There’s debate about the best model for providing memory care services—either under the same roof as traditional assisted living or by itself in a specialized setting—but ultimately the key is doing a good job of providing a differentiated environment with individualized services depending on care needs.
“Having a combined community is fine, because you can gain some economies of scale, but the fundamentals of having the capabilities for both populations is significant,” says Margaret Wylde, president and CEO of market research firm ProMatura Group, LLC.
Some assisted living communities also feature a secured memory care wing or floor, and they’re increasingly adding memory care units as the need for them grows.
Other buildings are flexibly designed to allow for converting assisted living units into memory care units, or vice versa, depending on current demand, while some communities provide assisted living services only for the memory impaired in a freestanding model.
The continuum model—with both traditional assisted living and memory care services—provides more flexibility, says Charles Turner, principal at PinPoint Commercial, and can be less risky to investors than a standalone memory care product.
PinPoint is partnering with Thrive Senior Living to build several senior living communities that can add or subtract memory care or assisted living, as dictated by demand for either type unit, by moving the outer, secured wall of the memory care side along with making minor modifications to individual units if necessary.
This model can work, says Wylde, as long as both populations—residents who need traditional assisted living services versus residents who also have memory impairment—can have their needs met.
Residents with memory and cognitive impairments have very specific care needs, while those whose memory and cognition in intact will want to continue participating in lifestyle activities with their peers. If both populations are housed under one roof, it could be difficult to properly provide this, she says.
While Turner favors the continuum model, he acknowledges that some well-established standalone memory care providers—such as The LaSalle Group’s Autumn Leaves brand and Silverado Senior Living—have been successful with their model.
“It’s all driven by who the operator is and their track record,” agrees Chip Woelper, a healthcare portfolio senior analyst of Lititz, Pa.-based Susquehanna Bank.
The problem some lenders are identifying, Turner says, is the “proliferation” of developers getting into the freestanding memory care space in the last year or two without much experience. Even standalone memory care providers are concerned by this trend.
“I wholeheartedly agree with this idea of many new entrants into the memory care market that have not done their homework,” says Paul Mullin, vice president of development at Silverado Senior Living, a national memory care provider that operates with a standalone model.
Many of the new developers building memory care are using Silverado’s pricing for their pro formas, says Mullin, perhaps believing that Silverado’s high rates of about $7,000 a month will translate into big margins.
However attractive those monthly rates may appear, though, Silverado’s costs are reflective of the “high level of care, service, and programing we provide,” says Mullin.
“The problem is they want to charge the higher rent without committing to the higher expense level and overhead of having adequate staffing, programing and care for memory care residents,” he says. “I believe these developments will struggle to attract residents because they will quickly get poor reputations for service and care.”
There may be new developers entering the memory care space that haven’t done their homework, he says, but it doesn’t mean there isn’t a need for new product, and the “sheer numbers” in need of memory care will become a national concern.
In the next five to ten years, the senior population will grow substantially and they’ll be living longer due to better healthcare, Mullin points out. As this population progresses into their late 80s, they have nearly a 50% chance of having some form of dementia, according to the American Medical Association.
“At Silverado, we’re encouraged to see more entrants into the memory care business,” Mullin says, adding that there’s an abundance—not a scarcity—of people who need those services. “Even if all these new entrants were to re-create Silverado’s model and commit themselves to our level of care, which we hope they do, there would still be a shortage of memory care communities and resources for the tremendous need that is coming.”
Written by Alyssa Gerace