3 Data Points Shedding Light on Future of Senior Living

In the last month, a number of reports have provided data points that shed light on what the future holds for senior living.

These reports have included an update on the middle market opportunity, a definition of the active adult rental sector, a breakdown of health conditions and spending among residents, a deep-dive into memory care sector fundamentals, and a case for “navigation hubs” to serve as entry points for older adults accessing services and supports.

For this week’s exclusive, members-only SHN+ Update, I highlight three data points drawn from these reports and analyze why I think they are important for understanding — and creating — the future of senior living. Specifically:

• The huge opportunity for innovations in care navigation
• The need for urgent and data-driven efforts to serve a more diverse population
• Memory care trends that should be generating more discussion

1 million calls

One data point that has been on my mind comes from Nexus Insights’ report on the need for better care navigation.

The data point is more than 1 million calls, which Kindred Healthcare received after setting up a free call center in 2014 to help older adults navigate the country’s complex and confusing system of long-term services and supports (LTSS). 

Even though the call center was “deluged,” Kindred could not come up with a sustainable revenue model for it.

The huge call volume shows the massive need — and business opportunity — in care navigation. And just one week ago, insurance giant Genworth and senior care entrepreneur Timothy Peck announced an effort to help older adults navigate LTSS, to improve what Peck described as a “fragmented,” “dizzying,” “unfair” and “overwhelming” experience for so many people.

This new venture — including its revenue model — is still largely under wraps, but it will involve connecting older adults with providers and services that meet particular quality standards.

Genworth policy holders will be the first consumer group involved, but the intention is to serve the general population, nationwide. Genworth has about 1.1 million long-term care insurance policyholders and 1.6 million life insurance and annuity customers.

Also of note: Walgreens on Oct. 11 announced an accelerated timeline for its full acquisition CareCentrix, for $392 million. One feature of CareCentrix is “post-acute care site optimization,” which utilizes analytics to generate personalized care pathways for people as they are discharged from the hospital, identifying the most appropriate next setting. CareCentrix manages care for more than 19 million members.

The lack of care navigation for older adults is a massive problem that demands a large-scale solution. So, it makes sense that insurance companies and other entities that are pursuing value-based care — and touching millions of lives — will try to solve this problem in a profitable way.

Senior living organizations must be attuned to these moves, which will affect referral streams. Genworth and Peck already are trying to enlist providers as “partners” in their effort, while CareCentrix touts its ability to shorten post-acute length of stay or bypass facility stays entirely.

Senior living providers must recognize and be ready to respond to a danger: that these emerging solutions might be the next iteration of current third-party referral services, and could become just as aggravating and costly to the industry.

But improved care navigation must be a shared goal for every LTSS organization that cares about the wellbeing of older adults, and I believe senior living providers should take steps to be part of a solution while also safeguarding their business interests.

Among other steps, I think providers must gather data to prove out their worth within value-based care frameworks; position senior living communities to consumers as appealing wellness hubs rather than one option on a menu of post-acute care options; and consider how they can increase their care integration capabilities and clout through ownership of insurance products such as Medicare Advantage plans.

Providers also can launch care navigation services of their own. Organizations such as United Church Homes (UCH) and Bella Groves are offering care navigation services through membership models.

“UCH hopes the monthly fee can cover much of the initial cost of the service. They are also encouraged by the interest in the service they have received both from insurers wanting to offer this coverage to their members and from employers considering offering the service as an employee benefit,” the Nexus Insights authors wrote.

The thought leaders at Nexus offer an appealing vision of nationwide “navigation hubs.” The creation of such hubs would require a massive lift across the public and private sectors that is hard to imagine becoming a reality; still, there’s no telling what might be achieved.

And whether or not such navigation hubs come to pass, the future of senior living will be shaped by whatever solutions gain traction with consumers while being financially and operationally scalable.

The diverse 22%

By 2033, 22% of the population of middle-income older adults will be people of color. This was one finding from the recently released update to the “Forgotten Middle” study that quantified the middle-market senior living opportunity, from NORC at the University of Chicago.

The “browning of the graying of America” has been observed for years, as Priya Living CEO Arun Paul pointed out to me in his Changemakers interview two years ago. And some organizations, including Priya, are taking concerted steps to serve a more diverse resident base, while still welcoming residents of all backgrounds. We recently explored the growing movement toward affinity and niche communities in an SHN article.

But it’s also clear that the industry has to undertake a massive effort to meet a more diverse market. P many communities today are racially polarized, which Brandywine CEO Brenda Bacon was refreshingly blunt about at the recent NIC conference. 

“You can literally walk into buildings, and every customer is white, and everybody who is working for them is Black or Hispanic,” she said.

This situation is even more disturbing when you consider how few of those frontline workers ascend to leadership positions.

“In the C-suites and boardrooms, you don’t see the diversity,” Bacon said.

A lack of diversity within senior living leadership does not bode well for the industry’s ability to reach a more diverse consumer base, and I’ve been disappointed to see women of color, including Cindy Kent and Lilly Donohue, leave top positions within the last year.

In interviews and conversations, I frequently ask senior living executives about how their organizations are working to improve diversity, equity and inclusion. Often, they take these questions as an opportunity to be self-congratulatory. Commonly, they focus on gender and tout how many women hold high-level positions in the company.

Gender diversity is essential (and there is still much progress that needs to be made), but leaders’ silence on matters racial diversity is telling. Glossing over racial disparities might be possible today but will become more difficult in the near future, because data is going to reveal the scope of the industry’s problems in this area.

This data will come in part from investor groups, which are increasingly focused on environmental, social and governance (ESG) matters. Providers should expect ownership firms to require more robust reporting on the racial diversity of resident populations, workforces and board composition — and investors will demand action if that data does not meet their “social” and “governance” goals. Consider last week’s Washington Post article on a study that analyzed CEO appointments from 2001 to 2020, which found that a median-size firm appointing a Black CEO saw a 3.1% boost in market cap three days later. Firms that named White CEOs experienced a 0.91% decline in market cap during that 3-day window.

And data on senior living’s racial diversity will come from other sources. Activated Insights is working to incorporate DEI data into the algorithm behind the Best Workplaces in Aging Services list, which is published by Fortune.

I expect that the data will not be pretty, but more clearly quantifying the issue will be an important step toward creating an industry that is more equitable and, ultimately, more profitable. 

‘Remarkable’ 4.3% increase

The third data point that has been on my mind is 4.3%.

This comes from a recent NIC analysis of memory care fundamentals, which stated:

“Remarkably, so far, memory care is the first and only care segment that has exceeded pre-pandemic occupied stock levels, up 4.3% or 5,148 occupied units over its level during the first quarter of 2020.”

In other words, demand for memory care has been strong, continuing a trend from before the pandemic. Over the five-year period prior to Q2 2020, occupied stock in the memory care segment increased by nearly 40%, compared to 9.6% for independent living and 17.8% for assisted living.

Couple this trend with another data point: Just seven newly built standalone memory care communities opened between Q1 2020 and Q2 2022.

That compares to about 35 newly opened standalone communities that came online each year between 2015 and 2020.

The surge in memory care during the pre-pandemic years did contribute to oversupply headwinds in certain markets, so the current slowdown in development might be a welcome correction. And there are challenges in the standalone memory care model, some of which RSF Managing Director and NIC Board Chair Kurt Read described at the NIC conference. For instance, smaller unit counts make these communities vulnerable to occupancy pressures and create difficulties in recruiting top leadership talent.

That said, one in three people aged 85 or older in the United States is living with dementia. If this ratio holds, 3 million people in this age group will be living with dementia by 2030. Among people 75 to 84 years old, 3.2 million will be living with dementia by 2030.

“These eight-year outlook estimates reflect that a sizable number of persons with dementia will need intensive and specialized memory care services as the severity level of dementia advances over time, and as challenges arise for those with dementia as well as for their family members,” NIC Senior Data Analyst Omar Zahraoui wrote.

From my perspective, there has been surprisingly little focus at the industry level on memory care demand — both the strong rebound since the pandemic and the longer-term trends.

Memory care development surely will ramp up in the years ahead, but developers could have a huge opportunity to seize right now, given the massive slowdown in construction of freestanding communities. However, operational and financial models must evolve if projects are going to be successful and deliver the highest quality care.

There’s obviously room for improvement in the standalone memory care model, to create more efficiencies of scale without sacrificing a high-touch, person-centered approach. New technologies, medications (including cannabis) and building designs (including clusters of small homes) all will play a role in the evolution of this product type, as speakers at our BRAIN event earlier this year explained.

I believe we also must think differently about how memory care is delivered in communities offering a continuum of services. Executives tell me that already, many assisted living residents are living with some form of dementia and that inevitably this number will rise.

Given the demand curve, I think that secured memory care wings likely will need to expand, and memory care also will become more integrated into every level of senior living, with more tailored offerings for each stage of dementia. Collaborations and partnerships with community-based organizations will be critical.

Then there is the huge challenge — and opportunity — involved in delivering memory care for the middle market. Given the high and relatively fixed labor costs associated with memory care, expansion of Medicaid waivers and other public policy changes may be necessary. But providers also should be exploring how value-based care is creating opportunities, as health systems such as Ochsner recognize the potential for huge cost savings by facilitating more coordinated and affordable care for people with dementia.

While there is a massive scramble to win over today’s young and healthy “active adult,” the future of senior living also will belong to those organizations that figure out how to deliver memory care to older adults with some of the greatest needs.