The need for memory care development is growing and many operators are rising to the challenge of providing it, but it’s difficult to determine the value of doing so through a stand-alone product versus as part of a continuum of care.
The senior housing industry attaches more value to the care continuum model, although that philosophy may be geared more toward communities offering independent and assisted living, whether or not memory care is included, according to Mel Gamzon, president of Senior Housing Investment Advisors, during a 2012 National Real Estate Investors webinar.
PinPoint Commercial, a Houston-based developer that’s collaborating with Thrive Senior Living to build and operate flexibly-designed assisted living and memory care communities, believes care continuums are the safest bet.
Some investors “are very wary of the stand-alone memory care community concept that seems to be proliferating everywhere,” says PinPoint Commercial principal Charles Turner, adding that the continuum model his company is developing adds value to both investors and families. His company’s model allows for converting memory care units to traditional assisted living, and vice versa, depending on current demand.
“If the model is dependent on having 100% memory care, that might be an issue,” says Chip Woelper, Healthcare Portfolio Senior Analyst at Susquehanna Bank. “If the units can’t be flexible, or transition into traditional, low-acuity assisted living, and the project can still work, that would be incumbent on developer to be able to Pro Forma that model.”
There’s certainly a need for memory care product, he says, making it an attractive sector for investment. The Lititz, Pa.-headquartered Susquehanna Bank hasn’t seen much development of stand-alone communities in the Central Pennsylvania region, but it’s subject to each area’s specific demand and what the market dictates, says Woelper. While some markets may be able to support 100-unit stand-alone community, that’s not true of all.
On the marketing side, while the ability to retain residents as long as possible is valuable, there doesn’t seem to be a hard-and-fast rule on free-standing memory care or assisted living combined with memory care, Margaret Wylde, president and CEO of Oxford, Miss.-based ProMatura Group, LLC, told SHN in an email.
There’s nothing wrong with the stand-alone model, she says, although providers need to prove their ability to offer a better, more quality experience for the resident and family in a specialized environment—even if they eventually have to move into a skilled nursing center once care needs increase.
“We have not encountered preference for one type of community (free-standing memory care versus assisted living and memory care) among discussions with family members [during market research],” she says. “The fundamental element is the capability of the operator and their experience, creativity, and flexibility in caring for individuals with memory loss, and their families.”
However, in focus groups, ProMatura Group has encountered families who didn’t want to place a family member in a stand-alone memory care community without capacity for skilled nursing care, because they were unwilling to risk the eventual possibility of needing to move their family member once skilled care was required.