Almost three-fourths of senior living residents in assisted living and memory care are living with behavioral health needs such as depression, anxiety and addiction.
That was one eye-popping statistic from a study released last month by the National Investment Center for Seniors Housing & Care (NIC) and NORC at the University of Chicago.
Independent living residents don’t fare much better, with 64% of those residents living with behavioral health needs. Even CCRC residents struggle with behavioral health, with the study noting that a little more than half of them have such needs.
Obviously, there are massive behavioral health needs in senior living, and operators that ignore behavioral health are likely failing their residents and missing a big opportunity that is growing by the year.
In this week’s exclusive, members-only SHN+ Update, I offer my analysis of the behavioral health opportunity in senior living, including:
- Why the senior living industry has underserved behavioral health needs
- How a former senior living exec is diving into the ‘biggest market in the history of our country’
- One possible future for behavioral health in senior living
Behavioral health challenges
With such a great need among senior living residents, it’s an open question as to why the senior living industry hasn’t chased behavioral health as an in-house service line.
To learn why, I spoke with Reed Gunnell earlier this year. Gunnell with his wife owns and works at Heritage Lane, a behavioral health assisted living community in Mesa, Arizona.
While he would not describe Heritage Lane as a senior living community, as it cares for people of all ages, some of the community’s residents are older adults. And as Gunnell sees it, the biggest hurdles to wider adoption are risk and liability, operational costs and reimbursement.
Regarding risk and liability, behavioral health residents may have complicated care needs that change frequently. Senior living leaders are likely to see behavioral health as yet another complicated service to offer, and potentially an added liability during a time that is already fraught with legal pitfalls.
Staff hiring and training is another potential hurdle. And, offering in-house behavioral health services could blow up operational expenses during a time when many senior living operators have little room to increase their labor budgets.
Reimbursement is yet another obstacle. The vast majority of behavioral health services Heritage offers are covered by Medicaid. Any operator that takes public dollars can tell you those funds are not always reliable. And operators focused on a private-pay model are likely to steer clear of Medicare and Medicaid certification.
But it’s clear there is a need for these services. Gunnell said Heritage Lane often fields calls from family members of residents who are being evicted from their communities due to behavioral issues that other operators just can’t meet.
“Every provider cares, every provider wants to take care of their people — but sometimes we don’t know what we don’t know,” Gunnell said. “The opportunity is there.”
Gunnell is not the only operator who sees a big opportunity in behavioral health in senior living.
In September, former Aegis Living President Kris Engskov launched Rippl, a new service aimed at providing home-based mental health services for older adults with memory care or other cognitive needs. The startup secured a sizable $32 million in seed funding from backers including ARCH Venture Partners and General Catalyst.
Although he is still working out the details, Engskov told me he sees a huge opportunity for more behavioral health services in senior living. His view is emboldened by the fact that there are so few psychiatric clinicians in the U.S. that specialize in geriatrics.
Engskov’s company studied claims data from emergency rooms across the country and saw they were “filled with people with dementia.” Although the reason for these visits vary, hospitals are not always equipped to properly care for that population.
Engskov said that the setting is the “last place” people living with dementia or other cognitive changes should end up, and that he also believes that many of these visits are unnecessary in the first place.
“What I saw was the opportunity to avoid those visits if there was an infrastructure that existed,” Engskov told SHN. “We saw the opportunity to create this infrastructure.”
Engskov envisions Rippl working with senior living operators to help residents living with dementia and their families navigate the care system. He sees the platform connecting senior living residents with specialized services — such as 24/7 assistance and behavioral support — from nurse practitioners, licensed social workers and community health workers.
Rippl will first operate under a fee-for-service payment model. But long-term, Engskov said the goal is to weave the platform into the industry’s larger shift toward value-based payment structures. For senior living operators, he sees benefits in that arrangement.
In theory, a layer of behavioral health services would help keep residents from the emergency room, and potentially boost length of stay and satisfaction in the process. It would also potentially boost the clinical capabilities of communities without adding to the cost of doing so.
“They’re able to offer a very specialized level of care without cost to them, because we’re working with insurers directly,” he said. “We hope that providers … see it as a sort of a no-brainer.”
Already, he said the company has signed up some senior living operators as partners and plan to pilot the service with them.
“There have been billions of dollars invested in mental health in the last three years, but … the majority has certainly not been targeted at seniors,” Engskov said. “And yet, to me, it seems obvious that this is going to be the biggest market in the history of our country, and we have to be prepared for what’s coming.”
Engskov’s assertions are backed up by the huge amount of capital flowing into the behavioral health market, and the digital space in particular.
Digital mental health investment hit $700M in Q3 2022, our sister publication Behavioral Health Business reported this week. And that’s actually a drop off from 2021 investment levels.
“When you put it in perspective of the economic headwinds that are out there for the entire industry and the pullback in deals of the entire industry, we’re looking at the deal flow to be still pretty healthy for behavioral,” Larry Kocot, principal at KPMG, told BHB in August.
And the Rippl funding has been among the largest rounds, with the average deal size for 2022 sitting at $11 million.
A glimpse of the future
The situation in the behavioral health space has parallels to trends in primary care, which also has seen an explosion in startups with more tech-forward models, seeking to facilitate more value-based care. While most of the primary care startups, like Oak Street and Cano, have not targeted senior living residents specifically, they do see opportunities to expand in this area. And other ventures, such as Pine Park Health, are targeting the senior living market.
And just as with primary care, it’s not hard to imagine a future where more senior living operators work with partners to offer behavioral health services in their communities.
While he expects other companies to make inroads in behavioral health in a similar way, Engskov also believes his company will have a competitive advantage through its tech-forward operations.
He also sees a competitive advantage in the fact that Rippl will specialize in behavioral health for older adults, an area where there are still relatively few players.
“I think we’re going to find that a great number of residents could benefit from even very basic mental health support,” Engskov said.
Connections between behavioral health and senior living and care also are recognized by some of the largest capital providers in the space.
Publicly real estate investment trusts including National Health Investors (NYSE: NHI) and Sabra Health Care REIT (Nasdaq: SBRA) are making sizable bets in the behavioral health sector, and it doesn’t seem like a stretch to me that they could one day find synergies between their senior living and behavioral health assets.
At the same time, the senior living industry itself is moving toward a more decentralized care model that prioritizes preventive medicine and wellbeing over reactive health care — going from “sick care” to “well care,” as Bickford Senior Living’s Alan Fairbanks has said in the past.
With so many residents living with mental health needs, it seems likely that behavioral health services will play a big role in that effort.
In a not-too-distant future, I see a world where more senior living operators offer behavioral health services to residents through telemedicine or in-person visits. Although there is an opportunity for operators to get into the service line themselves, I think a more likely outcome is that companies like Rippl will step in to fill the gap, given the complexity and time required in doing so.
“We’re helping with access, we’re providing convenience to these operators who may not be able to find that level of specialty care — and may not even need it full time,” Engskov said.