Although the housing slump may have “bottomed-out”, occupancy declines, especially for independent living, are more widespread . 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” [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”!
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:
 NIC MAP®, 9/1/2009
 “The Greatest Generation” by Tom Brokaw (1998)
 “Peak – How Great Companies Get Their Mojo from Maslow” by Chip Conley (2007)