Senior Living Executive Forecast 2023: Pivoting Away From ‘Crisis Mode’

With a pandemic, staffing woes and operational headwinds serving as the backdrop, the senior living industry has spent the last two years lurching from one crisis to another. In 2023, that must end.

That is the belief of HumanGood CEO John Cochrane. As he surveys the industry, Cochrane still sees plenty of operational areas requiring change and disruption.

“We aren’t in the same place as two years ago and we cannot manage as if we still are,” he said.

The good news is that he also believes the industry has an opportunity to emerge from “crisis mode” in 2023 and pivot to its next chapter. In particular, the industry has a long runway for occupancy growth in the year ahead, albeit with a potentially higher bar for stabilized occupancy than in the pre-pandemic years.

Across the industry, senior living leaders are feeling bullish about their long-term prospects — and with the rise of the baby boomers, there is plenty to feel bullish about. Although many are plagued by the same problems as the prior two years — chief among them, staffing; they are also hopeful that 2023 is the year when the industry finally emerges from its numerous headwinds.

At the same time, they also see a possible looming recession, rising interest rates and still-elevated expenses on the horizon, which could complicate or even derail growth and recovery plans this year.

To learn more about how senior living executives are feeling heading into the new year, Senior Housing News connected with a variety of industry leaders. What follows is the second part of a two-part series sharing those responses:

Cindy Baier, CEO, Brookdale Senior Living:

Throughout 2022, we faced no shortage of daunting challenges that continue to be obstacles we will work to overcome. Brookdale will maintain our focus toward the need to continue rebuilding our Covid-19-impacted census. We’re also currently in an inflationary environment that will continue to challenge this recovery. To help appropriately manage inflationary costs, we expect to continue reducing contract labor, increase our Brookdale workforce, and build more efficiencies into our operations, while continuing to provide quality services to our residents.

As we look ahead to 2023, we continue to focus on our strategic goals, which will remain steady and unchanged from 2022.

We will renew our steadfast commitment to our shared goal of earning resident and family trust and satisfaction by providing valued high-quality care and personalized services.

We understand that the hard work of our current associates is the bedrock on which we all stand. As such, we will continue to focus on retaining, engaging and developing our existing talent. In addition, we will search for new and innovative ways to attract new talent into our communities.

We will also focus on getting every available room in service at the highest profitable rate. By encouraging new residents to move into our communities, we can help offer stability, predictability and compassionate care to more seniors. We’re excited to be rolling out innovative new programs next year that we hope will continue to enhance the lives of current residents and encourage new residents to join our communities.

By focusing on these collective 2023 goals, we will continue to achieve our mission of enriching the lives of seniors with meaning, fulfillment and a high level of personalized care.

Jon DeLuca, President and CEO, Senior Lifestyle:

Over the past several years, we have all felt the stress that the pandemic placed on the seniors housing industry. This came in the form of decreased move-ins, residents who left congregate settings, responding to constantly changing regulations and funding rounds, working to stockpile PPE, and working through ever-present staffing shortages while continuing to care for our country’s seniors. Notwithstanding the times that we’ve weathered, I am very bullish about the long-term outlook for the senior housing industry.

As we continue to operate in the post-pandemic era, the demand for our product not only exists, but continues to grow. This is supported by the fact that resident move-ins during 2022 have outpaced 2019 levels.

While I see a strong industry with much upside, and believe that we will see record levels of resident move-ins in 2023, as an industry we will have to be ready to work through what I expect to be significant obstacles in 2023. Some of these include higher resident turnover and shorter lengths of stay than we have historically seen, increasing labor costs, historic inflation, rising interest rates, and investor challenges in capital markets.

Despite experiencing greater move-ins in 2022 over 2019 levels, lengths of stay for these residents are not as long as they have historically been. The care levels of new residents are greater and require more care staff adding to the pressures of current staff shortages. Shorter resident length of stay means that more move-ins will be needed to maintain existing occupancy levels and even more move-ins will be needed to increase occupancy levels.

On the cost side, this will lead to payment of more sales commissions and additional wear and tear on the units, all of which increase operating expenses. In addition, given the move-ins needed to maintain occupancy, what is considered “stabilized occupancy” is now probably closer to 90% than the historical levels of approximately 93% to 94%.

Although shortages in staffing have improved over the last four months, as we enter 2023 the senior housing industry will continue to experience labor shortages for caregivers, waitstaff, and housekeepers in part because of available alternative places of employment. For a similar hourly wage, our employees could work at McDonald’s, Walmart, or other places. The increases in hourly wages, primarily for caregivers, have also forced a complete overhaul of wages for all other departments. Current caregivers wages have increased over 20% since March 2020, with waitstaff and housekeeping wages increases not too far behind caregiver levels. I believe these wage increases are permanent.

Operators will continue to see a competitive labor environment in 2023 in part due to the fact that the workforce has shrunk since March 2020, and that many people are not re-entering the labor pool. In fact, the labor pool continues to shrink every month, and thus the current unemployment rate is understated. As 2023 progresses, the unemployment rate will continue to rise due to tightening monetary policy by the Federal Reserve Board.

In addition to higher labor expenses, net operating income and margins have also been significantly impacted by historic inflationary levels. For example, raw food costs have increased by over 25% in 2022. Hopefully, inflationary levels will stabilize in 2023, however, without deflation (which won’t happen), many costs for goods and services at seniors communities will continue to increase in 2023.

Due to the Federal Reserve’s aggressive monetary policy of raising interest rates and intention to continue raising interest rates in 2023 to combat inflation, I would not be surprised if the U.S. economy goes into a recession in 2023. I believe this because major layoffs are already occurring, the price of food has not come down in line with other goods since the Federal Reserve’s interest rate increases, and the unemployment rate as of today is understated. The reality is that people have to eat, so they will buy groceries, and the consumption of other goods and services will decline.

On the revenue side I expect to see significant resident rate increases in 2023 ranging from high single digits to low double digit increases. In addition, I can see mid-year increases if the market will bear them. These increases are necessary to offset the increases in the cost structure at the communities. As operators, we need to challenge ourselves to find more efficiencies in other services provided to our residents to offset the net operating margin decline we have experienced caused by the pandemic. While the implementation of certain technologies may assist us with creating efficiencies, our business is taking care of our residents, which requires face-to-face interactions.

Looking at the capital side of the industry, the number of loan defaults in 2023 will increase dramatically over prior year levels. These defaults will occur because the majority of mortgages on seniors housing communities are financed with floating rate debt structures and not a fixed interest rate. The significant increases in interest rates will add even more pressure to operators and investors as the debt service amount increases at a much faster pace than net operating income. Debt service coverages will decline substantially, and debt service coverages will be below the required coverage ratios. This is unlike the financial crisis of 2008 when interest rates declined and remained historically low, allowing communities to cover debt service despite lower net operating income margins produced at the community level. We have the opposite situation currently. The rising interest rates will cause declining valuations for communities.

As a result of rising interest rates, higher expenses and increased cap rates, transactions in 2023 will decrease. Transactions that do occur will be tied to loan maturity, or investor fund lifecycle. I do not see interest rates declining in the foreseeable future, and historically interest rates have been around 6% to 7% (between 1954 and 2005) with interest rates peaking at around 19% in 1989. Over the last 10 years, interest rates have been as low as .25% to 3%, with an average around 2%, primarily due to the financial crisis in 2008. Unfortunately, the days of “free money” are over and I see interest rates stabilizing around 6% to 7% by the end of 2023.

While the higher interest rate environment will have a negative impact on some investors, it also presents great opportunities for new investors to enter the seniors housing industry at a much lower price point and to assemble a portfolio of communities that have been developed within the last 3 to 5 years.

It will take time to figure out what all this means for operators, investors and lenders, but I am confident that as an industry we will be able to overcome the very difficult operating environment that 2023 will throw at us.

John Cochrane, President and CEO, HumanGood

We have lived the last two years, quite necessarily, in crisis mode, constantly recalibrating strategies and approaches, shifting staffing resources and resident programming, opening and closing dining rooms and activities, reallocating resources and responding to the every-shifting demands of a global pandemic, disrupted supply chain, and persistently high inflation.

We cannot live in crisis mode any longer. The good news is we don’t have to. We spent the past two years in the immediate, lurching from crisis to crisis and all too often glad to just get to the end of the day with everything still intact. We aren’t in the same place as two years ago and we cannot manage as if we still are. Happily, those same years of challenge have brought us new skills, vital to making our way through a radically different world.

We have a leadership mantra at HumanGood: we must have one foot in today and one foot in five years. Of course, that is easy to say, but much harder to do, particularly in a disruptive, chaotic, inflationary environment. It has never been more difficult yet it has never been more necessary.

A few thoughts on the next five years:

The strong will be challenged; the weak will not make it. Consolidation will continue as providers need scale, talent, and resources to survive. Just as we see happening in media, there will be a smaller number of stronger, better equipped, and deeply pocketed players with the resources, will, and vision to win. New models will emerge seemingly out of the blue. Competition will come from the places we do not expect. We will act surprised and try to play catch-up. Tough decisions will have to be made: which businesses to be in and to be out of; which communities to invest in and which to divest. Smart operators will have to figure out how to differentiate in a largely undifferentiated marketplace. There will be winners and there will be losers.

Demographics are going to radically shift our field. Yes, we have a rapidly growing number of older people getting older. That is market opportunity. Conversely, and largely ignored but equally important, we also have decades of declining birth rates, globally, which means far fewer people to support that rapidly growing aging demographic. That is market challenge. This is going to force a radical rethinking of how we perform every aspect of our business.

The most immediate impact of this shift will be in the labor markets. We are currently on the front edge of the biggest disruption to the labor markets the world has ever seen. The boomers are aging out and the coming generations are not bringing in adequate reinforcements. This dynamic will put continued pressure on wages, cause a shift in labor to resident, family, and even volunteer participation, and continue the push to greater automation. Minimum wages will be a quaint, but irrelevant relic of a bygone era in many cases with increased costs dictated by this historic shift in power from employer to employee. $25 an hour starting wages will become commonplace. Unions will be irrelevant if providers embrace this change and quickly adapt or they will be ubiquitous if we drag our feet and resist. It’s our choice.

Technology will continue to reshape our field in ways big and small. We are already seeing technology to help manage many of the issues around aging, healthcare, life engagement, community management, etc. We will see continued focus and development on tools and resources to engage existing customers (residents, families, team members, and community partners), improve business practices, and attract new customers. We will also see a consolidation of technologies into a few winners with the resources, depth, and market position to win.

Healthcare will continue to evolve due to customer demands for measurably healthier living and to an institutional/social need to better control healthcare costs while ensuring universal access. Our sick-care system is undesirable, unsustainable, and unaffordable. We can and must be part of the solution bringing socialization, access, affordability, and accountability. Where we can do this on a sustained and measurable basis, we will win and win big.

The changes are real, they are big, and they are here. We are at a precipice. What got us here will not get us where we want to go. But there is hope. The last two years have forced all of us to be more agile, creative, responsive, and bold than we have ever been. Those of us who cling to the old ways of doing things will lose. But for those who adapt and pivot the sky is the limit. This is our time and I wouldn’t miss it for anything.

Greg Roderick, President and CEO, Frontier Management:

Frontier Management has been very targeted in our deliberate approach to enhancing our employee experience, the resident healthcare ecosystem, and in the selection of vendor relationships to position our post-Covid recovery and significant advancement in 2023. Further, making certain that our leadership is not only best-in-class, but to elevate the tools, training and resources in a broad, yet efficient manner. So that is my broad brush, now for specific deets:

Our employees/associates are truly the backbone and we launched our Team Rewards program a year ago to invest in training, tuition reimbursement, swag, bonuses, pay increases, parties and much more. Then, we added Pineapple Academy to our training arsenal which matches our hospitality rich organization. Further, we added Regent USA for training and elevating our environments and support to our Maintenance Directors. We have additional tech planned to meet today’s employee expectations and for making the training efforts much more on the schedule of the employee.

Kare has been our go-to for short term or immediate staffing needs and has been a truly fantastic partner.

Our resident healthcare ecosystem is comprehensive and has been evolving over the past two years which allows the length of stay to extend far beyond the past. Specifically with solid pharmacy, visiting doctor and dentist relationships; specific laboratory, genetic tests, hospice, rehabilitation; and more. These create early detection of issues and a collaborative approach to treatment and care, and often prevention. Our goal is more than double the length of stay with this comprehensive approach.

By utilizing Pure Solutions, we’ve been able to go to market with RFPs to select the best pricing in our vendor relations and nail down lower prices, even in a high inflationary environment. Although wages and other items are up, we’ve been successful in lowering prices with medical supplies, linens, utilities and technology through these efforts. We have outsourced a number of disciplines without quality or culture deterioration.

In fact we just signed with Referah for substantially lower prices for resident move-in referrals. We recently moved our PLGL and Health Insurance representation as well, which will generate further savings.

Our 2023 Operating Budgets were completed and delivered to all of our clients on or before Nov. 15, 2022, and that allows the time to review, adjust and still have them in the hands of our executive directors and team leaders with plenty of time for implementation. Rental rate increases were 20% less than last year because we got ahead of it early in the pandemic when we recognized the headwinds.

Having the best team around me is so critical and without a “yes man” in the group. We discuss, debate and review all issues and major decisions so as to get input from a wide audience so that all parties are considered. We celebrated 23 years of serving seniors on Dec. 1, 2022, and the Company and its communities are in a good position to continue to drive occupancy, meet our objectives and elevate the future leaders of our company and of our profession.

My predictions:

• 2023 will be a year to carefully select markets for development due to interest rates and population relocation.
• 2023 will continue to be a year of the employee and the winners will be the employers that celebrate, pivot communication and technology to better serve the employee, and how they provide training to advance skills and confidence.
• 2023 is a year to improve systems such as purchasing, retooling pricing, and making capital improvements to advance occupancy.
• 2023 will be a year when technology is going to shine. From lifestyle and engagement to healthcare collaboration and employee engagement, this is certain to be a dynamic year!
• 2023 occupancy will continue to rise in high single digit to low double digit levels for large companies; and solid double digits for those in lease-up or releasing post-Covid. It’s a great year to hone those skills and strategies with excellent marketing partners.

Dwayne Clark, Founder and CEO, Aegis Living

We are a “stay the course” kind of company. We’ve been doing this business for 25+ years and have learned not to get distracted by the highs and lows.

The last 30 months have been tough for all of us, especially in the senior living industry but we have remained focused on the fundamentals of being a great company – the same fundamentals we started with 25 years ago when I founded Aegis Living and the same fundamentals that have brought us to where we are today. We focus on our people and being a great place to work and ensuring our residents not only have the best care but come to Aegis to live their best possible lives.

Staffing continues to be the greatest challenge we face. There is a huge cultural shift we are seeing. For example, an estimated seven million men of prime working age are no longer in the labor force and don’t plan to return. We continue to rethink employee benefits and schedules to meet the needs of today’s workforce. Earlier this year, we started Kalon Care, Aegis’ in-house staffing agency to help address this issue and fill the immediate gaps with temporary workers.

The workforce issue is not going away anytime soon. To stand out, companies will need to rethink their employee scheduling practices, how innovative technologies can help the industry, and offer competitive employment strategies. Senior living needs to focus on finding the “right fit” when it comes to their new hires, as it’s easier to coach someone up if they fit the industry well.

The quality of staff talent is worrisome. Some of the best people have just left the workforce and many who are left are taking advantage of the job market by overselling themselves, asking for steep compensation packages and coming in with some not-so-realistic expectations. Every industry is going to be focused on coaching people up, and for some, it just won’t be possible. That’s the situation.

We continue to dive deep into developing new state-of-the art properties with a keen focus on green building. Our new development company will also be leading the way with much needed development consulting services for the industry. We’re always asking: how can we do things differently and push new boundaries?

Interest rates are a short-term problem, yet still one that will cause significant challenges for some. We’ll also see companies come to the market with poor performance and operations due to these long-tail pandemic-challenges – not everyone has been able to maintain quality in their products and services. Companies that are not doing well will be looking to merge with others, while senior housing providers that are better off will continue to distance themselves from the crowd.

The bright side is the recession is not as bad as we thought it would be. Today, less than 50% believe it will still happen, down from nearly 75%.

In 2022, we opened the world’s greenest senior living community in Seattle. I’m looking forward to continuing to drive development and innovation in the green building space. I’m proud that we’ve maintained our core focus by providing exceptional care to our seniors; we’ve been the same company for 25 years.

We’ll be laser focused on navigating the juxtaposition of an inflationary environment versus recession. It’s all about timing and getting that right.

Growing our new development company and staffing agency while keeping focused on our core business is central to 2023 priorities. Luxury senior living seems to be a growing trend today and we’ve been leading the way for 15+ years. We will keep doing what we do best and growing with purpose, not to be the biggest.

Michael Stoller, CEO, LCB Senior Living

Each year we look forward to the next in such different ways. Do any of us remember the giddiness of our industry before the pandemic, with the excitement of the “senior tsunami” getting closer and closer? It’s so easy to look back and wish for those days.

For two solid years we have focused so much of our thoughts and efforts into caring for the safety of our residents in ways that changed everything we ever did, how we delivered services and rethinking amenities. The industry changed in a heartbeat. We adapted. We became better operators, yes even the best operators became better.

While Covid still lingers with new variants and an ebb and flow of impacts on daily operations we have recovered occupancy, mostly anyhow, only to run head on into a series of challenges. In no particular order of importance, the “great resignation” with resultant labor shortages, which resulted in agency staff hiring and wage hikes. Couple that with supply chain issues and inflation after years of relative stability, the escalation of construction costs, and furnishings and decorating supplies becoming limited.

Then of course inflation came next which led to monetary tightening, the resultant rate hikes by the Fed, borrowing rates climbing and lending slowing down dramatically, and we passed into recessionary waters. This all contributed to higher cap rates and more selective investing.

Remarkably, despite all of those impacts, values escalated, showing us that the core fundamentals of our industry remain strong. Tough times weed out flawed business models, and while some operators have certainly struggled (and some have failed) the predominance of the senior housing sector is poised for long-term success.

We are seeing occupancy growth with particularly increasing inquiries and tours in our communities, creeping back towards pre-pandemic levels. This, again, points to the fundamental strength of the product.

We look into the new year amidst continued challenges, but not without great opportunities. While economic and demographic forces have temporarily slowed down new development, we nonetheless continue to seek and take advantage of strong niche development opportunities where they might arise. In many ways, presuming the availability of financing, land acquisition has become quite attractive under the right circumstances.

Acquisitions remain a focus, and those with strong capital partners are seeing tremendous opportunity to add promising-yet-underperforming assets to their portfolios at attractive rates.

Within other areas of the business we have seen major advancements in technology that have changed the speed and availability of information, enabling us to make better, more informed and faster decisions. Despite the urge to cut costs across the board, we have maintained or increased our investment in marketing, taking advantage of new digital marketing tools and opportunities, and shifting away from some of the evanescent channels that are becoming less relevant. We have also increased our investment in our associates and continue to reward them for their loyalty and steadfastness despite some difficult staffing situations.

Finally, we continue to work very diligently on reinforcing our culture and shared belief that we are all one family within LCB: our residents and their families, our associates and their families.

So in some ways, looking to 2023 is a mixed bag, yet with a strong sense that the industry has much growth to look forward to. We continue to focus on outside opportunities for growth where prudent, yet with a close eye on efficiency and business optimization to control cost during the continued recovery.

On the whole I am confident that our industry will be even better-off 12 months from now, with optimism for the tremendous demand we will be called on to meet in the very near future.

Jeff Fischer, President, MBK Senior Living

We made great strides in recouping occupancy losses from the pandemic. Now it’s a matter of maintaining momentum and census, along with continued margin recovery. As for growth in 2023, we’re taking a conservative approach. While we are still considering acquisition opportunities and have our eye on a long-term goal of 10,000 units, our focus this year will be primarily on community management and co-investment projects.

Staffing and stabilizing our workforce. We’re in a health and hospitality business that requires not just people but the right type of person to ensure the delivery of high-quality care, programming, and services. We’ve made a lot of progress in adding talented people to the MBK team. It has helped reduce agency and cut overtime, but we still have our work cut out for us. Like occupancy, it requires constant attention.

We’ve looked hard at how we can better attract, support, and retain our team members. We solicited feedback in several ways. What we heard is what we already knew in our gut – it’s not just about pay. It’s also the desire for more flexible schedules, ongoing training, additional resources, and recognition for a well-done job. Based on this feedback, we have implemented or improved systems that support our team members.

Most noteworthy is our employee benefits package. We’ve taken on the brunt of the cost to ease the burden on our team members. As inflation and the cost of living continues to rise, it has answered a need. Another example is technology and training platforms. We’ve launched The Pineapple Academy in all our communities to provide a quick and effective training solution for our culinary and dining room teams.

Not to sound like a broken record, but I am most worried about staffing and the instability of the workforce. We’re in a much better place than this time last year. We have internal teams focused on cracking this nut and are making good progress.

Emerging and evolving technological advancement in senior living is exciting. While we’ll never get away from personal human care, technology is helping make life easier and more enjoyable for residents and team members. More than just efficiency, although that’s a great benefit, many of the technological solutions can enhance day-to-day experiences and improve communication and engagement.

A new generation of seniors is on the horizon – one that is far more comfortable with technology. That’s why we’ve integrated several technologies and online systems in our communities and continue to evaluate others.

We have launched Connected Living in all communities as an online, one-stop shop for calendars, menus, and other community resources. We’re also utilizing iN2L and Joy For All pets, Eversound, and recently added Rendever, a virtual reality system.

Tim Buchanan, Founder and CEO, Legend Senior Living

Looking toward 2023 we are looking forward to continued growth as we navigate a few lingering headwinds. Growth is occurring on several fronts. Like many providers we are experiencing robust growth in our existing portfolio. Occupancy continues to climb as the interest in our products are exhibiting an experiencing rate of inquiry not seen for many years. As consumers reach more normalized behaviors and life patterns the benefits of seniors housing become more apparent to prospects and families.

Boomers certainly play a role in this. Looking at boomers, they have driven many trends in our culture, not the least of which is housing. In the 70’s apartment construction with them in mind peaked, setting a record still unbroken. However, the US is getting close. In the 80s boomers drove a rise in condominium construction as they sought similar congregate living options but wanted benefits of ownership. In the late 80s and 90’s boomers drove record single family home construction as interest rates lowered and they sought “first time” and “move up” homes. Mini mansions became all the rage! It seems today boomers are returning to smaller homes, condominiums and multifamily type living options designed with them in mind. The growth in these segments has not yet peaked.

We are positioned for continued growth in 2023. We currently have several acquisitions currently in diligence that will enhance our penetration in several markets. Although development is greatly reduced we are seeing select opportunities and are working closely on some very targeted products. We look forward to some settling of the debt markets in 2023 which will certainly lead to a more robust deal pipeline.

Rising interest rates have tapped the brakes on home sales and they continue to slow. The hesitation by homeowners to sell into this market will have an impact going into 2023. Although assisted living may feel some of this impact, Independent and Active segments will experience the effect sooner and to a greater degree. As in previous cycles, and because of the overwhelming number of boomers it is likely that as consumers became more acclimated to the interest rates vs lamenting a lost opportunity, many, particularly seniors will choose to act.

The disruption in staffing has been quite disruptive for our industry and for us as operators. We are experiencing only small amounts of agency staffing in certain markets. Many of our markets are experiencing more normalized levels of job inquires and filled positions. As the economy continues to slow as a result of higher interest rates and the pandemic hiring binge reverses for many sectors, more people will be job seeking and I am optimistic we will continue to see more workers in senior living.

Certainly, the inflationary pressure in the marketplace have had an impact on margins. We have seen significant price increases in everything from eggs to oil. The timing of our rate increases has created some fluctuations in margins from period to period. In many markets rate pressures continue to prevent providers from establishing rates sufficient to fully recouping the cost increases. As consumers become more knowledgeable and experience inflation in other spending they are becoming more understanding and tolerant of these increases in seniors housing. Earlier in 2022 we were forced to raise rental rates by the highest percentage in our history. While we experienced a small number of move outs most of our customers, while unhappy, were understanding and remained with us. We anticipate additional increases in 2023 as inflation continues to take a toll. The reality has not changed for most people and they can live in seniors housing vs at home for not much change in their overall annual expenses.

Senior housing is poised for innovation. After 35 years with basically the same named product types consumers and operators are ready. Certainly, assisted living has been the greatest and most meaningful housing and care solution offered in a couple generations. (But that’s just me) A fact I like to point out is” assisted living is the single largest private pay healthcare delivery system ever created in America.” And the consumer has driven its growth! There has to be something pretty spectacular there. Care should be taken in innovating the product so we protect the basic paradigms and philosophies of the product that has made it so appealing to consumers, medical providers, and state governments. But innovate we should.

An interesting point to recall is that the early innovators and pioneers in assisted living were not from the long term care or senior housing industries. They were “outsiders”. The challenge for our industry is can we, now the “insiders,” be that creative force that drives continued improvement if not disruption in our products? The coming few years of continued stability will provide increased opportunities for providers and outsiders to leverage resources and take on the risks of innovation.