The assisted living sector touts itself as the most cost-effective option to provide quality-of-life care and services for the nation’s older adults. But that value comes at a cost, according to a new report.

Seniorly set out to determine how much assisted living communities actually cost and how those costs stack up against other options, including in-home care, by analyzing the average cost to consumers in all 50 states.

The price of assisted living, as with most business offerings, is increasing. Between 2021 and 2023, 30 states saw average costs for assisted living rise — with Wyoming (a 53% increase), West Virginia (46%) and New Hampshire (46%) seeing the biggest average increases, according to the report. The 2023 national average monthly cost of $4,401 is an 8% increase over 2021.

Costs charged to consumers actually fell in 15 states — Washington saw the biggest decline, at 16% — and remained relatively flat in six states, according to the report. 

The average monthly rent for assisted living communities ranged from $2,946 in Louisiana to $8,248 in New Hampshire, where it was almost double the national average. Average monthly costs were more than $5,000 in 10 states, most of them concentrated in New England and the Mid-Atlantic, whereas the most affordable states included Indiana ($3,695), Iowa ($3,420) and South Dakota ($3,378).

Middle market highlighted

The cost of senior living is shining a spotlight on options for the “forgotten middle,” those whose incomes are too low for them to be able to afford current private-pay senior living options but too high for them to qualify for federal assistance.

A recent Milken Institute report, released in partnership with the National Investment Center for Seniors Housing & Care and CVS Health, projected that almost three-fourths of the estimated 16 million middle-income older adults who will be aged 75 or more years will be financially unprepared to afford housing to meet their needs in 2033. Even with home equity, the Milken researchers found, only 39% of those middle-income older adults will be able to afford assisted living.

Another recent study from the Harvard Joint Center for Housing Studies, released last month, found that only 13% of adults aged 75 or more years who are living alone across 97 US metro areas can afford to move into an assisted living community without starting to cash in their assets.

A NIC-funded 2019 study by NORC at the University of Chicago found that 54% of middle-income older adults will lack the financial resources to pay for senior housing and care in 2029, calling for a combination of public and private efforts to address the looming crisis.

The Seniorly study in part used data from the US Census Bureau’s 2022 median annual household income for states and savings rates from the Bureau of Economic Analysis. In doing so, Seniorly estimated that it would take the average American 17.2 years to save for one year of assisted living. 

Using those data to look at the affordability of assisted living, Seniorly found that New Hampshire residents would need to save for 26.8 years to cover a single year of assisted living, with West Virginia (26.1 years), Mississippi (24.8 years), Wyoming (24.6 years) and Delaware (21.7 years) rounding out the top five states as far as timing. 

Maryland came out at the other end of the spectrum, with residents needing to save an average of 11.7 years to cover one year of assisted living costs, followed by Utah (12.3 years), Minnesota (12.3 years), Georgia (13.3 years) and Washington (13.4 years). 

In comparing assisted living with home care costs, Seniorly pointed to a report from Genworth Financial that put the monthly cost of a home health aide at $5,462, although wide variation exists between states. Minnesotans will pay the most for home care, with a median monthly cost of $7,333, compared with $3,472 for assisted living. West Virginia was the least expensive state for home health aides at $3,793 per month, compared with $4,846 average monthly rent for assisted living.

Some question value

The assisted living industry’s pricing structure and providers’ for-profit status were two topics examined in a New York Times and KFF article package in November. Costs also were discussed in a December Washington Post article package looking at the deaths of residents who had eloped from communities. 

Those and other lay media investigations into the assisted living industry led the US Senate Special Committee on Aging to launch a review of the industry, including questions to three large providers, and to schedule a Jan. 25 hearing based on “significant concerns” about costs, staffing levels and resident safety.

The LCS Foundation has announced a partnership with the Granger Cobb Institute for Senior Living to provide an annual scholarship to add more professionals to the senior living industry.

The institute was announced for Washington State University in 2017 and dedicated in 2019 to focus on building the future senior living workforce through academic programs, industry partnerships and research. It is named for the senior living industry executive who helped build the Washington State University senior living curriculum and taught a course in senior housing administration before he died in 2015. The senior living management program, launched in 2020, offers industry-driven courses, immersive learning, community operations expertise and industry-expert connections before graduation. 

In December, the program celebrated its first graduate, who earned the degree through the institute’s global campus. Six students have completed the senior living minor, which began in fall 2021, and 25 students are in the pipeline working on a senior living major or minor, according to GCISL founding director Nancy Swanger, PhD. Since offering an elective class in senior living management in 2010, almost 800 students have taken the course, with many now working in the industry. 

“Our program is quite unique in that it is housed in a hospitality school within an accredited college of business. The industry loves the business acumen and relationship-building foci in our curriculum,” Swanger told McKnight’s Senior Living. “The program at Washington State University is relatively new, and having such generous support for our students from LCS lends tremendous validity and credibility to what we are trying to build.”

Swanger added that many industry providers have given their “time, talent and treasure to help the program grow,” and that the LCS scholarship is one of three specifically for students studying senior living.

Swanger is on the board of trustees of the Vision Centre, which is supported by several industry associations — including the American Health Care Association / National Center for Assisted Living, the American Seniors Housing Association, Argentum, LeadingAge and the National Investment Center for Seniors Housing & Care — and working to create university and college programs and facilitate internships to prepare future generations of aging services leaders.

Since 2017, the LCS Foundation has awarded more than $450,000 in scholarships and professional development programs. The foundation also has collegiate partnerships with the University of Northern Iowa, Northwood University and the University of Wisconsin-Eau Claire. Those partnerships have placed senior living experts on advisory boards, developed curricula and helped provide students with interactions to advance their learning.

Other senior living-focused academic programs include an assisted living/senior housing administration concentration at George Mason University, a Master of Arts degree in senior living hospitality at the University of Southern California Leonard Davis School of Gerontology, an undergraduate degree in senior living management in University of Central Florida’s Rose College of Hospitality Management, and Boston University’s concentration in senior living in the Masters of Management in Hospitality degree program.

A significant number of senior living companies have implemented diversity, equity, inclusion and belonging programs in the past year, indicating that more owners and operators are “leaning in” to those initiatives to meet strategic goals, according to new industry research.

But the authors of the report about the results of the 2023 Senior Living DEIB Survey, which was released Wednesday, say it’s time for operators to focus on actions aimed at improving retention in addition to recruiting.

“Organizations should establish a holistic vision for what they are trying to achieve through their DEIB efforts,” they wrote. “It is time to move beyond the focus of just recruiting diverse talent. Companies must foster inclusive work environments that provide a sense of belonging, so that they can retain the talent that they work hard to attract.”

The survey, which continued to track the industry’s progression addressing DEIB initiatives, was conducted by Ferguson Partners and sponsored by the Senior Living DEIB Coalition, a two-year-old partnership among Argentum, the American Seniors Housing Association and the National Investment Center for Seniors Housing & Care.

Although more work lies ahead, Argentum President and CEO James Balda said that it is important to acknowledge the progress to date.

“It is exciting to note that this year’s survey showed an increase in the percentage of companies with formal DEIB programs, from 27% to 40%, which indicates a growing recognition within the industry of the importance and positive impact of promoting diversity, equity, inclusion and belonging among employees and residents,” Balda said in a statement. “A formal DEIB program is an important step to foster a culture of diversity, equity, including and belonging, which also bolsters employee engagement.”

Recommendations

The survey, however, also revealed that well more than 80% of executive positions are held by white employees, presenting a “huge opportunity” for racial/ethnic parity at the executive level with employees of color. More work also is needed at the mid-management level, with women of color leaving at twice the rate of their promotion, according to the report. 

“Senior living is about creating communities where everyone feels welcome and valued,” NIC President and CEO Ray Braun said. “The results of this survey provide us with a roadmap for furthering our DEIB initiatives and creating an industry that is truly inclusive for all.”

DEIB trends

The results also provide a market overview of how the senior living industry is addressing DEIB, according to ASHA President and CEO David Schless. 

“The data collected provides valuable insights into current industry trends, best practices and areas of improvement for those looking to further their DEIB efforts,” he said.

Survey participation increased 36% — from 44 to 60 companies — from 2022. 

According to the results, 40% of respondents have a formal DEIB program in place — up from 27% in 2022 — and 37% have implemented some DEIB initiatives or policies. In addition, 93% of respondents said they are taking steps to recruit potential employees from underrepresented groups, and 95% said they are taking steps to increase retention and promotion rates of members of underrepresented groups.

Other findings:

• The majority of organizations focus on gender (91%), race/ethnicity (98%), sexual orientation (89%) and age (83%) as dimensions of diversity.
• 73% of senior living professionals are women.
• 50% of employees are white, and 46% are people of color.
• 14% of executive management is people of color, and women make up 50% of executives.

In most cases (57%), DEIB initiatives originate in the C-suite (57%), although some initiatives are developed by the human resources department (17%) or by a dedicated DEIB committee (13%).

An executive summary of the survey results is available on Argentum’s website.

The senior living occupancy rate (assisted and independent living combined) increased 0.8 percentage points in the fourth quarter of 2023, to 85.1%, according to the data, analyzed by the National Investment Center for Seniors Housing & Care. That rate is up 7.3 percentage points from a pandemic low of 77.8% in second quarter 2021, bringing senior lying occupancy within less than two percentage points of the 87.1% pre-pandemic rate in March 2020.

The assisted living occupancy rate improved 0.9 percentage points from the third quarter to 83.4%, whereas the independent living occupancy rate increased 0.8 percentage points, to 86.8%. As a result, the occupancy rate for assisted living was only 1.1 percentage point from the pre-pandemic level, and the occupancy rate for independent living was only 2.8 percentage points from its pre-pandemic level.

The cities of Boston (90.7%), Baltimore (88.6%) and Minneapolis (88.1%) had the highest occupancy rates of the 31 primary markets that NIC MAP Vision watches, whereas Houston (79.3%), Atlanta (81.8%) and Las Vegas (82.1%) had the lowest occupancy rates.

NIC MAP’s 68 secondary markets fared even better, with assisted living occupancy fully recovered and 1.2 percentage points above its pre-pandemic occupancy level of 84.2%. 

Demand outpaced supply in both assisted living and independent living properties within the primary markets in the fourth quarter, driving occupancy rates higher. 

Higher capital costs and a challenged lending environment, however, continued to weigh on new supply, NIC said. Inventory for the primary markets grew by only 0.4% from the third quarter. Year-over-year inventory growth held steady at 1.4%, among its smallest increases since 2012.

“At this pace, we anticipate occupancy recovery to pre-pandemic levels in the second half of 2024,” NIC Senior Principal Caroline Clapp said in a statement. “If this environment of robust absorption coupled with relatively moderate new inventory continues, owners and operators will need to determine when to jumpstart new construction to meet consumer demand.”

A new report released Tuesday by the Milken Institute presents four potential solutions to improving the financing and delivery of housing for the “forgotten middle,” those whose incomes are too low for them to be able to privately pay for current senior living options but too high for them to qualify for federal assistance.

This group was named and quantified in 2019 and 2022 studies. The Milken Institute undertook the research due to the long-standing — and growing — gap in available senior housing and care options affordable care options to this group, according to Lauren Dunning, director of the Institute’s Future of Aging Advisory Board. More than half of middle-income Americans 75 and older are projected to fall into the “forgotten middle” by 2029.

But a central purpose of the report, Dunning told McKnight’s Senior Living, was to spotlight the flip side of the challenge — the opportunity for innovative senior housing and care offerings, options and solutions addressing the unmet needs and wants of older adults.

“Pioneering operators are already utilizing unique levers to serve the ‘forgotten middle,’ creating healthcare and payer partnerships, developing models centered around resident volunteering, and introducing new a la carte arrangements,” Dunning said. “Lowering housing and care costs can also increase the value proposition for investors and present compelling selling points for prospective consumers.”

Senior housing operators are innovating, Dunning said, and now the call to action is to bring that to scale across the nation.

The potential solutions presented in the new report, Dunning said, embody an overarching theme that senior housing is “approaching a new era” of integration in the healthcare continuum, within communities, and across sectors, such as technology:

1. Establish a social enterprise to refinance and rehabilitate existing distressed senior living properties.
2. Design a revolving loan fund to provide a sustainable source of long-term capital.
3. Use a pay-for-performance model to attract upfront funding for housing and provide a new revenue stream to offset the ongoing costs of providing care by delivering long-term cost-savings for payers.
4. Launch a regional pilot program to generate data supporting partnerships between senior housing operators and payers in value-based care.

The report, titled “Innovative Financing and Care Models to Scale Affordable Housing Solutions for Middle-Income Older Adults,” comes as the need to address cost barriers to affordable senior living and care increases. It presents research findings from Milken’s Financial Innovations Lab conducted by the institute’s Innovative Finance and Future of Aging teams. Milken partnered with the National Investment Center for Seniors Housing & Care and CVS Health last summer to host a series of meetings with 80 experts from healthcare, senior living and care delivery, finance, technology, government, philanthropy and academia.

There are a few groups of stakeholders working to advance the recommendations outlined in the report.

“We are excited that the industry has embraced the report’s findings, and we will continue to help facilitate the execution of the solution alongside the working groups,” Dunning said.

The ‘forgotten middle’ dilemma

It is projected that nearly three-fourths of the estimated 16 million middle-income older adults 75 and older will be financially unprepared to afford housing to meet their needs in 2033, with more than half projected to live with three or more chronic conditions and mobility limitations, according to the report authors.

Even with home equity, 39% of middle-income older adults will be unable to pay for assisted living, but 67% of those individuals are expected to experience three or more chronic conditions, and 60% will have limited mobility.

Compounding the problem is the intensifying shortage of direct care workers and lasting economic effects of the COVID-19 pandemic on senior housing developers in the form of higher costs for materials, labor, operations and employee benefits. Those factors contributed to a 17.8% increase in senior housing development costs between 2020 and 2022, according to the report.

But optimism exists within the industry that pandemic disruptors have changed the way developers and operators design and deliver housing and care, with innovation driving the overall value proposition of senior living, according to the authors.

In a case study, the report highlighted 2Life Communities’ Opus Communities project, which broke ground in March as one of the nation’s first senior housing projects designed specifically for the middle market. Among the approaches the project is taking to reduce operating and state costs, Opus will require residents to volunteer 10 hours per month, offer meal service just three nights a week and encourage membership in nearby Jewish community centers for activities, to reduce in-house entertainment and activity costs.

With a projected need for 200,000 additional senior living units by next year, inventory and investment isn’t set to keep pace with the growing demand, Lisa McCracken, head of research and analytics at the National Investment Center for Seniors Housing & Care, writes in a new blog. But the industry is moving in the right direction. 

Calculations by NIC MAP Vision project the need for an additional 200,000 senior living units by next year, when the first baby boomers, born in 1946, approach 80, McCracken said. The youngest boomers are turning 60 this year.

“With record-low construction starts observed in 2023, the projected gap between available and needed senior housing units will be significant,” she wrote. “To maintain the current market penetration rate in the senior housing sector, we will need significant near-term growth in the senior housing inventory.”

An industry-wide investment of $400 billion is necessary to complete the required new development to meet anticipated demand, she said, but only 40% of that investment need is on pace to be fulfilled.

The industry is facing the situation with an “undeniable sense of optimism” coupled with a “drastic sense of urgency” as it contemplates the coming “age wave” and its “profound implications” for the sector, according to a NIC MAP Vision blog.

Call to action

“This strong demand presents a golden opportunity for stakeholders in the senior housing industry,” the NIC MAP Vision blog read, adding that the “possibilities are boundless.”

That optimism, however, comes with a call to action. 

Although today’s older adults are living longer and healthier than members of previous generations, chronic conditions and age-related ailments necessitating specialized care also are on the rise and will necessitate changes to traditional support systems, according to the NIC MAP Vision blog. Additionally, the availability of fewer family caregivers will shift the burden of care to congregate care environments. 

“The industry must, therefore, focus on creating environments that are not just residences, but holistic communities that prioritize health, well-being and social connectedness,” the NIC MAP Vision blog read. “Within these communities, balancing affordability with quality becomes paramount — especially given this generation’s longer lifespans and potential for increased healthcare needs.”

In 2023, approximately 5,000 new senior living units were under construction per quarter — a pace not fast enough to keep up with growing demand, according to NIC MAP Vision, which also echoed McCrakcker’s remark that investments in senior living aren’t keeping pace with demand. The result, according to NIC MAP Vision, could mean potential difficulties in affordability, accessibility and quality of care. 

“In essence, while we are moving in the right direction, we are not moving fast enough,” the NIC MAP Vision blog reads. “The required investment to maintain the current market penetration rates is estimated to be over $1 trillion — the majority of which is not estimated to be met.”

The blog concluded that the future of senior living is bright, with strong demand and ample opportunities. 

“It is incumbent upon stakeholders — developers, investors, policymakers and care providers — to rise to the occasion,” the blog concluded. “By accelerating investments, fostering innovation and strategically planning for the future, we can ensure that the growing demand is not just met, but exceeded, crafting a future where our seniors live their golden years in comfort, community and care.”

The late George Chapman, along with Marilynn Duker and Robert G. Kramer, are the 2024 inductees into the Senior Living Hall of Fame, the American Seniors Housing Association announced Thursday.

ASHA awards the annual honor to recognize “visionaries who have distinguished themselves through uncommon foresight and ground-breaking innovation.” Inductees, the association said, “are industry leaders with an unwavering commitment to community lifestyles that enhance choice, independence, dignity and personalized service.”

ASHA President and CEO David Schless said: “We are very grateful to them and their commitment to senior living.” 

The honorees will be inducted in January at ASHA’s annual meeting in Aventura, FL. They will join 24 others previously inducted in 2018, 2019, 2020, 2021, 2022 and 2023.

George Chapman

Chapman spent 31 years investing and running companies in the senior living space, during which time, according to ASHA, “one constant, core principle” was “developing longstanding, mutually rewarding relationships built on loyalty, trust and spirited friendship.”

Chapman joined Toledo, OH-based Health Care REIT (now known as Welltower) in 1992 as executive vice president and general counsel, then became chairman and CEO in 1996 and added the title of president in 2009.

After Congress passed the RIDEA Act in 2007, which gave REITs the ability to share in the net operating income generated by their assets, Chapman quickly recognized how this would better align the interests of owners and operators, ASHA said, adding that Health Care REIT was the first to close a RIDEA transaction. 

Chapman retired from Health Care REIT in 2014 after having assembled a portfolio of senior living, skilled nursing and medical office properties with an enterprise value of more than $25 billion in the United States, Canada and the United Kingdom. After Welltower, Chapman founded ReNew REIT in 2018.

Chapman, who passed away in 2023, was a longtime board member of ASHA and a Chairman’s Circle supporter of the Seniors Housing PAC. Over the course of his career, he also served on the boards of Benchmark Senior Living, Sunrise Senior Living, OnShift, National Storage Affiliates and the National Association of Real Estate Investment Trusts, among other organizations.

He “had a profound impact on the senior living industry both as a pioneering investor and as a mentor to hundreds of next-generation leaders,” Schless said.

Marilynn Duker

Duker, Schless said, “helped create one of the industry’s finest organizations with a culture and a commitment to caring that has been recognized for excellence by consumers, team members, and investors alike.”

Duker joined Brightview Senior Living’s predecessor, The Shelter Group, a privately held real estate development and property management firm, in 1982. She was The Shelter Group’s second employee and has been involved in every phase of the company’s operations and growth.

By 1996, she and her business partner, Arnie Richman, were ready to capitalize on a new opportunity by branching out into senior living. Richman led the creation of Brightview, while Duker continued to lead the multifamily side of the business until becoming president of Brightview in 2007. She subsequently became CEO.

Brightview opened its first senior living community in 1999 and over the years has grown to 47 independent living, assisted living and memory care communities in eight states along the East Coast. She has been responsible for directing strategy, operations and long-term growth of the business. In 2022, she began transitioning to the role of co-chair.

Under Duker’s leadership, Brightview has been rewarded for impressive accomplishments. Recently, for instance:

• The company was the only senior living operator listed among employers on the Best Workplaces for Women lists in 2019 and 2022.
• Brightview topped the Best Workplaces in Aging Services list for large-sized companies in 2019, 2020, 2021 and 2022.
• 2022 was the company’s second consecutive year earning a spot on People’s Companies that Care list, and it was the only senior living company to make the list, as it had been in 2021.
• Brightview also was the only senior living company to land a spot on Fortune’s 100 Best Companies to Work For list, in both 2021 and 2023.

Duker serves on the Mercy Health Systems Board of Trustees and until October 2022 also served on the National Investment Center for Seniors Housing & Care’s Operator Advisory Board. She was recognized as the Loyola University of Maryland Sellinger School of Business Leader of the Year in 2019 and received the McKnight’s Women of Distinction Lifetime Achievement Award in 2023.

Before joining The Shelter Group/Brightview, she was a Presidential Intern at the US Department of Housing and Urban Development.

She is a graduate of The College of Wooster, Wooster, OH, and holds a master’s degree from the Massachusetts Institute of Technology, Cambridge.

Bob Kramer

Kramer, Schless said, “played an instrumental role in the creation of the National Investment Center for Seniors Housing & Care and their efforts to educate potential lenders and investors about the senior care continuum.”

His “commitment to advancing innovation for older adults in housing, community and healthcare,” ASHA said, can be traced to 1991, when he co-founded the organization, where he was president and CEO through 2017. Today, he continues to serve NIC as board member and strategic adviser. 

Under Kramer’s leadership, ASHA noted, NIC pioneered the development of data and analytics that the capital markets relied on as they turned their attention to the emerging senior living industry and powered its subsequent growth. 

Kramer also was instrumental in compiling and naming “The Forgotten Middle,” a landmark study funded by NIC and published by the journal Health Affairs in 2019. It examined the health and socioeconomic status of middle-income adults who will be 75 years old or older in 2029, their ability to afford private-pay senior housing, and potential solutions to meeting their needs.

According to ASHA, the mission of one of Kramer’s most recent endeavors, the Nexus Insights think tank, “neatly sums up his prolific, multi-faceted and highly influential role in senior living: Rethink aging from every angle.” He founded Nexus Insights in 2020, where he works with a network of senior living leaders to identify and track trends in aging as well as promote innovative models for services, housing and care for older adults. It is merging with the new Aging Innovation Collaborative of the Milken Institute’s Center for the Future of Aging thanks to $3 million in funding from NIC.

Kramer also received the inaugural McKnight’s Pinnacle Awards Career Achievement Award in 2023.

He also is a former county government official and Maryland state legislator. After graduating from Harvard University, he went on to Oxford University and earned a Master of Divinity degree from Westminster Theological Seminary.

This year’s inductees were chosen by the Senior Living Hall of Fame Selection Committee, which is led by former ASHA Chair Larry Cohen, CEO of Trustwell Living. Committee members include Lois Bowers, editor of McKnight’s Senior Living, and Steve Monroe, Tim Mullaney and Matt Valley.

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