Setting a New Standard for Memory Care: New Consumers, Tight Margins, Niche Products Shaping the Future

This article is part of your SHN+ membership

“By 2026 or 2027, virtually every memory care unit in the country will be full,” Pegasus Senior Living CEO Chris Hollister said during the Senior Housing News BRAIN conference last week in Washington, D.C.

That might be true, but getting through the next few years will not be easy. From residents who require a lot of care and strict staffing requirements to skyrocketing insurance premiums and other expenses, being a memory care operator in 2023 is not for the faint of heart. 

While some challenges, such as staffing, have eased up somewhat in the last year, margins are still well below where memory care companies want them to be. Even some memory care operators that have returned to near-pre-pandemic average occupancy are finding themselves effectively treading water with regard to net operating income, as one told me at BRAIN.

But the reward for taking on that risk is a potentially deep well of demand in the years ahead. The senior living industry is seeing the lowest level of senior living units under construction since 2014, according to the latest NIC MAP Vision data. At the same time, the industry is sitting in the shadow of a looming massive demand wave in the form of the baby boomers.

Leaders in the space, such as Hollister and Anthem Memory Care’s Isaac Scott and, believe that memory care demand will take off in the coming years.

Memory care operators are well aware of the demand prize at hand and are not sitting on their laurels. What they are building and piloting in 2023 may very well set a new industry standard in the future.

In this exclusive, members-only SHN+ update, I analyze our recent BRAIN event in D.C. and offer my top takeaways, including:

• How a new class of memory care consumers is taking hold
• Why that will require a new way of thinking about the product type
• How lingering staffing, training and leadership challenges could hamstring efforts in the years ahead

New consumer profiles, more niche memory care offerings

In 2023, when residents and their families search for memory care online, they are often doing so in a different way than before.

Today, residents are arriving at communities after first checking them out on social media websites like Facebook or Instagram. And they are sometimes taking their time when doing so, bucking the notion that families only search for memory care when challenges reach crisis levels.

This trend can be measured in senior living sales cycles. For instance, the memory care sales cycle at Artis Senior Living has almost tripled since before the pandemic, going from an average of about 104 days to nearly 300 days, according to Vice President of Sales and Marketing Amy Beth DePreker. At the same time, consumers are savvier than before, and they do their research.

“We’ve seen quite a change in our consumers in the past 18 months,” she said during a panel discussion at BRAIN. “You can’t sell features and benefits anymore, you really have to be able to sell … what this disease is like to deal with.”

Today’s memory care landscape is a dizzying array of services and brand names. It’s often unclear, at least on the surface, what separates one company’s programming or services from another. At the same time, memory care is typically the most expensive of all the senior living product types.

To me, this is a clear sign that memory care operators must still find their niche in order to stand out from the crowd and be successful in the years to come.

At BRAIN, we saw a number of ways operators are standing out from the crowd in 2023. And I think we will only see more of these kinds of operators in the future as time marches on and demand grows.

Some operators, like Belmont Village, Goodwin Living and the standalone Abe’s Garden Community, are differentiating themselves by focusing on cutting-edge research and evidence-based treatments. There are also operators, like Vi, Maplewood and Mather going big on luxury in memory care.

Others, like Prairie Elder Care and Inspirations, are operating memory care residences on farms with real animals, and still others, like Acts Retirement, have programs with Montessori elements baked into them. And that is not to mention small-house style communities and other such innovative models.

I also think this could lead to even more specialized versions of memory care down the road. And it’s not hard to imagine more memory care practices ending up in assisted or even independent living, where many residents also live with different cognitive abilities. Indeed, panelists at BRAIN spoke about the increasing recognition among consumers that brain health is an important facet of wellness, not exclusively a concern for those with a dementia diagnosis.

I can also see memory care programs for older adults living in single-family homes and other kinds of dwellings as operators extend their reach to serve people where they want to live. In fact, that was suggested by Sharon Maguire, who is vice president and director of health services at LCS. She noted that, as value-based care and Medicare Advantage programs grow in scope, they stand to “change our world.”

That is, as payers seek to more effectively manage their highest-cost beneficiaries, they naturally will be looking more closely at how to serve people with memory care needs — regardless of where they live.

“If you have scale, and you have existing properties with AL and memory care, why not contemplate adding home care under that, and looking at dementia outside your door?” Maguire said. “Medicare Advantage and private duty home care, it’s already happening, and I think it’s only going to happen more.”

The bottom line is that, as long as the passion and expertise is there, I don’t think there is necessarily a wrong way to cater to memory care residents. But what the proliferation of new and innovative memory care programming and services in the pandemic age tells me is that operators are gearing up to serve a new and different generation of residents, and that others could be left in their wake if they don’t offer something unique of their own. But pursuing such innovation is becoming challenging, due to headwinds facing the sector.

Staffing challenges could be a limiter

Memory care operators have been hit hard by staffing challenges since the pandemic began. At BRAIN, there was a sense that some of those challenges have gotten easier. For example, many operators have at least made substantial progress trimming or outright eliminating the use of agency staffing in their communities.

But there is also a sense that staffing challenges have simply evolved. For example, Pegasus’ Hollister noted that the company’s biggest staffing challenge in 2023 is leadership — and therein lies no easy answer.

“There’s still a hangover effect on our leadership and their personal lives,” Hollister said.

Ally Senior Living CEO Dan Williams said during a panel on staffing that as recently as six to nine months ago, the applicant pool was the sector’s biggest staffing challenge. Since then, Ally and other operators have had success rehiring for full-time positions. Now, the operator’s biggest staffing challenges have shifted from recruitment to retention.

“The memory care sector is the most difficult caregiving position,” Williams said. “You have to build a culture and show them that they are heroes — and it’s essential now.”

During the event, I heard multiple ideas for retaining staff, including higher levels of training, new staffing models, flex schedules and better pay and benefits. I can see the merit in all of them, and a cursory search on Senior Housing News would reveal years of coverage on these topics.

But I sense that one challenge in the future will be successfully implementing new and innovative staffing practices while keeping the ship running smoothly. To me, it seems hard to both thread a needle in revenue at the same time you are filling a hole in staffing and upping your game in onboarding them. At the end of the day, I think staffing will mean the difference between execution and stagnation in the years to come.

Perhaps the most progressive idea on staffing came from one of the most experienced memory care professionals to take the stage at BRAIN: Belmont Village’s Beverly Sanborn, who argued that operators should break down barriers among staff, residents and their families through the lens of wellness, with the idea that staff are also a customer, at least in a sense.

I think that, beyond talk of career ladders and wage increases, this is the sort of fundamental mindset that is required to build a more sustainable industry workforce.