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Around this time each winter, I reflect on the previous 12 months and try to take stock of where the senior living industry is headed in the upcoming year.
I am planning to publish a larger piece sharing some top trends for the year ahead at the end of December, but I wanted to take some time today to recap some of the top-read SHN+ stories over the last 12 months, and place them in context of the year ahead.
The senior living industry’s year in 2024 was anything but quiet, and operators have spent the last 12 months preparing for a potentially big growth year ahead. The highest-read SHN+ stories of the year spanned topics such as resident rates and the middle-market, new entrants and investment partners in the space, a new class of senior living leaders and a need to grow and evolve services for the future. No doubt, these and other topics will remain top of mind for operators across the industry in 2025.
Senior Housing News will pause its regular SHN+ email schedule next week, but we will be back with another email at the start of the new year. Happy holidays to all our SHN+ members!
Resident rates and affordability
Among the biggest topics we covered in 2024 included senior living rates, both what operators are planning to charge in the year ahead, and how the industry is trying to make its services more affordable for middle-income consumers.
In January, I explored what the senior industry must do to get over its “paralysis” regarding reaching the middle-market. In short, operators are still far behind meeting demand for the millions of older adults that will want and need middle-market senior living in the years to come, and I believe that more creativity is required if the industry hopes to reach the large and growing demographic.
At the same time, senior living operators feel as though they have less leeway in 2025 to enact the kinds of double-digit rate increases that they set for residents in the last few years as they embark on marketing strategies that include targeted discounts and concessions.
In the coming year, I think this will lead operators to be more thoughtful about the increases they set for residents. Whether a senior living operator lands on a new and scalable middle-market formula in 2025 is anyone’s guess, but some companies are trying.
Models, services in anticipation of future demand
Millions of baby boomers are aging into senior housing, and operators are seeking to cater to them in new ways that both meet their needs and help operators grow revenue and expand margins.
That is partially the thinking behind Brookdale Senior Living’s (NYSE: BKD) HealthPlus program, which I covered in detail in May. At the root of the program is a belief that incoming older adults in the company’s communities will desire services that keep them well for longer. At the same time, the operator believes this is a way to keep residents in their communities for longer lengths of stay, and with fewer visits to the hospital.
Welltower (NYSE: WELL) is catering to a different group of assisted living residents with similar aims. The company plans to cater to lower-acuity residents in the product type and improve their length of stay through better services in their communities.
In general, operators are walking a “fine line” regarding resident acuity while seeking to reach pre-pandemic margins. Those efforts will no doubt continue to change shape in 2025.
Investors eye senior living with selective interest
For years, outside investors have looked to the senior living industry with apprehensive interest. In 2024, certain newcomers to the space emerged, including Strategic Public Health Equities and Real Estate (SPHERE) Investments and its plan to build a new business model that changes the relationship between capital and operations.
“We believe that, by investing in a management company with our digitization and ideas that we have to improve the outcome of the residents, we should be able to create a very profitable company and thus, at the same time, benefit the ownership on the real estate side,” SPHERE Founder and CEO Didier Choukroun told me in March.
In May, I examined the case for private-equity investment in senior living, and analyzed some of the sector’s history investing in other similar industries.
There is still considerable interest from deep-pocketed companies to invest and grow in senior living, and those relationships will likely be important in the coming year and beyond if the industry hopes to fill its large and growing “investment gap.”
New class of leadership takes the reins
In the last year, a handful of senior living operators have announced plans to shift leadership to a new generation in 2024. To name only a handful, these include Atria Senior Living, which appointed Holly Belter-Chesser as CEO at the start of 2024; and Volante Senior Living, which hired former MBK Senior Living President Jeff Fischer as CEO in July; and LCS, which has in August promoted Chris Bird to the role of CEO in a planned leadership transition slated for 2025.
As SHN Reporter Austin Montgomery reported in August, those leadership transitions are pushing the industry forward into its next iteration. Of course, such transitions may not always be smooth handoffs, but the fact that operators are thinking about future leadership shows the broader need for succession planning in senior living.
In 2025, I would not be surprised to see this trend continue as operators seek to get on a new path for the future.
Companies featured in this article:
Atria Senior Living, Brookdale Senior Living, LCS, MBK Senior Living, SPHERE Investments, Welltower
