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What's Keeping Senior Housing Owners & Executives Up At Night?

In a changing world, senior housing/healthcare owners and operators have plenty to toss and turn about on sleepless nights.

A changing of the political guard at the White House always brings uncertainties.  But this time around, we appear to be dealing with a course correction unlike any that has gone before.

It looks like fundamental disagreements regarding the best way to care for the nation's aging population - and what the government's role should be - will be with us for the foreseeable future.

Other things that might keep owner/operators up at night are rising interest rates, local and national minimum wage hikes, and issues related to government regulations.

Assisted living owners, especially for higher-end private pay buildings, will not find rising wages to be a major issue.  But the same cannot be said for buildings in lower demographic areas and third-party payor buildings, and more affordable buildings where an increase in the minimum wage might provide some cause for concern.

However... in the spring of 2020, the spreading COVID-19 pandemic put owners and operators of senior housing on high alert.

Procedures, guidelines, and personal protection equipment (PPE) were put in place, and facilities were able to better safeguard their environments to help protect residents and staff from contacting and spreading the virus.

Although COVID-19 has produced these operational changes in the industry, it will not alter the course of demographic convergence.  In the near future, the demand for space in senior housing developments will only increase, not diminish.

For need-driven housing, such as assisted living and memory care, age 50 is the appropriate threshold, argued an American Seniors Housing Association report. While that might be accurate, most people currently in seniors housing are in their mid-80's--the first baby boomers will not hit 82 until 2028.  "Right now, the cohort that typically lives in seniors housing (those born in the 1930's) is expanding, just not at the pace people anticipate when considering the baby boomers," says Mace.  Indeed, a lot of the residents of seniors housing are the parents of baby boomers.

It is estimated about 23 million Americans are 75 years and older, and that cohort will expand to 29 million by 2025 and to 34 million by 2030.  The current pace of development is needed because the penetration rate of senior households age 75 and older is about 11 percent.  In 2020, 17 million Americans comprise the younger part of the cohort, ages 75 to 84.  That number will grow to 21 million by 2025 and to 25 million by 2030.  This is where baby boomers are going to immediately have an influence. 

Another data point to consider is caregiver ratio.  If someone is over 80, his or her adult child is probably between the ages of 45 and 64.  In 2020, the available adult children to care for every senior over the age of 80 is estimated at 7-to-1 by 2030, that shrinks to 4-to-1 and by 2050, the ratio is only 3-to-1.  Simply put, fewer caregivers means more community-based congregate settings will be needed.

"A couple of years ago at a seminar, industry executives were sitting around brainstorming about what could disrupt seniors housing."  No one thought of a global pandemic, proving you can prepare as best you can, and there is still going to be something that comes up that you weren't prepared for."

Nevertheless, when you look at long-term trends, "we still believe in seniors housing.  It may be vulnerable at times, but when you have approximately 1 million new, potential residents a year aging into the target demographic for senior care, it keeps us bullish on the sector."

Moore Financial Services offers financial / insurance programs that will help you sleep at night!  

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