independent or assisted living and a certain portion of it is converted for Alzheimer’s care, compromises are made, said Gerber, but that’s not the case when building stand-alone facilities.
“When a building is designed specifically [for memory care], we’re freed from those limitations… [it’s] very unique in its terms of supporting the needs of the programming,” he said.
EPOCH has one facility that is under construction right now, and more are planned, Gerber told SHN. The company has community scheduled to begin construction in February or March and another four or five that are in the pre-development case.
Health Care REIT has jumped at the opportunity to work with operators who specialize in memory care, closing several deals over the last year.
“Our strategy, is to partner with the best operators in the industry and to do so in very favorable markets,” said Jennifer Crute Steiner, vice president of communications for Health Care REIT during an interview with SHN.
In February, Benchmark Senior Living formed a $890 million joint venture with Health Care REIT on 34 of the operators properties encompassing 3,007 units in the North East. Of those units, 34% are dedicated to memory care, which includes eight stand alone communities and more are on the way.
“We expect to build more [because] there is a great demand for it,” said Thomas Grape, chairman and CEO of Benchmark during the Assisted Living Federation of America conference in October.
Chelsea Senior Living, which closed a $308 million sale leaseback deal on 10 properties with Health Care REIT, has had success with memory care as well, as part of its assisted and independent living communities. During the ALFA conference, Roger Bernier, president of Chelsea said all of its memory care units are 100% occupied and have waiting lists.
“If we could add more Alzheimer’s units we would; the physical structure isn’t allowing us to do it,” he said.
Written by John Yedinak