As life plan communities seek to best position themselves to capture future demand, many are honing growth strategies, including swapping skilled nursing for other product types, including memory care.
Memory care offerings in life plan communities have grown at a slower pace in recent years compared to non-life plan communities. According to NIC Head of Research and Analytics Lisa McCracken, many life plan communities were originally developed without memory care in mind, but over time, the need grew for providers to offer cognitive support and dementia care. Those factors have set the stage for a slower pace of memory care growth in life plan communities. But demand and skilled nursing conversions in 2024 have changed those trends.
“This need also drives expansions to existing units,” McCracken wrote, adding that memory care units will continue to play a “meaningful role” in the care continuum of senior living.
Going back a decade, roughly 3% of life plan community units were allocated for memory care. That figure now sits at 4.2% as of the second quarter, NIC MAP Vision data shows.
For non-life plan community types, memory care growth in overall units saw an increase of 1.9%.
“Given recent trends and momentum, it is anticipated that these unit counts will increase over the next several years as life plan communities evolve to meet the demands of the baby boomer population,” McCracken wrote.
Evolving demand from a new incoming generation
It’s no secret that demographic-driven demand for memory care is one of the factors behind the recent trend in memory care-specific growth as higher-acuity needs lead operators to bolster care services.
The Alzheimer’s Association estimates that 6.9 million Americans aged 65 and older are living with Alzheimer’s disease, with 5 million of Alzheimer’s patients over the age of 75.
While memory care development and additions for life plan communities continue to rise, life plan communities have also decreased skilled nursing exposure. Between the second quarter of 2023 and the second quarter of this year, skilled nursing units within life plan communities decreased by 1.8% across NIC MAP Vision primary and secondary markets.
The downsizing in skilled nursing units has allowed some senior living operators to reposition campus footprints to accommodate front-end continuum growth, adding cottage units or focusing on independent living development.
Repositionings have also accounted for a portion of how providers are spending capital expenditures this year. For example, nonprofit provider Lifespire of Virginia allocated $50 million for independent living additions across its portfolio, and $85 million for cottage unit additions at its Lakewood and The Glebe campuses in Virginia.
“We recognize the consumer has changed,” Lifespire of Virginia CEO Jonathan Cook said. “If we were going to have a product that was going to compete in today’s market, we knew we had to have a product that emphasized lifestyle and promoted more active lifestyles and wellness programs.”
Earlier this year, SHN tracked operators expanding with cottage projects, including Commonwealth Senior Living, the Davis Community, Distinctive Living, and SilverPoint Senior Living, as the customizable and flexible unit type gains appeal.
“Cottages have come back because you’ve got a new generation who are looking for something that’s easy to transition into, but they still have enough mobility that they have that independence,” said Lantz-Boggio Architects and Interior Designers Partner Bill Foster.
Occupancy among memory care units operated by life plan communities remains higher than non-LPCs, with an average occupancy of 89.7% and 85.1%, respectively. Entrance fee-life plan communities have reported even greater census gains in primary and secondary markets, carrying an average occupancy of over 90% as of the second quarter of this year.
