A recent article published by CNBC revealed that the number of single-family offices, which are organized entities that represent family wealth generally of $100 million and higher, is projected to rise from 8,000 to roughly 10,720 by the year 2030 based on estimates from Deloitte. The assets of these families have grown tremendously over the past several years and the overall wealth accumulation is expected to exceed hedge funds within the next 5-6 years. The article further details that the most rapid family office expansion has been in North America with growth projections at 258% between 2019 and 2030.  

Implications for Senior Housing & Care 

While invested assets can vary dramatically across family offices, a 2023 Campden Wealth report indicated that 25% of North American family offices intended to increase their allocations in real estate. For those family offices wanting to retain a certain balance of real estate investments in their portfolio, senior housing is a more favorable property type in today’s market than some others such as commercial office and residential. While there are currently no exact statistics on the number of family office investments in senior housing, those relationships do exist, and anecdotal reports reveal the potential opportunity for more.  

There is a natural alignment between family offices and operators who are looking for capital partners:  

• Family offices are generally longer-term investors, which can provide  greater stability in the owner-operator relationship.  

• Given their structure and autonomy, there is also often greater flexibility in how the deals and relationships are structured.  

• While returns are important, family offices may also find the mission of senior housing and care appealing. These family offices appreciate investments that fuel meaningful work and, like many of us, they have often experienced the need to find housing and care for an older loved one, so have first-hand exposure to the sector.  

Direct family office contacts can often facilitate these relationships along with the wealth management advisors who serve the specific family offices. Those exploring family office capital may look for individual family office investments or even a pooling across more than one family office. These investments are often an equity investment, but family offices may also be a vehicle to tap into private credit. While most senior housing investments are geared towards real estate, there have been instances where the family office has invested in the operating company as well. The sector has long been seeking capital partners for operations and this could be one potential pipeline for those arrangements.  

The growth in family offices should be on the radar of those in senior housing and care. Attracting capital from family offices into senior housing can be a viable strategy given the alignment across several key goals. NIC will continue to track family office trends and work to educate family office constituents about the sector and potential alternative investments.  

NIC wishes to congratulate the following Future Leaders Council (FLC) members who graduated at the Fall Conference in Washington, DC. These volunteer leaders directly contributed to NIC’s mission throughout their term by actively participating in strategic initiatives, serving on committees and creating and delivering valuable content.     

• Samantha Medred, Chair – CFO/Partner, HealthTrust 

• Audrey Griffin, Vice Chair – Executive Director, Wells Fargo 

• Craig Ahlstrom, Jr. – Chief Operating Officer, Avista Senior Living 

• Holly Ballarotto – Assistant VP for Growth, Rowan University 

• Matthew Derrick – Managing Director, Confluent Development 

• Emma Rosen – Director of Acquisitions, RSF Partners 

• Mike Segal – Executive Managing Director, Blueprint Health Care Real Estate Advisors 

• Jennifer Wong – Director, AEW Capital Management 

“I am proud of NIC’s commitment to developing rising talent and am grateful to the FLC members for their passion and dedication to the industry and our organization,” said Raymond Braun, NIC’s president and CEO. “I congratulate the graduates and look forward to working with them in future volunteer roles.” 

In addition to celebrating this year’s graduates, NIC also officially welcomed the new FLC class: 

• Brooks Blackmon – Executive Managing Director, Blueprint Health Care Real Estate Advisors  

• Kloie Catizone – Managing Director, CIBC Bank USA 

• Michael Cregan – Vice President, CBRE Capital Markets 

• Ilya Gaev – Partner, HealthTrust 

• David Jennings – VP Investments, Atria Senior Living 

• Jessica Lopez – Vice President of Operations, HumanGood 

• Mike McMillen – EVP, Sales, SafelyYou 

• Molly Odgers – VP, Relationship Manager, BOK Financial 

• Joseph Pohlen – CEO, Cardinal Senior Living 

• Hasaam Sheikh – Director, Strategic Operations, US Heart and Vascular 

The 2024-2025 FLC Leadership Team is charged with inspiring their fellow industry innovators and collaborating with NIC staff to coordinate the Council’s efforts over the next year.  

• Chair: Madisen Medley — Vice President, Business Development, Merrill Gardens 

• Vice Chair: James Estes – Vice President, Asset Management, Sunrise Senior Living 

• Vice Chair: Trever Sweeney — VP, Asset Management, Ventas 

• Vice Chair: Brittany Spicer – AVP, Business Development, National Health Investors 

NIC is grateful to all FLC members and their supporting organizations for their commitment to professional development and dedication to NIC’s mission to enable access and choice.  

Learn more about the FLC here. 

Most are well-aware of the statistics related to the growing prevalence of cognitive decline among older adults throughout the U.S. Alzheimer’s disease is the sixth leading cause of death overall and fifth leading cause of death for Americans aged 65 and older. An estimated 6.9 million Americans aged 65 and older have Alzheimer’s in 2024, with 5.0 million of them aged 75 and older. It is no surprise that senior living organizations are playing an increasingly important role in providing supportive housing and care for older adults with varying degrees of cognitive impairment. This article specifically focuses on the memory care segment within Life Plan Communities (LPCs), an offering that has grown steadily across the past decade.

In the second quarter of 2014, roughly 3% of the total LPC units were devoted to memory care across the NIC MAP Primary and Secondary Markets. In the second quarter of this year, that number was 4.2%. Across the past year alone, the total number of memory care units within LPCs grew by 1.4%. While that year-over-year growth is below the non-LPC community types, which grew by 1.9% across the past year, that is meaningful growth.

Drivers of Memory Care Growth in LPCs

Many factors influence the decision to add or expand dedicated memory care units within a community. The first obvious trend is the growing need and demand for services for older adults who have a degree of impairment. Many LPCs may have been originally developed without a specific unit for memory care and over time, it has been deemed a clear need among the existing resident base. This need also drives expansions to existing units.

Another unfolding trend relates to the downsizing of the skilled nursing footprint. Between the second quarter of 2023 and the second quarter of 2024, the total number of skilled nursing units within LPCs decreased by 1.8%. This decline is on top of the skilled nursing downsizing and in some cases, closures, in the years prior. This downsizing of the skilled nursing footprint will often result in having space that community leaders are charged with repositioning for alternate uses. One common strategy has been to utilize that vacated space for a dedicated memory care unit. In most cases, that memory care is licensed as assisted living memory care rather than a skilled nursing memory care unit.   

Memory Care Occupancy

The occupancy in memory care units of LPCs follows a similar pattern to the other levels of living within LPCs in that the LPC occupancy is above the non-LPC communities. As of the second quarter of this year, LPC memory care occupancy was 89.7% compared to 85.1% for non-LPCs. That occupancy is 3.7% above one year ago for the LPCs and 2.7% above for non-LPCs. To dig even deeper, when comparing across LPC types, the memory care occupancy for entrance-fee LPCs is 90.3% compared to 88.9% among rental LPCs as of the second quarter of this year.

Concluding Thoughts

Although memory care units within LPCs represent only 4.2% of the total units, they play a meaningful role in the housing and care continuum for older adults. Given recent trends and momentum, it is anticipated that these unit counts will increase over the next several years as LPCs evolve to meet the demands of the Baby Boomer population. This growth in a community’s physical footprint must be accompanied by intentional design elements, robust workforce training and innovative programming that is supportive of the unique needs of this population. NIC will continue monitoring this segment’s growth and share additional data insights as they become available. 

NIC’s Strategic Plan includes objectives to ‘expand the tent’ across five key focus areas – Active Adult, AgeTech, Capital for Operations, Middle Market, and Partnering for Health. Focus Area Committees (FACs) were formed to support these efforts. The Capital for Operations Committee is led by Chair Fee Stubblefield, Founder & CEO of The Springs Living. I had a chance to talk with Stubblefield and hear his thoughts about this important committee.

How did you first get involved with NIC as a volunteer?

I have been attending NIC Conferences since 1997 and started volunteering as a member of the Operator Advisory Board in 2018.

You are the chair of the Capital for Operations Focus Area Committee. Can you tell us about the composition of the committee?  

The Capital for Operations Committee is a diverse group of capital and operators passionate about finding new ways of understanding, supporting, and providing capital. The fifteen committee members have various backgrounds and experiences in all aspects of senior housing and care, which enables us to engage in robust discussion as we work together over the next two years. We have organized the committee into three sub-committees working to create a glossary for Capital for Operations, understand how other industries have evolved and structure agreements with operations, and finance cash flow in operations which is separate from real estate financing.  

Why do you think it’s important for NIC to focus on Capital for Operations?

Even the largest capital provider cannot afford to own buildings without paying customers and its operations that access the financial resources of the customer. Simply said, no quality operations, no quality returns. The industry has relied on real estate to finance much of the capital structure, but senior housing and care must find ways to finance and invest in operations as growth accelerates in the decade ahead.

The Capital for Operations effort is not only about enhancing sources of capital for operations but it’s also about the recognition that operations matter. In fact, the real estate values are inexplicably tied to the quality of operations and the key for fulfilling our promises to not only older adults but to our capital providers.  

What does the Capital for Operations Committee aim to accomplish in the next year? 

Creating clarity around Capital for Operations is the number one goal. Along those lines, we want to get a general agreement on definitions around Capital for Operations.  In addition, we aim to submit recommendations for Capital for Operations content to the Conference Program Committees, research, data, and analytics to the Research Committee, and educational and training programs that NIC can offer through NIC Academy.

Interested in Capital for Operations? Be sure to attend Fee’s discussion with Pete Stavros, Founder and Chairman of Ownership Works – Creating Shared Success: Investing in an Ownership Culture at the NIC Fall Conference in Washington, D.C.!

We know that Medicaid is the safety net funding source to cover skilled nursing care and room and board when no other payment options exist. The typical daily rate, about $250 per day for nursing care, reimburses providers for room and board, skilled nursing care, personal hygiene supplies, meals, and medications.

What if those services could be delivered appropriately in a lower-cost setting, such as assisted living? Would it not make sense for care costs to be as low as possible for the Center for Medicare & Medicaid Services (CMS) and Medicaid?

Medicaid does not cover room and board costs for assisted living. The exception to this is the Medicaid assisted living waiver program. Many states offer Medicaid waiver programs that help defray the costs of assisted living. Medicaid’s home- and community-based waivers are programs that help Medicaid beneficiaries receive long-term care services and support in assisted living communities or other settings.

As of 2024, 46 states and Washington D.C. offer some level of assistance in the form of waivers for individuals in assisted living or other forms of non-nursing care. Among each of the states, however, wide variation exists in terms of the waiver structure, reimbursement level, and general effectiveness. One aspect that is common across states is that the waivers almost always have enrollment caps in place and because of these caps, waiting lists are unfortunately commonplace.

At the same time, skilled nursing communities are experiencing rising expenses nationally, with labor costs significantly impacting the industry. From 2019 to 2022 alone, skilled nursing care communities’ direct care nursing expenses increased by almost 25%.

(Source: CliftonLarsonAllen, SNF Cost Comparison and Industry Trends Report, 2024)

A 2023 KFF survey revealed that no states were looking to freeze or reduce Medicaid rates, but that some states – Pennsylvania, Texas, Illinois, Missouri, and North Carolina – were examining Medicaid rate methodologies and potentially rebasing rates in response to unsustainable economic trends.

(Source: CliftonLarsonAllen, SNF Cost Comparison and Industry Trends Report, 2024)

Additionally, Medicaid beneficiaries account for more than 60% of skilled nursing patient days. With care costs rising and a deep penetration of Medicaid beneficiaries residing in skilled nursing settings, assisted living waiver programs could be seen as a bulwark against rising care costs in skilled nursing.

Assisted living communities have experienced an increase in resident acuity over the last decade and have demonstrated that they are increasingly equipped to deliver high-quality and effective healthcare to their residents. But still, not every Medicaid beneficiary will be appropriate to take advantage of these state-by-state assisted living waivers. For the Medicaid beneficiary who needs only moderate care services, having access to assisted living waivers can be a game-changer. In a paper published in June 2024, “We Need to Rethink Nursing Homes,” authors Farber and Shah estimate that roughly 20% of nursing home residents actually need access to affordable housing.

While many Medicaid beneficiaries in nursing homes are there because their income limitations and physical needs require it, there are indeed those who are simply there because they cannot afford private pay assisted living and are unable to live on their own in the greater community. For the Assisted Living Waivers to be successful, there needs to be alignment between operators’ expenses and the state-based reimbursement levels. Assisted living operators need to be appropriately compensated for the room and board costs that are incurred to bring forth optimal alignment.

For CMS, expansion of the Assisted Living Medicaid waivers may contribute to reduced Medicaid spending and a more efficient use of Medicaid dollars. For skilled nursing operators, this may translate into fewer residents whose care needs do not warrant full-time residency in a skilled nursing setting.  For the beneficiary, this could mean living in a more appropriate care setting for their care needs.