Senior Living Executive Forecast: 2019 Business Trends, Challenges, Opportunities

In 2019, senior living providers need get over a “me first” mentality and get collaborative. Occupancy will remain stagnant and workforce challenges will grow more complicated, but changes in the U.S. economy and health care system could alleviate some pressures and create business opportunities. However, to take advantage of opportunities, providers might need to “detonate” standard practices.

These are just a few of the predictions for 2019 offered by leading executives at senior living operators from around the country. While these business leaders offer a variety of viewpoints, a common theme is that in spite of immediate and pressing challenges, providers have to grasp and respond to complex and shifting dynamics in markets, policy, technology and other areas to position themselves for the future.

Brenda Bacon, President and CEO, Brandywine Living:
2019 will see continued stratification of our product. People are increasingly giving a thumbs down on being defined by their age and their ADLs [activities of daily living], whether it’s our current customers or their 65-year old adult children. The customer of the St. Regis is quite different from the customer of Comfort Suites, not better, but importantly different in what appeals to them. They want more choices in terms of active living, dining and living accommodations. Their families want to see them smile again. They want to entertain their friends. The argument of whether we are hospitality or health care has always baffled me. Why do we have to choose one or the other? We are senior living.

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Of course, labor availability and cost are on a runaway train that we are all chasing. Our challenge is and will be to attract and retain the best talent. The concurrent challenge is to absorb the growing cost of labor in the lowest unemployment environment in 49 years while maintaining and improving margins.

All in all, I think 2019 will be a year of great opportunity for people like me who hate to be bored.

Cindy Baier, CEO, Brookdale Senior Living:
In 2019, senior living companies will have to focus on what matters most – their people. We expect the labor market will continue to be quite competitive, so senior living companies will have to maintain a meaningful focus on attracting, engaging, developing, and retaining key talent. And we believe that providing high quality care and personalized service to residents and their family members, making a difference one relationship at a time, will allow senior living providers to earn trust and endorsements from those they serve.

Misty Hansen, CFO, Watermark Retirement Communities:
We believe senior living is going to be an integral part of the nation’s health care delivery system of the future. Our current private pay model will be disrupted and we will rely on different sources to ensure our success. At Watermark, we are already forming strategic alliances with hospital systems across the country and determining where our communities and services fit into the continuum of care. As baby boomers age they are looking for a different level of service and amenities than in the past. Those entering the nursing home profession will find customer service and hospitality as a growing area of focus.

Kai Hsiao, CEO, Eclipse Senior Living:
Bad news: Trends from 2018 will spill into 2019 — challenged operational performance due to pressure on the topline from stagnant occupancy caused by continued, though mitigated, new supply, plus pressure on the bottom line from a competitive and static labor pool (until we wake up and start to truly expand the labor pool, we’ll see the same faces in different places and wonder why we still get the same results). Additionally, assets will continue to transition due to operators with broken capital structures, or poor performance due to inability to invest back into their operational platform.

Good news: Operators will be forced to address their own self-inflicted wounds, and capital will get both tighter due to rising interest rates and smarter due to more time in the space. Or at least that’s the hope. Happy new year.

Lynne Katzmann, founder and President, Juniper Communities:
2019 will be an interesting year, one that continues to bring change to our country, industry and companies. But this year, many changes will force action. That action may be a decision to change mindset or to actively evolve operating strategy, but in any case, it will be unavoidable. For example, the mindset for management must change. We have traditionally thought in a linear fashion: A leads to B and so forth. But now we need to consider second, third and fourth tier impacts. To be successful will mean adopting an ecosystem mindset. With a new mindset, leaders will be sought out for not only their demonstrated expertise but their humanity. The soft skills like ability to communicate effectively and cultivate creativity will matter more to success.

I really resonated with something I recently read that said that we have reached the level of “peak outrage” in our country. This year, the “Me First” attitude many individuals and companies have adopted may need to change to achieve success. We need a broader, more inclusive approach. Just like success in value-based care demands collaboration and integration, the way to build a culture and the people we need for success will mean a broader perspective and an acknowledgement that the work we do at all levels of the organization is interconnected.

Providers will need to focus more on partnership development. The need to integrate care and the means to create value will in large part depend on not only working together but also acknowledging in real business relationships, the interdependencies of our markets (meaning communities of residents) and the services we need to support their quality (and quantity) of life. We will need to identify the right partners and learn how to negotiate for today and for our evolving needs over time.

Beyond the need to continue to focus on leadership and people issues that will work in this new environment, there are several other trends to watch in 2019. Tech is one. Several trends in tech are likely to impact our industry. Invisible tech or artificial intelligence embedded in every system and hence every job will be become normal. Enterprise data systems will come under considerable pressure and may even be disrupted by the move to PHR [personal health record] and blockchain systems. Keep an eye on the big tech names for their movement into our world with PHR. Even Apple, which has rarely, if ever, opened itself up to outside development is building its health app on FHIR’s [Fast Healthcare Interoperability Resources] international standards. While things are not likely to tip in 2019, they will within a couple of years and our current data is all on older enterprise based systems.

The redefinition by the government of health care is the most exciting change I see making a difference on our industry in 2019. Let me be more specific: how the government defines care will correspond to what they pay for and will open up a new recognition of the value of services we provide in seniors housing. Large health systems like Geisinger and Kaiser Permanente have declared that “good food is good medicine” and are creating “farmacies” where people with chronic diabetes can get not only nutritional counseling but food without paying for it. [HHS Secretary] Alex Azar recently spoke of the value to society of addressing the social determinants of health and noted that the administration could support a broader definition of health services if the services met the triple aim — proved they produced better results for individuals and the country’s treasury. In addition, we will see a broad array of new benefits offered as part of Medicare Advantage plans under the flexibility permitted by the 2018 Chronic Care Act. The options will explode in time for open enrollment next October. Stay tuned!

Sean Kelly, President and CEO, The Kendal Corporation:
The sensibilities of the “next generation” are here! Providers will continue to work toward meeting the “both-and” proposition that the market is demanding: Deliver a community and/or programming that is steeped in a larger mission and born of an engaged, progressive, innovative and wellness-centered culture. At the same time, providers will need to leverage scale, technology and system resources that enable them to thrive in the present and endure into the future. These heightened demands may be cause for greater market differentiation across product types and also may fuel continued consolidation among like organizations, as well as among “health care-related” partners.

Doug Leidig, President and CEO, Asbury Communities Inc.:
I am of the view that the continual adoption and evolution of technology is the single most exciting change we are seeing in the senior living industry and one which will have a significant impact on our future business models. Technological advances are allowing us to increase our engagement and connection with both residents and associates (think robotics). Data analytics is allowing us to create predictive algorithms to help prevent falls and identify significant health issues before they happen or at least minimize negative outcomes. Voice technology, health monitoring devices, and other assistive technologies are opening new doors for us in how we can support aging safely at home, whether home is on our campus or the larger community. The merits of telemedicine and workforce technology have been proven. I truly believe that the senior living industry must embrace technology and determine how to best use it to enhance our current service offerings, provide efficiencies and innovate for the future. These are exciting times!

Anja Rogers, CEO, Senior Star:
In 2019 and beyond, our response to consumer demand must “detonate” current best practices. “Detonate” is the title word from authors Geoff Tuft and Steven Goldbach’s recent book subtitled, “Why — and how — corporations must blow up best practices (and bring a beginner’s mind) to survive.” A radical shift in leadership, operational and marketing perspectives, viewed through the lens of a newcomer to the industry, is needed to bring all stakeholders the returns expected; from employees and residents to capital partners and stockholders, and everyone in between.

Senior Star will be successful in our ability to “detonate” best practices if we simultaneously unite people with a driving vision, clear mission and uphold our promise to do for each other with love. To me, it’s a love thing!

Pierre Verger, COO, Heritage Senior Living:
The competition is growing but also getting more “competitive.”

It means that everybody is striving to provide greater and greater amenities but also to bring more and more clinical skills. Even if all of that has a cost for the operators, this will be a benefit to the residents. In fact, this competition will continue to push the assisted living operators to improve the quality of what they offer in terms of lifestyle and a care delivery model.

The customers will continue to change and expect specific care as in 4-star hotels.

The care will become more and more specific: from peace of mind package in residential care apartment complex, to memory care or hospice care in community based residential facilities. The campuses will continue to provide continuums of care with specific programs including: Activities programs, building layout, staff training and organization, family involvement and outside provider partnerships.

Our first resource is and will be the human resource. The concerning staffing situation will get even more complicated. In effect, to find and retain great staff with the right motivation and skills will be “mission impossible.” There is more competition from other industries who offer a different job, better pay and are more attractive for front line staff as well as for the leaders.

In fact, leadership team retention and support will be key to maintain the stability of each community. Especially, the Director and Director of Nursing will be essential to maintain the necessary relationship with staff, residents, families and partners. However, technology, optimization of the organization and volunteers should continue to be an opportunity for the AL operators to face a growing crisis.

To conclude, operators will have to continue to invest time and money in quality, compliance, amenities, services, technology and workforce. Only the larger operators may be able to support the cost of the assisted living industry changes.

Chris Winkle, CEO, Sunrise Senior Living:
Our team members are the foundation of Sunrise, working each and every day to serve residents with the very best in care. In 2019, focus will remain on the team member experience, as demand for a skilled, talented and dedicated workforce continues to grow. This includes providing additional development and growth opportunities, celebrating our lasting company culture, as well as continuing to enhance our operating platform to help team members thrive in their roles and benefit our customers with a high-quality, personalized experience.

Written by Tim Mullaney

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