NIC co-founder and strategic advisor Bob Kramer joined a panel hosted by the Milken Institute to discuss innovative models that integrate housing and healthcare, enabling older adults to thrive.

A new generation of senior housing residents are determined to live with “purposeful longevity”— a greater sense of purpose and connectivity to their own interests and those of the community they live in. Healthy living and overall wellness provide the foundation for purposeful longevity, and senior living providers have an obligation to make it a reality for their residents.

Bob Kramer, NIC co-founder and founder of Nexus Insights, recently participated in a panel hosted by the Milken Institute at its Future of Healthcare Summit. Alongside other leaders in housing and connected health services, Kramer discussed how senior housing and healthcare can integrate to provide the sense of purposeful longevity that residents desire. Kramer and the panelists covered how healthcare for older adults continues to migrate out of hospitals and into private residences, as this population prefers to age in their own homes but requires designated in-home care services to do so. That’s why affordable housing and connected health services are the two most critical policy interventions that local leaders must prioritize before 2030, according to the panel and a new Milken Institute survey.

The Milken Institute’s summit offers a glimpse into the kinds of discussions and topics coming up at the 2023 NIC Spring Conference. The conference will dive into how senior housing and healthcare leaders are “Partnering for the Future” to provide better outcomes for older adults.

Kramer highlighted that for integration to be successful, senior housing providers and policymakers must recognize the “forgotten middle,” those who do not qualify for Medicaid but cannot afford private-pay senior housing. The number of middle-income seniors will nearly double to 14.4 million by 2029 and over half of them will not be able to afford assisted living, according to the original NIC-funded study conducted by NORC at the University of Chicago. Reaching people with preventive, person-centered and affordable healthcare will be key for senior living facilities to reach this population, and while funding and reimbursement challenges remain, there are several value-based models that show promise.

Kramer noted that senior living must take a new approach to how it provides care for residents and improves health outcomes, which should focus on the priorities that matter most to the individual. This requires understanding how wellness can help residents accomplish the things they want to do with their lives. Paired with the growth of data and analytics to drive better health outcomes, Kramer believes this approach will allow senior living facilities to provide the best care for residents.

Now is the time for senior housing and healthcare organizations to consider how to work together to provide the new generation of senior living residents with purposeful longevity. Watch the panel discussion from Milken Institute’s Future of Healthcare Summit to learn more.

To continue the discussion on the role of senior housing in healthcare and how all stakeholders—from operators to capital providers, to payers—can work together to improve the well-being of older adults, join other healthcare and senior living leaders in San Diego this March.

“The occupancy rate for skilled nursing properties increased throughout 2022. However, labor continues to be a significant challenge within the industry and some operators are unable to admit new patients due to staffing shortages.” 

-Bill Kauffman

NIC MAP Vision released its latest Skilled Nursing Monthly Report on December 29, 2022. The report includes key monthly data points from January 2012 through October 2022. 
Here are some key takeaways from the report:

The skilled nursing occupancy rate in October recovered the ground it lost in September and rose 53 basis points to 79.4%, its highest level since April 2020. More broadly, there has been positive momentum throughout 2021 and 2022 and the occupancy rate was up nearly six percentage points (598 basis points) since its low point (73.4%) reached in January 2021. However, a rise in COVID-19 cases last year slowed some of the initial momentum. In addition, the staffing crisis in the sector was still a significant burden on skilled nursing operators and limited the ability to accept new patients in some situations. Occupancy was still down 8.2 percentage points from the pre-pandemic February 2020 level of 87.6%. As staffing and wage growth pressures persist, operations for many operators will be under pressure but the long-term demand for skilled nursing services is expected to grow over time. Hence, finding solutions to staffing shortages is a priority.

Managed Medicare revenue per patient day (RPPD) increased slightly in October but was down 1.4% from year-earlier levels and 4.7% from October 2020. Some operators see opportunity to capture patient volume with the growth of managed care, depending on the operator’s business model. However, the continued decline in managed Medicare revenue per patient day can pose a challenge to operators as the reimbursement differential between Medicare fee-for-service and managed Medicare has increased during the past two years. Medicare fee-for-service RPPD ended October 2022 at $583 and managed Medicare ended at $465, representing a $118 differential. In October of 2020, the differential was $100. 

Medicare revenue mix nudged up slightly from September to end October at 21.4% but was down from its pandemic high of 24.6% set in February 2022. It is down from earlier in the year (January/February) when increased cases of COVID-19 resulted in additional need for the utilization of the 3-Day rule waiver thereby increasing the Medicare census instead of transferring patients to hospitals. Meanwhile, Medicare revenue per patient day (RPPD) increased from $570 in September to $583 in October. Most of this monthly change is likely a result of the increase in Medicare rates to skilled nursing properties for fiscal year 2023. However, it is down from the high this year set in January most likely due to less reimbursement needed for COVID-19 positive patients. 

Medicaid patient day mix held steady ending October at 64.8%. However, it has increased 269 basis points from the pandemic low of 62.1% set in February 2022. In addition, Medicaid revenue mix declined 29 basis points from the prior month, ending October at 51.3%. Medicaid revenue mix is up from earlier in the year (January/February) as patients have now moved from Medicare patient days back to Medicaid, after utilizing the 3-Day Rule waiver. Meanwhile, Medicaid RPPD increased 1.1% from $260 in September to end October at $263. It is up 0.5% from one year ago.

To get more trends from the latest data you can download the Skilled Nursing Monthly Report. There is no charge for this report. 

The report provides aggregate data at the national level from a sampling of skilled nursing operators with multiple properties in the United States. NIC continues to grow its database of participating operators to provide data at localized levels in the future. Operators who are interested in participating can complete a participation form on our website. NIC maintains strict confidentiality of all data it receives.

This commentary drills deep into recent performance of the Secondary Markets, examining the overall performance and composition of the Secondary Markets in aggregate and in comparison to the Primary Markets.  

The Secondary Markets tracked by NIC MAP Vision have benefited in recent quarters from recovering strength in demand with limited new supply, driving occupancy closer to pre-pandemic levels for the Secondary Markets than that of the Primary Markets. New Orleans, LA (up 13.6%); Knoxville, TN (up 12.4%); and Baton Rouge, LA (up 12.2%), in particular, stand out as markets that have recovered the most following occupancy declines during the pandemic. All three markets were already experiencing negative absorption before the onset of the pandemic, and the health care crisis accelerated this trend. Absorption turned positive in these markets more recently, and the limited new supply arriving online drove occupancy to rebound. 

Source: NIC MAP® Data, powered by NIC MAP Vision

Supply, Demand, and Occupancy Rate Patterns. The exhibit below illustrates the pattern of inventory growth, net absorption, and occupancy for the Secondary Markets in aggregate. The recovery in property market fundamentals for senior housing began in the second quarter of 2021 and has strengthened in recent quarters. In the most recent data available from the third quarter of 2022, net absorption was the second highest on record at 4,655 units. At the same time, inventory growth in these 68 metropolitan markets totaled in aggregate only 473 units, which was the weakest inventory growth in the time series of the data that goes back to 2008. As a result of these improving supply and demand fundamentals, the occupancy rate for the Secondary Markets was only 3.0 percentage points below its pre-pandemic level of 87.0%, better than the 5.0 percentage point spread for the Primary Markets.

Seniors Housing Fundamentals | Secondary Markets | 2Q08 – 3Q22

Source: NIC MAP® Data, powered by NIC MAP Vision

In terms of demand, the number of occupied units for the Secondary Markets fell by 22,950 on a net basis from the first quarter of 2020 through the first quarter of 2021 as the health care crisis weighed on demand for seniors housing. Since the recovery in demand began, however, the number of occupied units has moved beyond its pre-pandemic level and stood at an all-time high of 308,554 units at the end of the third quarter, more than 1,100 units above the previous peak. This robust absorption of units speaks to the value proposition of seniors housing and its appeal to families that need the services and care provided by senior housing. More broadly, the value proposition provided by seniors housing includes socialization, security, engagement, room and board, care coordination, as well as lifestyle and wellness programs that support a high quality of life.

Seniors Housing Occupied Units (Estimated) | Secondary Markets | 1Q08 – 3Q22

Source: NIC MAP® Data, powered by NIC MAP Vision

In terms of new supply, the number of senior housing units under construction at the end of the third quarter in the Secondary Markets stood at 15,669 (152 properties), equivalent to 4.3% of existing inventory. This level of construction is down from a recent peak in the third quarter of 2018 of 23,611 units (253 properties) – which totaled 7.0% of existing inventory at that time – and is lower than the 5.0% of inventory under way in the Primary Markets. Meanwhile, construction starts have also been limited during the third quarter and totaled only 553 units across the entire 68 Secondary Markets. (Note, however, that construction starts data often gets restated as more information is collected and is thus subject to change). 

Units Under Construction and Construction as a Percent of Inventory Seniors Housing | Secondary Markets | 1Q08 – 3Q22

Source: NIC MAP® Data, powered by NIC MAP Vision

Seniors Housing Construction Starts | Secondary Markets | 2Q16 – 3Q22

Source: NIC MAP® Data, powered by NIC MAP Vision
 
Secondary vs. Primary Markets Comparisons. When evaluating existing inventory, the share of non-stabilized inventory¹ (a measure of how much recent inventory is not yet filled) is lower for the Secondary Markets (3%) than the Primary Markets (5%).  This is due to the fact that a larger amount of new supply that has been delivered in the Primary Markets in recent quarters. 

Seniors Housing Stabilization Status by Percent of Units | 3Q22

Source: NIC MAP® Data, powered by NIC MAP Vision

Separately and interesting to note is that the penetration rate for the Secondary Markets in the third quarter is higher than the Primary Markets at 11.6% versus 10.8%, respectively, indicating that seniors housing among households age 75+ is possibly slightly more accepted within the Secondary Markets than within the Primary Markets. 

Meanwhile, many other measures of seniors housing inventory indicate that the Secondary Markets are quite comparable to the Primary Markets. For example, the distribution of properties by age is comparable to that of the Primary Markets, with roughly 46% of units within the Secondary Markets 25 years or older, compared to 43% of the Primary Markets’ inventory. Properties 2 to 10 years and 10 to 17 years comprise roughly 20% and 10%, respectively, for both Secondary and Primary markets.

The property type distribution of the Secondary Markets is also similar to the Primary Markets when comparing the percent of inventory that are majority independent living at roughly 30%, majority assisted living at roughly 25%, and majority nursing care at roughly 45%. Additionally, the payment type is similar at roughly 22% entrance fee versus 78% rental. 

Overall, the inventory composition for the Secondary Markets is quite similar to that of the Primary Markets except for the slightly larger share of non-stabilized inventory in the Primary Markets, and this is largely due to construction pipelines and development activity.

Seniors Housing Property Age in Years by Number of Units | 3Q22

Source: NIC MAP® Data, powered by NIC MAP Vision

Seniors Housing Property Type by Percent of Units | 3Q22

Source: NIC MAP® Data, powered by NIC MAP Vision

Seniors Housing Payment Types by Percent of Units | 3Q22

Source: NIC MAP® Data, powered by NIC MAP Vision

Conclusion

The 68 Secondary Markets tracked by NIC MAP Vision somewhat mirror the Primary Markets in terms of inventory composition in aggregate. Additionally, the Secondary Markets have benefited from recovering strength in demand with limited new supply and have better closed the gap to pre-pandemic occupancy than the 31 Primary Markets on average. 

^{______________________
1}Stabilized occupancy inventory are properties that are (a) at least two years old, or (b) if less than two years old, properties that have achieved occupancy of at least 95.0% since their opening.

How to understand consumer behavior to innovate senior living. 

About 19 million people belong to the silent generation (born 1928-1945). They are the senior living customers of today. Compare that to the 70 million baby boomers (born 1946-1964) just starting to enter the pool of potential residents.  

The groups are quite different, and not only in size. The silent generation (age 77-94) is often characterized as thrifty, respectful, unassuming, and loyal. Baby boomers (age 58-76) are portrayed as demanding, self-assured, independent, and competitive.  

A well-attended educational session at the 2022 NIC Fall Conference addressed the challenge to understand the differences between the silent and baby boomer generations and how that impacts the senior living industry.  

“Do we really understand our consumer?” asked Joe Daniels, panel moderator, and vice president at Direct Supply. “We have the opportunity to do things differently.” 

Daniels was joined on the panel by several experts. They agreed that the industry must adopt a more customer-centric approach, especially to attract boomers. Marketing campaigns should micro target the local population, which can vary widely from place to place.  

“It’s crucial to dive into the details,” said Arick Morton, CEO at NIC MAP Vision. “Who is really your customer?” He suggested using county-level psychographic, age and income data to understand the local customer base.

Operators need to curate an experience, tailored by market, showcasing a vibrant lifestyle to entice baby boomers to move sooner rather than later, according to panelist Traci Bild. The experience starts with the marketing process. “Be empathetic, listen, slow down,” advised Bild, chief visionary officer at Bild & Co. “Change the customer experience and how you make people feel.”  

Think about your own buyer experiences, said panelist William Swearingen, senior vice president, Spectrum Retirement Communities. The buyer experience needs to meet their expectations. “It doesn’t take a budget. It’s about attitude, culture, and service,” he said.  

Surveys can be useful to get feedback from customers and referral sources on the buyer experience. Ask customers, including the adult children, how the buying process makes them feel.  

“Life sells on a tour,” said Morton. Potential residents and their families aren’t sold by beautiful empty spaces, he explained. They want to see residents actively engaged.   

From Bingo to Madonna 

Do prospective customers see residents playing bingo because it’s the best activity being provided? “Think about what that means,” said Swearingen. He cited a 2010 study that showed most people are well defined by the age of 40. Today’s resident who is age 85 was 40 years old in 1977. Activities should reflect events and interests of the late 1970s and early 1980s. These consumers don’t care about celebrity throwbacks to the 1940s. “We need to wake up,” said Swearingen. When he’s living in a retirement community at age 80, he expects the piped in music to feature Madonna’s greatest hits. “Take a chance,” he said. 

A few tweaks to the dining experience can have a big impact for a relatively small investment. “Dining is the highlight of the day,” said Bild. “How can you improve the overall experience?” The use of outdoor patios as dining venues increased during the pandemic which has been a plus.  

Technology is another area where senior living providers can improve their offerings. Major advances are being made in the areas of life safety and convenience. For example, artificial intelligence applications can help manage falls. Voice assistants, such as Amazon’s Alexa can carry out everyday demands. “We have a clear opportunity,” said Morton.  

Current residents already have smart phones. “They’re more tech savvy than we think,” said Swearingen. The pandemic only accelerated the trend.  

Amid rising resident acuity, more technology will be devoted to the management of chronic health conditions. Morton thinks that the silent generation has been less motivated to move into senior living because of their health status. But baby boomers are likely to delay move-ins until their health is compromised. “We need to understand how to build healthcare programming to meet their needs,” said Morton. 

Providers should also be aware that a demographic shift is under way among adult children. A growing number of them belong to Gen X, a group worried about financial security.  

The panelists discussed how to expand the consumer base. Private pay senior living mostly serves a well-off, white population, overlooking diverse groups. “We need an intentional effort to reach out to these populations,” said Swearingen. He added that marketing approaches tailored to different groups can result in two to three extra move-ins. 

Websites should feature persons of color as residents. Spanish language marketing campaigns can result in occupancy growth. Providers shouldn’t assume that members of diverse groups can’t afford senior living. At the same time, certain groups that have a tradition of providing elders with care at home should be educated about what the industry offers. 

Daniels concluded the session by asking the panelists the single biggest difference between boomers and the silent generation.  

Swearingen said boomers are an opinionated population. “Be prepared to answer their questions,” he said. “Don’t be afraid.” 

Bild noted that how the provider makes people feel has more impact than anything else. “Boomers like attention,” she said. “Master the human connection,” adding,  “Time is on our side.” 

Morton reminded the audience that the silent generation and boomers have very different life experiences. The world adapted to the boomers. The silent generation adapted to the world. “Understand who is your customer. Get the data.”

Loneliness and isolation were health concerns for older adults before the pandemic and have become more so in the aftermath of the worst of the pandemic period partly due to restrictions and protocols that were put in place within seniors housing communities and health care facilities. A search for publications that mentioned “loneliness” or “isolation” and “older adult(s)” or “older people” produced a result of roughly 19,000 publications in 2013. This number climbed to more than 25,000 in 2019 and spiked to more than 40,000 and 45,000 publications in 2020 and 2021, respectively. While down to roughly 32,000 thus far in 2022 (as of December 15), the level of interest and concern remains elevated.  

One reason for concern is that neuroscience research has shown that loneliness can speed cognitive decline. For example, one study found that individuals who were age 75 or older and lonely – defined as feeling unseen or unheard within a group – had a 210% increased chance of developing dementia. At the same time, there was a 60% increase in lifespan for individuals of the same age group who had rich social networks¹.  

Isolation, meanwhile, can result in both physical and mental health issues escalating into major emergencies if they remain unchecked by health care providers, family, friends, or the surrounding community. Developers, operators, and health care providers can take steps to reduce isolation and loneliness among older adults. 

Senior Housing Developers

Senior housing developers can reduce loneliness and isolation by site selection, location, and design. For example, new development, conversions, or retrofits with a tilt toward urban in-fill locations allow residents to be closer to city centers and population clusters. Indeed, some residents report that even the sound of nearby public transportation helps them feel less isolated from the community. However, from a cost-basis, in-fill locations can be expensive sites in which to build, and as a result, developers could also look to smaller secondary and tertiary cities for urban development where costs may be less prohibitive. 

Developing properties near or within multigenerational communities may also help reduce the potential for resident isolation and loneliness. For example, providing senior housing within walking distance of single-family housing helps residents be closer to younger generations or younger families. While age-eligible housing is an attractive lifestyle for many older adults, offering intergenerational developments with a mix of housing, retail, health, and wellness provides another option for those at risk of isolation. Locating senior housing on or near college campuses is another opportunity that allows proximity to walkable and alma mater experiences such as auditing courses or attending sporting events, which has been a popular draw to older adults for many years. Recently, some universities and colleges have begun incorporating non-students into classrooms, housing, and daily life as part of their diversity, equity, and inclusion initiatives and to address loneliness among both older adults and college students. 

Regarding design, spaces that encourage positive interactions and socialization between residents, visitors, and the surrounding community help to reduce loneliness and isolation. Rather than fences or walls, use of wide side yards with benches, shade trees, and sidewalks that are wide enough for both wheelchairs and pedestrians help to enhance community integration. Additionally, enlarged thresholds help to draw visitors in and to encourage residents to go out while providing opportunity for those less mobile to observe activities in the immediate surroundings. Inside, bedrooms that face communal space encourage residents to go out and socialize. In the dining area, small and intimate tables provide ease of conversation with other residents, while reconfigurable tables allow for larger gatherings with visitors.  

Senior Housing Operators

Senior housing operators can reduce loneliness and isolation by leveraging campus resources, affinity groups, pet therapy, and technology. Regarding resources, operators can offer popular campus services such as maintenance, landscaping, meal prep, and housekeeping off-site to engage the surrounding community. Wellness centers with fitness and nutrition amenities that are open to staff, residents, and the surrounding community increase multigenerational integration, particularly if set in a quiet environment that encourages conversation. Providing on-site childcare for staff could also help to increase multigenerational interaction, as well as help with employee hiring and retention. This is not always easy to implement effectively, however. Pet therapy has become popular in both schools and older adult communities for pets’ ability to reduce anxiety and feelings of loneliness, and operators can enlist regular visits from such pets to increase interactions between residents, staff, and visitors.  

Affinity groups can reduce loneliness and isolation by increasing opportunities to socialize and connect in a specialized setting. Communities catering to LGBTQ+ older adults and allies have gained interest², as well as veterans-focused age-eligible communities. Some adult day care operators have had success in target marketing for ethnic backgrounds with newspapers, television programs, and conversation in a particular language. Operators of culturally focused communities can also consider dietary customs, opportunities for meal sharing, and spaces for cultural events in their designs. As a commercial real estate property type, active adult rental properties are a response to the preferences of the baby boomer generation and appeal to a cohort of the older population seeking an option for living in a secure, maintenance-free setting with amenities and opportunities that foster socialization and shared activities with like-minded older adults.  

Regarding technology, today’s older adults are more tech savvy than prior generations and are increasingly expanding the use and number of devices employed³. Ensuring regular, private communication between staff, family, and residents and sharing real-time data via apps or wearable devices reduces isolation and the likelihood of physical or mental health issues going unchecked. Wearables can track changes in socialization by reporting “where two or more are together.” Access to traditional social media allows connectedness to friends, family, and daily life.  

Health Care Providers

Skilled nursing properties and hospitals can reduce loneliness and isolation by design and by leveraging technology and campus resources. Inviting use of skilled nursing and hospital campuses for community events, such as farmers markets, or charity events, including cornhole tournaments, could increase community integration with residents, patients, visitors, and staff. Corridors designed as walking paths encourage patients to step out and visitors to come in. Within skilled nursing and hospital rooms, large consultation areas can include both the patient and family bedside with designated space to display family photographs either digitally or physically. Additionally, skilled nursing properties and hospitals can downplay the clinical environment by adding art, appealing lighting, and communal touches such as: 

• A piano that residents, patients, visitors, or staff can play
• Meditation rooms
• Rotating art exhibits
• Public events and demonstrations
• Inviting landscapes
• Rooftop or botanical gardens
• Healing gardens or labyrinths
• Indoor playgrounds
• Restaurants  

Regarding technology, skilled nursing and hospital rooms can incorporate devices and wearables to communicate with family, friends, and staff. Additionally, the use of robots has increasingly been used to provide socialization in addition to providing entertainment and helping with staffing shortages. For example, some interactive therapeutic robots provide animal therapy in environments where live animals are unable to visit and can stimulate interaction between patients and caregivers⁴.

Final Thoughts

While the pandemic brought new restrictions and protocols, strained labor availability, and increased concerns about loneliness and isolation, senior housing developers and operators and health care providers can incorporate social needs into daily life and care. In general, older adults must not feel like a burden to those around them and should not be isolated from family, friends, staff, or the surrounding community. All available resources should be leveraged to encourage socialization, communication, connectedness, and inclusion. 

 ¹ “Lifestyle, Social Factors, and Survival After Age 75: Population Based Study”, BMJ, The Advisory Board Company.

 ² “Retirement Communities Cater to LGBT Population”, WSJ, November 16, 2022.

 ³ “Baby Boomers & Tech – How the Pandemic Changed the Relationship”, GWI, July 6, 2021.

 ⁴ “How a Robotic Baby Seal Is Revolutionizing Memory Care”, The Front Porch Center for Innovation and Wellbeing, October 20, 2016.