Scotsman Guide > Commercial > April 2005 > Article

 Enter your e-mail address and password below.


Forgot your password? New User? Register Now.
   ARTICLE   |   From Scotsman Guide Commercial Edition   |   April 2005

Senior Housing Plays Catch-up as U.S. Ages in Place

few decades to accommodate one or two care options — such as independent living, congregate care or skilled nursing — is fast becoming outdated.

More-sophisticated older adults and their middle-aged boomer children are searching for a “continuum-of-care” approach and senior-housing developments that include a wider variety of care options, from a wellness center to home health-assistance to assisted living to adult day-care to skilled nursing, hospice and more. Developers and lenders must recognize this approach to stay ahead in the long term and have success in the future. This is particularly true given the long lead time in this type of project; site selection, permitting and construction-financing can take one to five years.

Senior population to nearly double

In the next 20 years, the senior population in the United States will almost double. According to the U.S. Census Bureau, there are 35 million individuals ages 65 and older in the United States today, and the number will rise to 64 million by 2025. Of that number, the number of adults ages 85 and older will grow by 87.6 percent, a consequence of improved health and medical care that helps people live into their 80s, 90s and beyond. A similar comparison demonstrates that today’s 7.3 million individuals who need long-term care services will grow by another 6.5 million in the next 10 years. Nearly one-third will choose to reside in some kind of senior-housing development. Compounding this demand, older adults are choosing to remain in their own homes for as long as possible.

As a result, today’s retirees are entering the senior-housing market at a later age and are much more likely to require complex levels of physical, social, emotional and medical care. Increased individual longevity also means that individuals and couples will remain in senior-housing facilities longer and at various health stages. This is the primary reason why older adults seek developments that boast the continuum-of-care approach. For example, an older adult residing in an assisted-living facility has nearly a two-thirds chance of transferring to a skilled-nursing facility. Furthermore, someone attending adult day-health-care has a one-in-four chance of entering a senior-housing facility for assisted living, Alzheimer’s-disease care or more.

These transitions from one facility to another can happen several times in someone’s lifetime, as the aging process takes its inevitable toll with broken hips, infections, diabetes, heart disease, cancer, chronic pain and other ills and infirmities. Regardless of the event, older adults tend to avoid change and prefer to remain within their comfort zones — and locations, if possible — without regard to costs or other consequences. They prefer to age in place, if possible.

Not many senior-housing developments currently cater to those wishes. As few as 55 percent of all senior-housing campuses constructed in 2004 included an assisted-living component. Only recently have developers added assisted-living facilities to existing senior-housing campuses in the form of new, residential-oriented designs and amenities. Senior-housing selection has become a consumer-driven phenomenon, as noninstitutional facilities appeal to older adults. This is highly marketable from a business standpoint for developers and lenders. Continuum-of-care facilities allow older adults to stay at senior-housing campuses longer — they can enter as independent and stay put should they require the amenities of assisted living, skilled nursing or other types of facilities.

New generation, new services

To attract older adults, developers and lenders involved in constructing senior-housing campuses must consider new amenities, such as hair salons, Internet cafes, wellness centers and exercise areas. The new older adults and their adult children are more sophisticated and knowledgeable consumers than previous generations. They are extremely active, highly dynamic and technologically savvy and as a result, demand specialized amenities that meet their lifestyles. A few senior-housing developments have incorporated large theaters with surround-sound and stadium seating, rather than forcing residents to crowd around a 15-inch television. These residents are able to watch a current movie release and have a true theater experience.

In addition to the entertainment center, developers and providers must consider creative, alternative dining options that offer not only a formal dining room but also an informal cafe, carryout and delivery options. Think hospitality with a medical-care emphasis. Think specialized high-end hotel. Kitchens in apartment-style rooms are in demand.

This does not eliminate the dining room, which has been the major source of social activity. Socialization still is an important part of living in a continuum-of-care campus, but the dining experience accommodates all residents by eliminating the need to dine in shifts and allowing for a broader mix of residents in varying degrees of health. This provides a vitality and diversity that increase the well-being of the entire care campus.

Older adults also often request plenty of living and storage space, privacy and a secure outdoor space where they can connect with others or engage in activities. From the perspective of older adults and their children, the continuum-of-care campus must feel akin to having all the comforts afforded at home.

In the past, developers and providers have defined this kind of community too narrowly for older adults, and today’s seniors are demanding that this circle be enlarged. Older adults also are demanding augmented services and activities to retain their connection to the local community. They want to live in a vibrant, active environment like everyone else. For the development, this can include partnerships with:

  • Local bookstores to organize lectures or book clubs; 
  • Local colleges to arrange continuing-education opportunities; or
  • Local gyms for nutritional and fitness classes.

Furthermore, developments can form partnerships with local businesses for volunteer and employment opportunities onor off-campus. Incorporating new areas for socialization and a stimulating environment makes the senior-housing campus more marketable and maintains residents’ physical and mental health for longer periods of time. In the end, this helps the bottom line.

Business benefits

The continuum-care-campus approach offers developers and lenders valuable opportunities to achieve economies of scale. They also can maintain needed clients within their development by offering multiple services via different senior facilities on contiguous properties. This can include centers for adult day-health-care, assisted living, skilled nursing and hospices, with complementary services such as a home health agency, pharmacy or wellness center. By placing a range of senior-housing options and services, developers can reduce overhead expenditures by consolidating administration, reducing fragmentation and duplication between service-delivery systems and integrating promotion and outreach. Moreover, facility directors can balance expenditures and funding streams (public and private), in addition to diversifying funds, between the care levels and provided services. For the corporation, this guarantees more-secure financial stability and occupancy levels.

When developing a long-term-care campus, it also can be important to partner with nontraditional organizations to expand the corporation’s visibility. For example, one company partnered with a regional hospital to directly discharge hospital residents to the long-term-care campus on and adjacent to hospital grounds. The company also partnered with area universities and community colleges to serve as teaching sites for medical and nursing students, which brought additional staffing and expertise to the campus and field experience to the students. The campus now consists of four assisted-living residences — two dedicated to Alzheimer’s disease — as well as a child-day-care center, an adult day-health-care center, a skilled-nursing facility, a certified outpatient-rehabilitation facility, a pharmacy and a home-health agency.

With campuses such as this, the continuum-of-care business is the best-performing sector in senior-housing industry with occupancy-percentage rates in the low 90s. Congregate care in conjunction with assisted-living services, as an added product type, also is a strong and consistent performer. The industry is moving beyond the traditional box to a more cosmopolitan continuum-of-care product that incorporates these services. In addition, the opportunity to add active-adult building formats that round out the campus environment will become more important.

Long-term care, an idea that has been around since before Social Security, now impacts senior-housing facilities and adds stability in an otherwise-unstable financial environment full of Medicare and Medicaid budget problems. Older adults are demanding this new approach through competitive markets. New partnerships are expanding traditional connection concepts and offering modern prospects for success. Senior housing will never be the same again, nor should it be.


Fins A Lender Post a Loan
Residential Find a Lender Commercial Find a Lender
Scotsman Guide Digital Magazine

Related Articles



© 2019 Scotsman Guide Media. All Rights Reserved.  Terms of Use  |  Privacy Policy