Senior Housing Crystal Ball: Top Execs’ 2017 Predictions

In C-Suites across the country, senior housing executives are trying to get a read on the year ahead.

The inauguration of President-elect Donald Trump is fast approaching, and while there have been some signals as to what policies will change, major questions remain about his approach to health care. Still, several senior living leaders believe that continued collaboration across the health care spectrum will be an ongoing trend—and a key opportunity for the sector.

Some executives are expecting further occupancy pressure from new supply coming online. As for whether new development will slow or remain robust, there’s some mixed opinion. Other top of mind issues include ongoing labor challenges, and technology, which is affecting everything from marketing to transportation.

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“While certain markets are contending with supply pressures, there continue to be opportunities for targeted senior living development in urban areas featuring a mixed-use and/or retail component. In 2017, we anticipate an increased focus on high barrier to entry markets that combine mixed-use retail environments combining with senior living.” —Mark Alexander, Senior Vice President, Head of Development, Atria Senior Living

“Two things come to mind. One is the growing importance of delivering on performance, especially maintaining a culture that attracts and retains the best team members, including the credentialing of our community Executive Directors. The other is that, on the deal side, as I think we have already begun to see, private equity will again become an aggressive player in the senior living space.” —Brenda Bacon, President and CEO, Brandywine Living

“Collaboration between traditional health care providers and senior housing is important and it is going to become even more important. There is an opportunity for senior housing to become even more essential in the evolving ecosystem of health care. You are going to see health care public policy continue to drive less expensive, better quality, value-based outcomes, irrespective of the fate of the Affordable Care Act. Senior living can be a part of the solution, and I think that is an exciting opportunity for the industry.” —Andy Smith, President and CEO, Brookdale Senior Living

“While new competition will impact markets in the short term, I expect experienced operators, who focus on hiring and retaining the best people, will outperform those who have the newest building. Engaging your front line will be the key to delivering the consistent services that are critical in a marketplace where families have numerous choices to consider for their loved ones.” —Richard J. Brewer, President and CEO, Commonwealth Senior Living

“We expect to see a continued focus on digital strategy and how to more effectively use this approach to initiate, communicate and cultivate relationships with prospective residents and their family members. It’s no longer a digital strategy that is required to be successful, but an overall integrated marketing strategy in a ‘Digital World.’” —Terri Cunliffe, CEO, Covenant Retirement Communities, Inc. 

“In 2017 I think there will be a slow down in consolidation yet an abundance of capital will still encourage new development of assisted living and memory care projects. A new Republican federal government will help relieve labor regulations but will encourage certain blue states and cities to get even more aggressive on labor mandates.” Adam Kane, Senior Vice President, Real Estate Acquisition & Corporate Affairs, Erickson Living

“We will begin to see examples of true ‘Digital Strategies’ in the CCRC industry. While not on the Uber-level of disruption, these capabilities will provide tangible product differentiation in the market. Companies will leverage digital capabilities, such as the Internet of Things (IOT) and Artificial Intelligence (AI), to deliver resident-facing apps and portals, moving beyond social networking and delivering real value to residents. Voice-enabled virtual assistants will allow even technophobic seniors to access relevant information and request services. Providers will build ecosystems of connected digital services, first within the communities, and then extending to external partners to bring a wealth of information, products and services only a mouse-click or voice command away.” —John F. Triscoli, Senior Vice President, Chief Information Officer, Erickson Living

“Labor challenges continue to plague the senior living industry. It’s in the best interest of the industry for providers to collaborate and share best practices for improving employee retention at all levels. We see the utilization of technology being essential to continuous quality improvement as well as a key resource in recruiting and retaining teammates in 2017 and beyond.” —Richard Williams, Senior Vice President, HHHunt Senior Living

“The big issues for 2017 will fall into two primary buckets: Adapting to value-based care and strengthening human capital. A third issue which has plagued us and long gone unaddressed is our industry branding. On value based care: Because the IMPACT Act and MACRA enjoyed bipartisan support, we are betting that the movement toward value-based care will continue under the Trump administration. As a result, it will be critical to continue to build an electronic infrastructure that permits integrated care—that is, the provision of ancillary services that address higher acuity via coordinated communication and real time access to patient data.

On strengthening human capital: National pressure for raising minimum wages is likely to abate under the new administration, however on the state level things look different. Eighteen states implemented increases on 1/1/17 and many others have pending legislation.

On rebranding senior living: As an industry we must address ageism, which is a fundamental problem for all of our businesses as it affects the size of the market seeking our products. At Juniper we hope to do our share by exploring alternate approaches to promotion most notably by switching from a description of features and benefits to define our product to thinking in terms of outcomes, what your life can look like. To get a better handle on our thinking, take a look at the Nike website!” —Lynne Katzmann, President and CEO, Juniper Communities

“I see construction of new communities continuing in 2017; however, at a slower pace than what we have seen in the last couple of years. I generally believe that the slower pace is not due to oversupply, but rather a continuing increase in construction costs. As the US economy has strengthened, alternative construction projects in the marketplace have made construction trades and material more expensive. This competition will increase the overall costs of new development projects and will make it more difficult to meet investor return hurdles.

In addition, as noted above, while I generally believe that supply and demand are in relative balance, competition from new developments coming on line in 2017 and offering lease-up incentives will impact the ability of stabilized communities to maintain high occupancies while achieving significant rate growth.” —Jon DeLuca, President and CEO at Senior Lifestyle

“In 2017, there will be a continued emphasis on strengthening collaboration with health systems and working together to coordinate residents’ care to help promote positive outcomes. Our industry prides itself on providing high-quality, personalized care and services for seniors. We’ll need to truly deliver on that experience consistently for our residents, in order to remain competitive and preserve our reputation as the best choice for families seeking senior living.” —Chris Winkle, CEO, Sunrise Senior Living

“With a strong economy and housing values returning to pre-recession levels, seniors will have the resources to enter Life Plan Communities. Nursing home occupancies will continue to be challenged in 2017, however, due to a preference for using home and community services and other venues to care for seniors with low-to-moderate acuities.” —John A. Capasso, Executive Vice President, Continuing Care, Trinity Health

“Development will slow as markets begin to be overdeveloped. Financing will be tougher to secure with rising interest rates. Finally, operators will become more selective regarding which opportunities to pursue.” —David Barnes, President and CEO, Watermark Retirement Communities

Written by Tim Mullaney

Photo Credit: “Crystal Ball/Glaskugel” by Christian Schnettelker, CC BY 2.0

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