The aging-in-place movement has been touted as an effective strategy to keep folks in their homes, either delaying or avoiding altogether the need to enter senior-oriented housing, and this trend could potentially have chain-reaction implications for senior living communities’ business models and marketing strategies.
Greater numbers of people choosing to age in place could mean communities will lose appeal to younger, healthier prospective residents, forcing them into a growing reliance on older, frailer residents in order to maintain occupancy, suggests a recent white paper released by Point Forward Solutions, LLC, a strategic consulting and financial advisory firm dedicated to the field of seniors housing.
Combining these two phenomena results in an increased average age and acuity of community residents. This, in turn, could lead to higher resident turnover, and thus a diminishing customer value proposition, which then impacts the effectiveness of sales and marketing.
Older Residents + Higher Acuity = Shorter Length of Stay
“As a community ages and acuity rises, it can become less attractive to younger, healthier prospective residents,” says Ryan Frederick, founder of Point Forward Solutions, in his white paper. “If attracting younger, healthier older adults is increasingly difficult, then new residents are more likely to be older and frailer. As such, communities are relying more heavily on their ability to attract older, frailer residents to maintain occupancy.”
Brookdale Senior Living (NYSE:BKD), the largest operator of seniors housing, said in its investor report last November that just over half of its independent living residents use a cane or walker. The average age and acuity levels of those in independent living has continued to rise, according to Margaret Wylde, the president and CEO of ProMatura, a market research company based in Oxford, Miss. and London, UK.
The average age of those living in independent living has shifted a few years older to the mid-80s, she says, with the average age of assisted living residents in the late 80s to early 90s.
It could be challenging to reverse these trends and attract younger residents, says Frederick, especially if an independent living community reaches a “tipping point” where the community feels more like a “senior home” than an active older adult environment.
With older seniors comes a higher turnover rate, as higher acuity residents are less likely to live as long as younger, healthier residents, Frederick continues.
Needs vs. Lifestyle Decisions Shrinks Prospective Resident Market
And if newer residents continue to be older and frailer, the effective market size for these residents, he says, is smaller on a relative basis. That’s because older prospective residents represent a “smaller pool of age and income qualified people” compared to younger prospects, and frailer residents are more likely to move into a senior living community due to “current or anticipated health needs than by the attraction of a care-free lifestyle.”
“We can anticipate, therefore, that such prospective residents are less likely to move great distances if there are viable care options close to them,” says Frederick. “The impact is that the geographic radius of people to market to decreases.”
How Does This Affect a Community’s Marketing Strategies?
With all this in mind, Frederick presents what he calls an “exercise using hypothetical numbers that attempts to approximate the combined impact of greater resident turnover and smaller addressable market.”
This exercise assumes that communities that experience aging in place have approximately (1) half the length of stay for its residents and (2) reach half the geographic distance from the community as before. Additionally, they’re catering to a much different age bracket—80 to 89, versus 75 to 84.
The combined effect of higher turnover plus a smaller market, Frederick finds, is that communities may require more than ten times the productivity in sales and marketing in order to maintain occupancy.
Traditional sales and marketing approaches aren’t well-suited to recent and current economic conditions, he says, which have left many older adults (and their children who may be offering financial support) less prepared for their futures.
In response, marketing strategies must focus on building trust with potential residents and their families, says Frederick, and should invest a lot of time into developing leads.
Still further, communities may need to change the way the pitch their services. While independent living marketing used to focus on an “improved and care-free lifestyle,” says Frederick, with an incoming population that’s older and frailer, communities may need to start presenting a value proposition oriented around the ability to deliver health care.
Possible Solutions
When addressing problems that could arise from aging in place, senior living providers will need to come up with some creative solutions, says Frederick in his white paper.
Creating a plan for a “successful, durable strategy for aging in place” can include conducting a community assessment, creating a level of urgency to deal with current challenges and opportunities, and testing/implementing solutions, all of which Frederick elaborates on in his white paper.
“Neither denial of today’s market realities nor abrupt and dramatic change is a wise course of action,” he says. “Instead, leaders should follow a well reasoned and carefully calibrated strategy. Such an approach should rely on using small bets to test hypotheses before moving more confidently to bold initiatives.”
Written by Alyssa Gerace
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Excellent article that addresses many issues in ALFs today. I've been in ALF marketing for two decades and owners haven't prepared for the changes that are occurring – higher acuity. Healthier adults going to Independent Living facilities that offer a few ALF services. Potential residents visit our facility with their family and see sicker, frail adults and opt for IL – they don't want to be in a "nursing home." Can't say I blame them. There's little or no creative thinking on how to combat this issue – ALFs doing business as usual which isn't working if you have an IL rental in the area. If ALFs want residents with high acuity they need to staff appropriately which they aren't – they're staffing per state regulations which is fine but inadequate. In essence they're not meeting the needs of most residents and not drawing healthier people either.
This was bound to happen, why is everyone in shock? The boomers are coming and they hate the big box model! I don't care how nice it is (which a lot of them are not) or how many amenities you have, boomers say no way! We value independence and we thrive on having things our way. We have owned our own homes and will not go quietly into the box like the last generation.
I have been developing a neighborhood concept in which I would want to live. It has adorable sustainable adaptable functional small cottages. The theory is we take care of each other as long as possible which would mean a memory care situation or in home hospice. We live out our life's in this community with our peers and listen to seventies music and go tanning. We have a sense of purpose as we take care of our neighborhood, work in it and care for each other. It brings the costs down and raises moral.
Of course senior housing as it exists will have a rude wake up call because nobody ever thinks of themselves as a senior and builds what they want. They try to determine what old people want. And no one ever sees themselves as old. Especially the next generation of seniors. Right now the average age entering is 86 because it is a need based situation, and this generation is more pliable than the next. Mom will go bee but i cause the kids say it is time…not going to happen with the boomers we stand our ground and make up our own mind! Unless we our literally out of our mind we ain't going!
So why do we keep building more of the same to accommodate the onslaught of boomers? Maybe we should start rethinking this ….I have but I often feel like a voice crying in the wilderness. Why are we not getting this? The model has to change now!!! Sorry I got on my pulpit but I feel very passionately about this and do not get the apathy that exists among providers and the attitude of if it's not broke don't fix it. Well guess what a lot of companies are going to discover the hard way it is broke because they are not listening to the next generation to enter senior living.
Well said, Kathy. You nailed it.
Betty Friedan called them "age-ghettos." Designed to segregate “old” people away from society so we aren’t reminded of our aging-selves. She had an interesting take on the big-box housing approach.
"The care-free lifestyle" seems to equate to giving up on some level…Boomers don’t want to be separate from the vibrancy of life—time will soon tell however.
My guess is you're right on with your assessment.
Alyssa, it appears to me based on your very well written column that sr. living providers should test implement some aging in place features that will make them more attractive to caregivers who are stressed with life / that they can't deliver the desired care to their loved ones and feel guilty about it. They may push their loved one to sr living especially if they can be notified about the well being of their loved one via a text, email or dashboard view of their adl's. This type of system would make the sr. living center a lot more attractive.
Robb
Great article as always Alyssa! We are seeing the same trends as you describe in your article. These shifts will require a reexamination of the design of future senior housing. We are currently working on some new facilties that target the higher age group as you describe and provide increased services- concierge- resort living. We need to throw out our old plans and start new- things are changing! Thanks again for your work on this!
I am an architect with affiliations with ASA Chicagoland and am much aware of issues relative to aging in place.
Due to advances in science/medicine/healthacre, Americans are living longer but not necessarily healthier. This is due to lifestyle choices i.e., nutrition, stress amongs others.
With entitlement programs such as social security, healthcare in a state of flux and certainly costing more for less services, the US society is trending away from institutionalized and managed care. Staying put in one's home allows lifestyle freedom/manageable expense by default seems to be the most viable and preferable option. Many other factors (telecommuting, home based office) are converging to reinforce home based living style which could acomodate visiting care provider. The formula of senior community development seems to have been usurped. In fact we are seeing requests and expectations of maximizing home accessibility through design. This appears to be the most suitable option.
Here are following facts.
one US baby boomer every 8 seconds
Great article as always Alyssa! We are seeing the same trends as you describe in your article. These shifts will require a reexamination of the design of future senior housing.