The seniors housing resident profile has changed since the industry’s early days in the 1990s. Seniors are generally choosing to enter a community later in life as better medical care and quality of life continues to increase life expectancy. Americans are staying healthier for longer, so it’s not surprising that the industry has observed a gradual increase in a resident’s average age as many are now choosing to enter seniors housing well into their 80s. According to a 2013 study conducted by American Seniors Housing Association and ProMatura Group of 6,858 IL rental customers, only 6% of IL rental customers were under the age of 75.

Why does it matter that residents are moving in later? Simply put, the Baby Boomers. Baby Boomers are one of the largest demographic cohorts (74 million in the U.S.) and have begun to reach the age of 65 and older. As shown in Figure 1, the growth in Americans aged 75 and older will accelerate over the next 15 years and comprise 15% of the overall population by 2029 (up from 11% in 2019) as the Baby Boomers age. This unprecedented wave of future demand will have lasting ramifications on the seniors housing and care industry. That said, determining when this will occur has become a moving target as Baby Boomers are waiting longer than prior generations to consider seniors housing options.  

The Baby Boomers are very different than their Silent Generation parents. First, the Baby Boomers will have a much longer retirement. The first of the Baby Boomer generation was eligible to retire in 2012 and will likely enjoy 25 post-work years. The oldest Baby Boomer is turning 73 years old this year and remains largely independent and active. They are potentially a decade away from requiring any assistance with daily activities that seniors housing provides. Second, Baby Boomers grew up in a period of economic expansion and social progress, and as a group, they are more educated, wealthier, and more physically fit than past generations. Boomers want what they want and many will have the financial means to maintain their desired lifestyle. Their health is a priority – both physical and mental – and Boomers are committed to staying active. They desire a community where they can make new friends and be social. They value convenience and want easy access to healthcare, shopping, dining, cultural events, and more.   

While seniors housing is already prepared to offer tailored services to a new Baby Boomer resident, we may need to patiently wait a little bit longer. 80 is a new 65, which has created a void between Americans who are turning 55 years old and Americans who require independent living services where there are not many choices available. This has resulted in some industry players getting creative because while Baby Boomers may not have any need-based care demands at the moment, they certainly have many want-based demands that remain underserved. The most traditional alternative remains home health, although the sophistication of the business has increased tenfold since its inception. More recently, the biggest disruptor that has come onto the scene is active adult. The biggest players in the space so far are making big bets on what they think the Baby Boomer consumer is looking for and have been first movers in trying to tap into this deep market.  

This new active adult product is nothing like the traditional communities developed by Del Webb. The current offering is a blend of multifamily and independent living. Similar to multifamily, these communities emphasize an independent lifestyle where Baby Boomers are self-sufficient. But like independent living, active adult offers residents a welcoming community with amenities and targeted activities and events.  

While it’s still too early to tell if active adult housing will successfully grab a sizeable piece of the Baby Boomer market, this definitely won’t be the last option we will see. We should expect more disruptor options to emerge as business entrepreneurs try to grab a piece of the Baby Boomer residential market. We are already starting to see this. While the first active adult investors were multifamily developers, some seniors housing veterans have also since entered the space. While it remains to be seen what format of housing and amenities Baby Boomers ultimately will want, they will need access to healthcare, which the seniors housing and care industry has expertise in providing. Our industry has remained nimble as we’ve adapted to our evolving resident, and we will continue to be at the forefront as we figure out how best to serve our aging Boomer.  

Health isn’t just determined by eating right, staying fit and getting regular check-ups. Evidence is growing that other factors—the social determinants of health—have a huge impact on well–being and healthcare outcomes.  

The social determinants of health include variables such as income, educational opportunities, social support, access to housing, and neighborhood conditions and the physical environment. These social circumstances are now thought to underlie ailments such as obesity, heart disease, diabetes and depression.  

Amid recognition of the impact of the social determinants of health, alliances are being formed between healthcare systems and senior living providers.  Take, for example, the recent joint venture between WesleyLife, a seniors housing and service provider, and Genesis Health System, a $1 billion hospital and healthcare network. Both serve the Quad Cities of eastern Iowa and western Illinois.   

The new partnership creates a comprehensive health and wellness network for seniors called WellSpire. It began operations July 1. 

The goal is to bring a new type of senior living to the Quad Cities. “Health systems are starting to understand the social determinants of health,” said Rob Kretzinger, president and CEO at WesleyLife, Johnston, Iowa. “We can have a big impact.” 

WellSpire, for example, can provide comprehensive follow-up care to elders returning home from the hospital. This can be a vulnerable time for elders, especially those who may live alone, and not have access to transportation and food.  

These social determinants of health are particularly prominent among so-called dual-eligible beneficiaries, seniors who qualify for both Medicare and Medicaid, according to Kretzinger. Social and nutritional support can help prevent rehospitalizations, he added, a goal of the new value-based healthcare system.  

WesleyLife has been moving toward a model of integrated care.  

The organization operates 12 life plan communities. About 10 years ago, WesleyLife repositioned itself as a health and wellness organization. It expanded its network of services to include home health, hospice, adult day services, transportation and private duty home care.  

WesleyLife impacts about 8,000 seniors a year in a variety of settings. “Care coordination acts as the stickiness between the services,” said Kretzinger. 

WesleyLife owns 60% of WellSpire, and Genesis owns 40%. WellSpire has assumed management of two senior living communities owned by Genesis. Plans are underway to upgrade the properties.  

WellSpire plans to break ground later this year for a new senior living community in Iowa, The Summit of Bettendorf. The group is also considering a project in Moline, Illinois.  

WellSpire is also offering a variety of services. Home health and hospice services will be provided by Genesis which already has robust operations in these areas. WesleyLife will provide private duty home care, adult day services, nutrition, and transportation. Other service partners may eventually be added.  

Care coordination 

Details on how WellSpire will implement care coordination across its properties and customer base are still being worked out. “We have just started the conversation about care pathways,” said Kretzinger. “We believe we can leverage each other’s strengths by coordinating care for seniors.” 

The integration of the two organizations is a challenge, admitted Kretzinger. Sharing information is key to care coordination. WesleyLife recently transitioned to PointClickCare, an electronic health records software, which was already being used by Genesis. “The timing was perfect,” said Kretzinger.   

Culture is a bigger issue, according to Kretzinger. “The importance of the cultural match cannot be underestimated,” he said.  

WesleyLife and Genesis share many of the same values. They are both performance driven, transparent and concerned about the health and well–being of customers as well as employees. Both groups are market leaders with good local reputations.  

The partnership was recently highlighted at the American Hospital Association meeting where WesleyLife and Genesis co-presented a program on their new venture. Asked about the potential of other partnerships that can leverage the social determinants of health, Kretzinger said, “We are an example of how that can happen.”  

In NIC’s upcoming Fall Conference, attendees will have the opportunity to learn how to use consumer insights from other industries as they formulate strategies to address some of the challenges facing the seniors housing sector today. The session titled “Activating Consumer Insights: Lessons from Other Industries” is taking place on Thursday, September 12th at 2:15 to 3:30 PM CT and promises to be thought provoking and insightful.

Consumer insights and feedback are routinely used to guide product development and marketing in industries such as hospitality and consumer goods. The seniors housing sector, however, has yet to widely adopt this approach to addressing its own product development and marketing challenges.  This session is designed to help industry participants think about marketing as a feedback loop in which consumers’ input and behavior inform product development and lead to greater innovation.   This is particularly relevant for today’s operators and capital providers since the seniors housing sector faces numerous challenges, including evolving demographics, changing consumer expectations and demands, and, for many potential residents, a lack of familiarity with the product.    

Moderated by Maria Nadelstumph, VP, Organization Development & Program Excellence at Brandywine Living, the discussion will be focused on solutions relevant and appropriate to the seniors housing and care sector. Nadelstumph will use her first-hand experiences to ensure that the discussion is useful to session participants. She has direct experience with the development of Brandywine’s high-end hospitality model, which features numerous innovations designed in response to shifting demographics and consumer demands.  

The discussion will hone in on how the tools and processes used routinely  in other industries can be employed to gather and make use of consumer feedback  in the development cycle for seniors housing and care. Techniques for borrowing successful innovations from other industries will also be shared.  

Jennifer Rasmussen Windbeck is a Managing Vice President in Capital One’s Retail and Direct Bank, leading the national Capital One Cafes and the Louisiana and Texas branches; as well as Customer Experience, Operations, and Physical Network Management for all branches and cafes. She leads the frontline cafe and branch teams and operations. In addition, Windbeck has responsibility for in-store customer experience and market engagement strategy, including innovating and executing upon customer guidance and transactional capabilities; associate experience and development; local community engagement; and scaling digital-first communications and operational processes.  Windbeck has leadership experience guiding experiential design, investigating customer behavior and change, and how to create something really unique in the market. While confined to the brick and mortar of their branches, Capital One has found a way to change the experience within those four walls to meet the myriad shifting tastes and demands of their customers, ranging from millennials to boomers. 

Heather Reavey, Head of Innovation Delivery at EPAM Continuum, will speak to product innovation. She thinks about where innovation is going and shapes EPAM Continuum’s people, practices, and processes to be there first. Reavey’s career has been dedicated to innovation since she began consulting in the role of Envisioner, focused on designing new-to-the-world ideas and strategies, and demystifying complexity through storytelling to catalyze organizations to take action. Over twenty years, Reavey has led teams and helped launch game-changing ideas and strategies for Procter & Gamble, Insulet, Tetra Pak, American Express, and UnitedHealthcare.  

Reavey will share ways to identify what is a good insight for innovation. She will discuss how to re-frame a challenge for innovation, and how to translate and activate novel ideas into new innovation across an organization and in a business environment.  

This exciting session promises to continue the NIC tradition of applying insights from other industries to bring fresh ideas for product development, and help leaders address the challenges facing today’s seniors housing and care businesses. It will take place in Ballroom VIII, Thursday, September 12, from 2:15 PM to 3:30 PM.  

The Labor Department reported that there were 164,000 jobs added in July, quite close to the consensus estimate.  The July increase in jobs marked the 106th consecutive month of job growth.  The latest six-month average increase is 140,000, the fewest in seven years and less than last year’s 223,000 monthly average.  Nevertheless, the pace of job gains is relatively strong and generally stronger than the levels that have usually prompted the Federal Reserve to cut interest rates in the past.  That said, pressures associated with trade tensions and potential further trade-related weakness in the economy suggest that the Fed may be cutting rates further in September after this month’s 25 basis point reduction.   

Revisions subtracted 41,000 to the prior two months.  The change in total nonfarm payroll employment for May was revised down by 10,000 from 72,000 to 62,000 and the change for June was revised down by 31,000 from 224,000 to 193,000.   Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.   

In July, employment in health care rose by 30,000. In the past year, health care has added 405,000 jobs. Ambulatory health care services accounted for two-thirds of these jobs.

The unemployment rate was unchanged in July at 3.7%.  This is still close to the lowest rate in 50 years.  A broader measure of unemployment, which includes those who are working part time but would prefer full-time jobs and those that they have given up searching—the U-6 unemployment rate—fell to 7.0% from 7.2%.   

Average hourly earnings for all employees on private nonfarm payrolls rose in July by eight cents to $27.98. Over the past 12 months, average hourly earnings have increased by 3.2%, up a bit from June.   For 2018, the year over year pace was 3.0% and in 2017 it was 2.6%. 

  The labor force participation rate, which is a measure of the share of working age people who are employed or looking for work was unchanged at 63.0% in July, very low but up from its cyclical low of 62.3% in 2015.  The low rate at least partially reflecting the effects of an aging population.

Mixed–use developments are a well-known concept in commercial real estate. However, incorporating seniors housing into a mixed–use development is somewhat of a new concept that is just starting to gain traction. Senior Housing News defines a mixed-use senior living development as “a senior living community that includes offerings that are open to both residents and members of the surrounding community”1. Mixed–use developments can take the form of a single building, a collection of buildings, or an entire neighborhood and can generally be classified into vertical, horizontal, and master plan communities: 

• Vertical Mixed-Use Developments combine different uses within the same building with public uses such as retail, restaurants or commercial businesses on the lower floors and private uses such as residential units, hotel rooms, or office space on the upper floors.  
• Horizontal Mixed-Use Developments consist of single-use buildings that are in close proximity to one another or even connected.  
• Master Plan Developments cover a large geographic area and contain a host of buildings/public spaces that serve residents and the community in a variety of ways.  

There are many reasons why mixed–use senior housing developments are becoming more prevalent, but the main reason is that market forces are starting to encourage them. One of the main catalysts is the mass movement of people to cities and the general desire to live in a more urban environment. Seniors are no exception to this trend. They are eager to be closer to the action where they have more opportunities for engaging social and cultural experiences as well as better access to healthcare. According to the Maplewood Senior Living Chairman and CEO Greg Smith, “The number one reason seniors are gravitating to urban markets is access to healthcare.”2 Today’s seniors also prefer to be integrated into the community with people of all ages and not isolated in a suburban environment.  They want to live in a community that offers an active lifestyle with more choices and a connection to the outside community through intergenerational interactions. Those demands are increasingly being met by incorporating seniors housing into new mixed–use developments that offer all the amenities, services, and options that seniors want.  

The desire for additional amenities outside of those provided in the typical senior housing community has encouraged developers to target locations in urban areas or locations that have exposure to urban amenities. Unfortunately, the availability of developable land in urban locations is normally scarce and the price is often much higher than in suburban locations. Those issues can be mitigated or offset with a mixed–use development that combines multiple uses into a vertical mixed-use building. The economic feasibility of the project is much greater if the cost of the land and building can be split among several parties who will benefit from the location and synergy of uses. The entitlement process is also easier in a mixed–use development because the master developer is typically responsible for the master plan, zoning, and permit and approval processes.  

Another benefit of incorporating seniors housing into a mixed–use development is the communal benefits and synergies between tenants and their stakeholders. Senior living developers no longer have to build or offer every conceivable amenity in their facility to be competitive. Instead, they can focus on their core competencies of hospitality and care and rely on the mixed–use community to provide their residents with the amenities and services they desire2. There is also a real potential for partnerships between tenants especially healthcare providers who are a natural partner to co-locate with senior housing operators. The amenities in a mixed–use development also provide a competitive advantage in marketing to adult children and employees who also benefit from the restaurant, shops, and entertainment.  

However, there are also challenges and difficulties associated with incorporating senior housing communities into mixed–use developments. First, the intrinsic design of a mixed–use development means there will be multiple groups of stakeholders occupying the same building and public spaces which can make security difficult. To address this concern, master developers need to make sure the various uses of the building are functionally separate during the design phase such that each tenant has complete control of access to their space3. It also likely means the senior housing provider has to limit its points of access and use electronic locks/key fobs so that they can monitor traffic in and out the community. Another important consideration is the ease of access for third parties such as ambulances, healthcare providers, and food and beverage deliveries. These third party providers have to be able to access the property for the senior housing community to function and be successful. Developers also need to consider the impact that certain tenants may have on other tenants such as restaurants and bars. Residents do not want their apartment to smell like the restaurant below them nor do they want to hear the sounds of a sports bar or people loitering late at night3. Another challenge of incorporating a senior housing community into a mixed–used development is the higher cost of constructing and operating a senior living community (especially a higher acuity facility) 4. Senior housing developers have to compete with luxury multifamily developers for space in a mixed–use development and are often at an inherent disadvantage relative to luxury multifamily developers since senior living providers have to deal with the logistics of running a true operating business.  

In summary, there are both costs and benefits to consider when determining whether to incorporate senior housing into a mixed–use development. However, in today’s competitive environment, it would be wise to consider all options because the needs  of the future senior housing resident will be fundamentally different than the demands of previous generations.  

Andrew Lavinder, Vice President – Real Estate, MidCap Financial Services, LLC