Memory care construction has been on the rise as of late, and it’s no wonder why. The sheer number of Americans with Alzheimer’s disease and other forms of dementia is reason enough to spur development activity, and an anticipated increase in the incidence of Alzheimer’s in the years ahead perhaps indicates that memory care is now becoming “mandatory” in seniors housing.
All signs seem to point that way, at least, Lancaster Pollard writes. In fact, leaders at seniors housing and care facilities believed memory care would experience the most growth in 2016 as opposed to other elements of the continuum of care, according to a survey of nearly 300 industry professionals conducted by the Columbus, Ohio-based senior housing finance company. Respondents also noted memory care as a main component of planned construction projects.
“I wouldn’t say anything is ever immune to oversupply,” Jessica Rosenberg, an associate with Lancaster Pollard, tells Senior Housing News. “If two years from now we get bombarded with supply, that could hurt. Given where the population is going, though, I don’t think we’re going to have an oversupply of memory care.”
Memory Care by the Numbers
An estimated 5.4 million Americans have Alzheimer’s disease in 2016, according to the Alzheimer’s Association, and nearly half a million people age 65 or older will develop the disease this year. What’s more, almost half of seniors over the age of 85 have it, Lancaster Pollard notes.
Considering that the senior population is expected to double by 2030, the need for memory care is significant, and demand will only grow. Luckily, the industry has responded.
Overall, the number of memory care units on the market has increased by 52% since 2010, from 43,191 units to 65,594 units as of the second quarter of 2016, according to findings from the National Investment Center for Seniors Housing & Care (NIC). In terms of freestanding memory care, inventory hit 29,090 units as of the second quarter of 2016, and average construction activity of standalone buildings represents 10.8% of existing stock, or 3,100 units under development, the data shows.
The Memory Care Opportunity
Without memory care, providers stand to lose quite a bit, especially financially, Rosenberg says. If someone comes into assisted living but really needs memory support services, for example, expenses for that resident will be much higher than for a typical assisted living resident, thus negatively impacting a company’s net operating income.
Additionally, in a continuing care retirement community (CCRC) setting where an entrance fee denotes a promise to care for a resident for the remainder of his or her life, memory care is crucial, Rosenberg says. Staying in independent or assisted living would potentially require 24-hour caregivers, and skilled nursing components don’t always have the employee capacity to oversee a memory care unit.
“If we ever talk to clients about care continuums, we urge them to consider incorporating memory care into their model,” Rosenberg says.
Buildings without a memory care element especially should seize the opportunity. Lancaster Pollard has a number of clients that have existing assisted living beds, and they’re looking to expand their properties to add memory care, Rosenberg says. Another approach is constructing assisted living units or wings that can easily be converted to memory care.
With an emphasis on memory care expansion and development mostly in primary markets, since developers want to build where they can generate the rents they want, there must be a focus on rural and underserved markets, as well, Rosenberg says. Typically, proposals for secondary and even tertiary markets where supply is limited tend to be easier to finance, she says.
Upping the number of memory care units is important, but there’s more to the memory care equation than building and expanding, Rosenberg says.
“While it is important for developers to continue to build and expand the number of memory care beds available, it is also crucial to not lose sight of the care aspect associated with this development,” Rosenberg writes. “With higher acuity residents comes increased oversight and ultimately increased labor costs. The training and development of staff is a critical component to success in the memory care segment.”
But that component isn’t always the easiest to accomplish, she tells SHN. A mix of senior, more tenured staff and younger workers would be an ideal balance, but that requires a different approach to recruitment.
“How do you get quality staff in a building when they can go down the street to McDonald’s and make more?” Rosenberg says. “There needs to be an approach as more of a learning process as opposed to, ‘this is hard work and no reward.’”
Otherwise, Rosenberg believes an understanding of memory care across all facets of the senior housing industry will prove beneficial moving forward.
“It’s very important that lenders make a strong effort to understand operations in general, but also memory care,” she says. “The best way to be able to provide financial advice is to understand what you’re looking at.”
Written by Kourtney Liepelt