Consider these statistics:
- Three million Baby Boomers will retire annually for the next 20 years.
- In 2013, demographers Senior Housing Analytics projected that national demand for senior housing will rise from approximately 18,000 units per year in 2010 to nearly 76,000 units per year in 2030.
- According to the National Investment Center for Seniors Housing and Care, the senior living inventory grew a modest 1.7 percent over 2014 — half of the projected annual need today.
This all adds up to one concerning conclusion: we simply can’t build enough beds to provide care for this ever-increasing population. Here are a few additional trends compounding the senior housing shortage as well as how we expect to combat it.
Boomers are a persnickety bunch
Boomers have unequivocally rejected the housing choices of the past but pose an interesting paradox: they’re selective and demanding about their lifestyle experiences and housing choices but haven’t financially prepared to afford the types of senior living facilities that provide the quality and choice they demand. Market pressure has clearly pushed providers to provide more with less.
Healthcare reform has created uncertainty
There are a multitude of pressures operators face that are prohibiting growth: decreasing reimbursements, increased operating costs, changing regulations, aging physical plants, and an increase in competitive offerings to name a few. The steady shift toward a mandatory risk-based payment system that measures outcomes and assesses monetary penalties has created an unprecedented level of uncertainty in the industry.
Healthcare retailization is redefining senior housing
According to the Advisory Board Company, healthcare markets are being shaped by healthcare reform and market dynamics, shifting from price-insulated consumers with limited choice and lack of transparency to engaged buyers — price-sensitive individuals with greater consumer cost exposure, increased care options, and increased transparency through online platforms. This new retail dynamic is driving our traditional senior living market into an unprecedented “retail” market, forcing senior living providers to deliver desirable housing and services at a low cost.
Innovation will drive the next generation of senior housing and service
The sheer number of seniors in need of housing and services, changing consumer demands, and the retailization of health care have forever changed the shape of senior care and services. Creative collaboration will be required through public/private partnerships that will include community leaders, agencies, foundations, developers, nonprofit and for-profit operators, and acute care providers (the list goes on!) to drive the best services to seniors. Multifaceted solutions offering both physical buildings and home and community-based services are needed to meet this enormous challenge.