Although the housing slump may have “bottomed-out”, occupancy declines, especially for independent living, are more widespread [1]. 
Will the industry re-bound with a business-as-usual mentality? Will new generations of customers be satisfied with today’s level of service?
There is no question that the real estate crisis and decline in portfolio values have impacted occupancy in senior living communities. AND, it’s easy to buy into the concept of “We just need to hold on, the demographics are still there, and we’ll be OK as soon as the housing market recovers”. The reality may be very different.
While the country has been in the economic doldrums over the past couple of years, several dynamics have been changing, largely un-noticed by the industry. First, the demographics are changing – the target market is gradually moving away from the “greatest generation”[2] [World War II vets are dying at the rate of 1000 per day] – and the industry must prepare for the “bobby-sox” generation (as a prelude to the “baby boomers”).
This generation, born between 1935 and 1945, is affluent and benefitted from the medical advances and healthy lifestyle initiatives of the 20th century. As a result, they will have longer life expectancies with more males in the target population. They demand value and will be less willing to compromise than their parents and older siblings who were tempered by the depression and WW II.
In the 1990s, assisted living (“AL”) developed as an alternative to nursing homes, and independent living (“IL”) has in large part developed as an alternative to assisted living facilities. The newest option is “aging-in-place” with various surveys documenting the desires for aging adults to stay in their own home. In the past, this wasn’t practical for many people, but we are seeing the development of a number of new companies that use various enabling technologies to provide cost-effective alternatives to senior housing. For example:
A study several years ago indicated that up to 80% of AL admissions were driven by the need for assistance with medication management. Yet, there are now numerous automated medication reminder systems for use in the home.
Numerous organizations have developed cognitive fitness systems to provide brain exercises and delay the effects of Alzheimer’s and other senile dementia.
Rosemary Bakker, a gerontologist with Weill Cornell Medical College has established the website This Caring Home to help caregivers and family members design a “smart home”, allowing individuals with early stage dementia to remain in their own home.
In addition to the psychological appeal of these options, the current economic malaise is forcing prospective residents – and their families – to become more value-conscious consumers. These products and services will take market share from IL and AL communities by offering greater independence at lower costs.
As a result, the standard AL resident in the future may become a medically complex individual with multiple health/psychological conditions.
The impact on the traditional IL model may be even more dramatic.
Is Everything “Doom & Gloom”?
The answer is that it doesn’t have to be – IF operators heed the wake-up call and are willing to consider new options:
1. Embrace new technology, instead of resisting it. Future generations won’t appreciate things such as internet access, a social networking site for the community, etc. as an added value – they will expect it as a minimum level of service.
Technology should be utilized to promote independence (no matter what level the resident demonstrates at move-in). View this as an investment in extending the higher functioning of the resident for extended periods of time, which should decrease the turnover rate, extend the average length of stay, and increase the occupancy percentage.
Offer the same technology services that are marketed for “at-home” care in a bundled package, so that the senior living community becomes the value-added solution. Sell the advantage of having someone on-site who can and will MANAGE the technology for the senior, at the same time they are receiving other traditional services such as meals and transportation.
2. Meet more than the basic needs for the residents. Abraham Maslow developed a Hierarchy of 5 levels of needs, as depicted in this diagram.
The senior living industry has traditionally done a good job of meeting the basic physical and security needs of the residents. However, there is tremendous opportunity to offer and market services that address their higher-level social, ego and self-actualization needs.
In fact, programs meeting those needs could be the differentiators that trigger the move-in decision. Interestingly, these needs are the most difficult for the senior to achieve while living alone in their home.
Too often society has assumed that seniors forgo these higher-level needs when they “retire”. Yet Lasell Village, a CCRC located on the campus of Lasell College in Massachusetts was created around the principle that retirees would move into an independent living setting where they would be committed to an annual continuing education curriculum. This program is clearly helping the “villagers” achieve their “Peak needs”[3]!
Senior living communities must adjust with the times and add these value-added initiatives if they wish to overcome the inertia caused by the economy and plan for the future generations.
What initiatives are you taking to use technology and/or meet your current or prospective residents’ higher level needs? Please add your comment by clicking on “Leave a comment” below:
Additional Links for New Technology Options:
Center for Technology and Aging
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[1] NIC MAP®, 9/1/2009
[2] “The Greatest Generation” by Tom Brokaw (1998)
[3] “Peak – How Great Companies Get Their Mojo from Maslow” by Chip Conley (2007)
Great Article, thank you for mentioning http://www.thecaringstore.com. Our principal product is a Medical Emergency Data card that could be used by the “living-at-home” individual or would be a great value-added service provided by senior living communities.
This is a usb card to store all your medical history, pictures, anything you might need or would like to have with you at all time…. This card fits in your wallet,(size of your credit cards) and works with just about any computer. Take a look. When purchased in quantity the price is below $20.00 each.
Enjoy and keep your own medical history with you not on the internet for other people to get….
Roger Rohrs
Senior Editor/Analyst
AP Insight
Face it… change is either something you create, or something that happens to you. Art’s point that the future of senior living will look, taste and feel very different is not a hypothesis—it’s a fact.
From where I sit, the most significant change happening in the senior living industry is the shift from a business model focused on hospitality to one based on resident wellness. This change is going shake everything up, re-write the rules and change the game. But instead of fearing or resisting it, senior living providers should embrace it and place it at the core of their business development strategy.
Why? For two good reasons. It’s good for the residents, and it’s good for business.
Maintaining resident wellness 1) extends longevity and length of stay, 2) maintains independence, reducing the cost of care and 3) creates satisfied customers who will refer others to your community.
Programs that promote resident wellness are a powerful marketing tool with which to differentiate your community from competition and reduce the cost of building census, by providing an important motivation to prospects to choose your community as the place offering the highest quality of life.
At Dakim BrainFitness, we are part of this change, and we work closely with our customers to help them achieve their resident wellness and business development goals by contributing to their initiatives to enhance their residents’ wellness and quality of life.
Well-stated Dan. Thank you for your comments.
[...] “bottomed-out”, occupancy declines, especially for independent living, are more widespread [1]. Will the industry re-bound with a business-as-usual mentality? Will new generations of customers [...]
Art, thanks so much for the article. Well-said! I have posted on various sites to spread the word. You are so right, technology will expected as a minimum level of service. We think that someone would no sooner have a loved one live alone at home without technology assist as a parent would allow a child to ride in a car without a car seat.
There is no choice but to change, this disruptive demographic that we are facing (the silver tsunami) cannot be solved with old solutions. New problems call for new solutions.
Thanks
Laura Mitchell
GrandCare Systems
Art,
Nicely said. I know how much technical support I have to give to my own mother for many websites. When I developed http://www.myfitbrain.com I wanted to make sure it was easy for her to use and really challenged her brain. Getting people started and comfortable with technology is really challenging.
Jim Hanekamp
Jim,
You have touched on one of the reasons why senior living communities SHOULD embrace these new technologies. Your mother uses a computer and internet — but how many others still are reluctant (dare I say “afraid”?) to buy / use a computer BECAUSE OF THAT NEED FOR TECHNICAL SUPPORT?
Following Maslow’s theory, learning to use the computer could be one of those self-actualization – PEAK – accomplishments for a senior. The senior living community that recognizes that desire and can offer a “solution” will go a long ways towards convincing that individual that their community is the “best” place for them to live.
This just scratches the surface of the opportunities technology can provide for an improved resident experience.
I would love to hear other stories of ways people in the industry are using technology today to (1) improve the quality of life and promote the independence of their residents and (2) exploiting that use in their marketing of their properties.
As always, you have great insight. Nearly all industries go through change. Leaders are those who perceive and act (wisely) on changing market pressures. Here, technological change is not only important, but accepted and perhaps demanded by the new clientele.
Furthermore, the new technology is a means of communicating with family and friends. Instant messaging, email, voice (VOIP) can increase the comfort of the resident, and the confidence of loved ones who often have an important role in selecting a senior living community. Technical support to keep lines of communication open could become a core requirement.
It’s all so interesting. Boomers will be the innovators of change…but will they even WANT to live in age-segregated housing? As a real estate agent who works primarily with seniors and their families, it’s been interesting to watch senior housing go from a property management discipline to one that crosses into the health care disciplines! Interesing post, thank you for sharing!
Great point – have you heard of NORC (Naturally Occuring Retirement Communities)?
http://www.nytimes.com/2009/10/18/realestate/18lizo.html?_r=1
Laura Mitchell
GrandCare Systems
Smart Homes for Smart Seniors