Margaritaville Meets Adult Day: ActivAge, the Middle Market, and an Overlooked Senior Living Opportunity

Today we saw the release of an update to the watershed “Forgotten Middle” study that quantified the huge need for more affordable senior living options.

While there have been many great ideas percolating in senior living about how to serve this demographic, there is one area I think is still overlooked in 2022: adult day.

The practice of caring for older adults during short stays but not overnight — usually called adult day or adult daycare — is not new, and these kinds of arrangements are not a true alternative to moving into a senior living community.


But as I look into the future, I believe that the forces shaping the industry, such as growing middle-market demand, will drive more older adults and their families to consider other options than independent or assisted living.

And I do see some companies trying to scale with unique models that break the mold. Just last week, I spoke with the leader of ActivAge, which has ambitious plans for a pipeline of 500 Margaritaville-inspired centers.

Some senior living operators are also making moves to expand in active adult, but I think too many providers are passing on this opportunity while competitors in the home care space and entrepreneurs targeting adult day specifically make moves.


In this week’s exclusive, members-only SHN+ Update, I offer analysis on how I see the future of the adult day sector, including:

  • Why adult day is a significant growth opportunity
  • Why more operators haven’t embraced adult day
  • One possible future for the adult day sector

The case for adult day

On the surface, adult day might seem like an easily added revenue source, given that senior living operators already offer much of what it includes. But beneath the surface lies a host of challenges that have disincentivized operators from going down that road — and as I’ve said before, I think that providers are being deterred from an area of rich opportunity.

For one, operators adding adult day would either need dedicated space for an adult day program or temporarily reserve space for one. As any programming director can tell you, finding space for groups of residents is not always easy.

Although they don’t stay overnight, caring for an extra group of adult day residents on top of their regular resident base would require hiring more workers at a time when doing so is still very challenging. And that is not to mention the added expenses such an endeavor would bring.

Adult day settings also usually command far lower resident rates than around-the-clock independent living or assisted living. So, even if operators can overcome the staffing and space hurdles, the reward for doing so is likely not worth it. And even if there is a profit margin to be had in adult day settings, operators doing the math might very well see a better one in the services that they already offer.

Here’s how I see it: It’s true that millions of older adults in the coming years will need senior living services, and that represents a big upside for the industry. But there is no guarantee that they can afford those services, and while I see valiant efforts to address affordability in the industry, I am pessimistic that these efforts will fully address the market need anytime soon.

I have a dark vision of a not-too-distant future where millions of older adults want and need senior living services, but lack the home equity, savings or passive income to afford it long-term.

Although the middle-market senior living sector is abuzz with good and interesting ideas, I see a real risk that only a lucky subset of older adults in the future will find a spot in true middle-market communities, with the rest having to make do elsewhere.

In the latter case, I believe the adult children of those older adults will either work as familial caregivers or buy home care services in piecemeal as they can afford them. That already happens today, but with millions of older adults entering their retirement years with less in their pockets than the previous generation, I believe this trend will only intensify.

I can almost hear the conversations: “If only I had somewhere better for Mom and Dad to go.”

I think there is a natural opportunity for operators to tout adult day as a hybrid or stopgap approach that lies somewhere between in-home care and true senior living.

According to the most recent Cost of Care Survey from insurer Genworth Financial (NYSE: GNW), the median cost of assisted living services for one resident in a one-bedroom unit was about $4,500 per month, or $54,000 annually. By comparison, adult day health care costs a median of about $1,690 per month, or a little over $20,000 annually, according to that survey.

A new update to NORC at the University of Chicago’s “Forgotten Middle” study, released on Wednesday morning, underscores the need for more affordable senior care options. According to the newly updated study, more than 11 million middle-income older adults may lack the funds to pay for assisted living while also not qualifying for Medicaid by 2033.

A new vision for adult day

While I see a strong value proposition in adult day as a lower-cost alternative to home care, I also think the model is in need of changes before it goes prime time.

One big problem — but not a new problem — is the name. No matter how you slice it, I suspect nobody wants to go to an “adult daycare,” even if that adequately describes the services offered there.

This isn’t a problem limited to the adult day sector. The senior living industry has long fretted over whether the word “senior” belongs in senior living, and some have complained that “active adult” is confusing in light of what other product types are called.

While the adult day sector is in need of some changes, I already see some companies looking to break the mold.

I had an interesting conversation recently with Kris Chana, Founder and CEO of ActivAge.

The adult day and home care company is building a unique model of adult day centers that he believes could be part of the sector’s “game-changer for the future.”

Chana’s company is taking a playful approach to the adult day center, which it simply calls “the club.” The company is currently operating one adult day center in Port Charlotte, Florida, which Chana described as a “Margaritaville-style” offering.

For family caregivers, AcitvAge is not an adult day center, it is a “daycation for their loved one.”

“The whole theory is that you’re jumping on a seaplane and we’re going to transport you to some magical island called ActivAge,” Chana said.

Though the facility is licensed to accommodate 60 older adults, Chana said the “sweet spot” lies at around 45 to 50.

The center has different stations for residents with unique names, such as the “Fins Up Fitness” area, the “Ocean Blue Salon and Spa” or the “Green Turtle Theater.”

Chana sees a future where millions can’t afford senior living but need it.

“That’s going to cause them to look for more affordable solutions that can provide a stopgap solution where it’s like, ‘Mom’s not really ready for assisted living, but we need something to help during the day.’” he told me. “I see that being a big thing.”

And Chana doesn’t intend to stop there. The company is currently building out a location in Sarasota, Florida, which will be one part flagship adult day center, one part headquarters, one part support center.

Rendering courtesy ActivAge

He also has a long-term vision to grow the company to as many as 500 locations across the country through a franchise model. Already, he told me he has 50 applicants that he is vetting.

And while Chana’s vision is particularly ambitious, he is not alone in tackling the adult day space. Another company is Innovation Senior Living, headed up by CEO Pilar Carvajal. Like me, Carvajal believes the senior living industry could be “crushed” by the weight of unmet middle-market demand. And she, too, sees the utility of adult day in reaching that cohort.

“Our industry is going to have to get comfortable with adult daycare, and I don’t understand why they’re not already,” she told me in May.

Another company looking to shake up the model is Town Square from Senior Helpers CEO Peter Ross. The Town Square model is unique in that older adults mingle inside of a large building with 1950s-themed activity “storefronts.”

Like Carvajal, Ross told me a few years back that he saw Town Square — which operates on a franchise model — as a “godsend” for the middle-market.

“​​Town Square fills a huge void for that group of people,” he told me in 2019.

Today, there are four Town Square franchises open in Maryland, New Jersey and Florida; with a list of others on the way in Texas, Georgia, North Carolina, Utah, Nevada and California.

Chana, Carvajal and Ross are united in their belief that adult day will play a significant role in the care ecosystem for the massive boomer cohort — and now is the time for forward-thinking companies to plant their stakes in this market.

“I see the value in adult day, and … I feel like it really is the future of care,” he said. “It’s just the world doesn’t know yet.”

Companies featured in this article:

, ,