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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Lisa McCracken, the new head of research and analytics for the National Investment Center for Seniors Housing & Care, talked during Wednesday’s LeadingAge policy update call about what she is seeing in her crystal ball as the industry enters the new year. 

“The pandemic was an accelerant across a lot of different levels. A lot of things unfolded much quicker,” she said.

The industry, McCracken said, is in the earlier stages regarding much technology, especially as relates to adoption. That reality, she added, brings questions about how to pay for it, who will pay for it and what providers can cover from an investment standpoint if technology helps improve outcomes and efficiencies.

Artificial intelligence also presents opportunities in terms of predicting when a resident’s health might start to decline or when a resident might be prone to falling, and to identify signs of employees who may be more likely to leave their jobs, McCracken said. 

“There is a lot of predictive data out there,” she said. Generative AI, McCracken added, processes data in different ways and helps with the human touch aspect of care and service provision by allowing staff members “to do the more important things.”

“I’m a big fan of a lot of the workforce tech that helps from an efficiency standpoint to reallocate staff time,” she said.

NIC, she added, is working with NORC at the University of Chicago to quantify the value that senior living brings to individuals from the standpoint of quality of life, longevity and health outcomes — and how that value can translate to the reimbursement side for some operators. Organizations, McCracken added, must adopt a business intelligence and analytics mindset to better quantify the sector’s story.

“How can you prove your own worth?” she asked. “We know it, we feel it, we see it — but we live in a world that demands the evidence. We need to do better at that.”

The integration of wellness into offerings, as well as risk partnerships with payers, are other innovative happenings that McCracken said she is seeing, “recognizing we can’t do this alone, and maybe we don’t need to be the end all, be all, but a convener to make bold moves.”

Partnerships, she added, are helping NIC propel some initiatives forward. McCracken mentioned a partnership with the Milken Institute that will yield a report next week regarding middle market solutions for senior housing and care. This report follows the November announcement of a $3 million grant that NIC provided to the institute’s Center for the Future of Aging to “develop bold new models” for senior housing and care. As part of that effort, Nexus Insights, a think tank founded almost four years ago by NIC founder Bob Kramer, is merging with the new Aging Innovation Collaborative within the center.

“We recognize that NIC has a powerful voice within the senior housing and care space, but others are looking at the population of older adults and saying what we need to know, how to partner, how to think innovatively,” McCracken said.

Senior living operators will continue to face inflationary pressures and capital market challenges in 2024, but some effects may lessen before the year is out, according to industry experts. Expect the workforce-related issues that have dogged providers for years to persist, however, they said.

“The elevated interest rates driven by the Federal Reserve efforts to bring down inflationary pressures had a profound impact on the sector in 2023,” National Investment Center for Seniors Housing & Care President and CEO Ray Braun told McKnight’s Senior Living.

Noting the “significant demographic wave on the horizon,” he said that the past year also saw record absorption of new senior housing inventory as it hit the market. “At the same time, we experienced a marked decline in new construction as well as transaction activity in 2023,” Braun said. “The lending environment and overall cost of capital has been prohibitive and has been a definite headwind.”

Capital still will be constrained early this year, he said, “but we are also hopeful that as the year progresses, we will start to see some improvement on this front.”

National Center for Assisted Living Executive Director LaShuan Bethea singled out inflation as the top issue faced by the industry over the past year.

“Inflation has caused soaring labor costs, in addition to other expenses, and made it difficult for assisted living providers to compete for caregivers,” she told McKnight’s Senior Living. “As a result, assisted living communities have been forced to use more contract nurses and staffing agencies, many of which are charging two or three times more than they charged prior to the pandemic.”

As 2024 dawns, Bethea said, the financial challenges will continue.

“Inflation makes all other expenses in assisted living more expensive, from food to cleaning supplies,” she said. “Additionally, the entire industry is still facing the ongoing ripple effects of skyrocketing costs from the pandemic.”

Assisted living providers, Bethea said, managed their COVID-19 response with little support from the government. According to some estimates, assisted living communities collectively received approximately $1 billion in relief funds, compared with the $12.5 billion received by nursing homes, despite the fact that assisted living providers serve about the same number of older adults and incurred more than $30 billion in pandemic losses and expenses.

“Federal and state policymakers provided little support to these communities in terms of personal protective equipment, testing and staff support,” she said. “Those COVID-related expenses continue today.”

Senior living providers, American Seniors Housing Association President and CEO David Schless said, continue to be confronted by “inflationary pressures across several key expense categories and a significant and rapid increase in interest rates.”

“Ultimately, the top challenge in 2023 was related to the capital markets and liquidity challenges,” he told McKnight’s Senior Living, adding that he expected those issues to continue this year.

“While inflationary pressures appear to be moderating somewhat, the interest rate environment and overall capital market environment for all real estate-based assets will likely remain challenging,” Schless said. “And we know there are many owners facing debt maturities in the upcoming year, which may prove to be extremely challenging with an ongoing liquidity crisis.”

NIC believes that the industry will reach an inflection point this year and that a “reset” will occur, Braun said.

“There will be some distressed inventory and underwater loans that the market is going to have to work through,” Braun said. “We think this reset is going to force a narrowing of the bid-ask spread and some reconciliation around equity contributions to stabilize outstanding debt.”

A ‘patchwork’ system

From a broader perspective, LeadingAge President and CEO Katie Smith Sloan told McKnight’s Senior Living, operators are challenged by “the shortcomings of our current patchwork system of delivering and financing long-term care.”

The association for nonprofit providers across the continuum of aging services is “doing all we can to raise up and urge policymakers and other stakeholders” to address the issue, she said.

“America is experiencing a massive demographic shift with implications for every aspect of society,” Sloan said. “Accessing quality long-term care is very often challenging, for many reasons. There is little political will to address these issues systemically, but policymakers are quick to criticize. Too often, aging services and providers are the scapegoat.”

Policymakers and members of the public must be educated about the industry as a whole as well as the differences between provider types, Sloan said.

“Ensuring that the public understands how long-term care is delivered and paid for — in a patchwork, inefficient system — and that the public appreciates the support that is needed, is critical,” she said. “And then advocating for long overdue change. We’re committed to doing everything we can to achieve that goal.”

Issues related to access and affordability also are on NIC’s radar screen, said Braun, who called them “an ongoing challenge for the sector.”

“NIC has been committed to defining and finding solutions for the middle-market consumer segment, and this work is more important than ever,” he said. “We need to be creative in finding solutions and models that are scalable and will bring forth greater access and options for the wave of baby boomers ahead.”

NIC funded a 2019 study by NORC at the University of Chicago that found that 54% of the 14.4 million middle-income older adults in 2029 in the United States will lack the financial resources to pay for senior housing and care, and a combination of public and private efforts will be needed to address the looming crisis.

More recently, Braun noted, NIC provided funding for the Housing for America’s Older Adults 2023 report, prepared by the Joint Center for Housing Studies of Harvard University. According to findings shared in that report, 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.

NIC also has partnered with CVS Health to support a soon-to-be released report from the Milken Institute, “Innovative Financing and Care Models to Scale Affordable Housing Solutions for Middle Income Older Adults,” Braun added.

Intertwined with staffing issues

Access and affordability issues are intertwined with senior living’s perennial challenges related to staffing, Braun indicated.

“​​Staffing-related expenses continue to pressure margins, and there is sensitivity to how much of this expense can be passed along to the consumer,” he said, noting that in the first quarter of 2023, the percentage of assisted living rent increases surpassed the percentage of wage escalation.

“We went several years where wage increases consistently exceeded rent increases,” Braun said. “This is an ongoing challenge for operators, who need to ‘read the tea leaves’ and determine how far they can go in rent increases to cover some of these expenses without pricing themselves out of the market.”

Sloan cited labor issues — specifically, recruiting and retaining workers — as the top challenge that has faced senior living owners and operators over the past year. And those issues affect access, she said.

“These challenges are particularly acute in senior living communities that provide skilled nursing and home healthcare,” such as continuing care retirement / life plan communities or assisted living communities where home- and community-based services are provided, she said. “Insufficient reimbursement rates, coupled with a highly competitive labor market, make for a very tough operating environment. Members are having to make hard choices — which service lines to continue, what to reduce — in order to maintain operations. That prospect of limiting older adults and families’ access to much-needed care is really antithetical to our members’ mission. Yet without staff, there is no care.”

NCAL’s Bethea noted that assisted living providers and those they could serve are feeling the pain as well.

“While the assisted living workforce has recovered in many areas, workforce shortages still remain a top challenge, especially in rural areas,” she said. “ Rural areas do not have as many people in general, let alone the qualified caregivers needed to support the communities’ seniors. As a result, assisted living providers are having to compete with other healthcare sectors for new hires or make the tough decision to limit admissions.”

Limiting move-ins, Bethea said, “leaves vulnerable residents displaced from their long-standing communities, as well as reduces their options for quality care. …Families are left scrambling to find new care options and often must travel farther to visit their loved one.”

NCAL, she added, is working with its state affiliates and individual providers to try to find solutions to address workforce challenges so that older adults’ access to assisted living is protected.

Mandate effects outside of nursing homes

Both Sloan and Bethea cited the federal government’s proposed minimum staffing mandate for nursing homes as a potential challenge for other types of providers along the long-term care continuum.

“There’s a bit of irony here. I’ve spent my career in this sector and finally — a true first in a long time — the federal government is focused on aging services and older adults’ access to quality care,” Sloan said. “But the Biden administration is not making the right choices.”

At LeadingAge’s annual meeting in November, Sloan said that even though the staffing mandate proposed by the Centers for Medicare & Medicaid Services directly would apply only to nursing homes, senior living and other providers would be affected because they are “fishing from the same pool” of workers and “there are just not enough people to hire.”

In December, she told McKnight’s Senior Living that “decisions are being made that will have far-reaching impact and potentially negative unintended consequences.”

Bethea predicted that the proposed mandate will be senior living’s top challenge this year.

“With the impending Biden administration’s staffing mandate for nursing homes, assisted living communities are at risk of losing staff,” she said. “No matter where an assisted living community sits on this continuum, a federal minimum staffing mandate threatens to take away the essential staff on which these communities depend to provide high-quality care for millions of residents.”

And because labor shortages can lead operators to curtail admissions, Bethea said, another top challenge for the industry will be to rebuild the capacity to accept new residents.

“As [the] workforce slowly recovers, assisted living providers must do everything they can to effectively communicate that they are willing and able to accept new residents,” she said. 

ASHA continues to pursue a variety of legislative solutions to workforce challenges, including immigration reform, Schless said. “Of course, the politics of immigration reform are extremely challenging,” he added, noting that, with 2024 being an election year, “getting any significant legislation enacted is unlikely,” although “ASHA will continue to look for any opportunities that may add new foreign workers to the workforce.”

Although the situation has improved from the previous two to three years, Braun said, labor issues continue to be a “pressure point” for operators.

“We have seen year-over-year wage increases come down from record highs, and a number of operators are reporting reduced agency dependency, but the challenges have not gone away,” he said.

Operators, Braun said, “need to be better about reducing turnover and ultimately improving the experience of our workforce, which in the end will pay dividends.”

Workforce issues also are a primary concern for affordable senior housing providers, Sloan said.

“Congressionally appropriated funds are critical to both meet rising demand for homes and support the programs for service coordinators, whose work helps residents to age in place,” she said. “Research — and the experience of our nonprofit members who provide federally assisted homes to seniors with low-incomes — show that residents are better able to age in community with improved health and overall well-being thanks to service coordinators’ work, yet for the past  decade, these programs hadn’t received support, until only recently.”

In December, the US Department of Housing and Urban Development released $40 million in new funding for service coordination programs in affordable senior housing. LeadingAge said it was the first service coordinator funding opportunity in 10 years.

A 2015 study by LeadingAge and the Lewin Group found that the availability of an on-site service coordinator, such as a social worker, at federally subsidized seniors housing reduced hospital admissions among residents by 18%. More recent studies found that service coordinators improved affordable senior housing resident resilience during the COVID-19 pandemic.

But “even with recent support, there are still significant unmet needs,” Sloan said.

Looking to the future

Looking toward the future, Braun said that the industry is “going to have to refine the owner-operator relationship in some cases.”

“We remain a fragmented space with many different owners and operators, and those relationships can be complicated depending on experience in the sector and generally a limited set of industry standards for measuring and defining quality,” he continued. “NIC is working with some others on this very topic. We think it will be critical to advance the sector in this regard as we prepare for the wave of new development that will come once the capital starts to free up.”

Look for the topics to be covered in educational sessions, forums and networking opportunities at the 2024 NIC Spring Conference, Braun said.

Meanwhile, Sloan said that LeadingAge members “are laser-focused on reimagining themselves for the future.”

“We know that the majority of Americans want to age in community, in their homes. That’s an opportunity for providers across the spectrum,” she said. “The big question for our members is determining the path that is consistent with their mission and sets them up to be successful well into the future. It’s really about making the smart and strategic choices and executing on them while at the same time navigating workforce shortages and other pressing issues.”

To educate potential residents and their families about senior living options, Schless said, ASHA will be re-launching a “completely overhauled” version of its consumer website, Where You Live Matters, this year.

Bethea said that quality will remain a top focus for NCAL and its members in 2024.

“Assisted living continues to deliver high-quality care in a safe, homelike setting that offers the ability to meet residents’ needs,” she added. “The only thing the current labor shortage has impacted is access to care, not quality. The caregivers in our assisted living communities are dedicated individuals who are committed to continuous quality improvement.”

A combination of challenges have prolonged timelines for senior living projects since the onset of the COVID-19 pandemic, and those delays will become even more problematic as the senior living industry struggles to meet future demand, according to a new report from NIC Analytics.

As detailed in a blog post analyzing senior housing (independent living, assisted living, memory care and continuing care retirement communities), construction duration — the timeline from the moment a community breaks ground to its official opening — shows notable shifts over time that vary widely across the 140 markets watched by NIC MAP. 

The data reveal a “clear and consistent” trend of increasing construction durations from 2015 to 2023, with a noticeable increase since the onset of the pandemic in 2020 — but they also show that the extended construction duration is not exclusively a post-pandemic trend, wrote Omar Zahraoui, principal at the National Investment Center for Seniors Housing & Care.

And there will be a “pressing need” for new construction to meet future demand and adapt to changing resident preferences: 41% of senior living communities are more than 25 years old, and the population of adults aged 80 or more years is projected to increase 35% by 2030.

Disruptions in the supply chain were blamed for construction backlogs early in the pandemic, with more recent challenges including labor shortages, inflation, increased construction wages and higher interest rates, Zahraoui said. Collectively, those factors affect various aspects of construction financing, elevate development costs and slow the pace of construction starts and completions, he concluded. 

The median construction durations consistently have risen from 16 months in 2015 and 2016, to 19 months in 2019, to 25 and 24 months at their peak in 2022 and 2023, respectively. 

Even before the pandemic, construction durations were on the rise, Zahraoui said, largely due to a project delivery boom from 2016 to 2020. In that timeframe, he said, the senior living market experienced a surge in new project completions, causing a temporary oversupply of units and declining occupancy rates. The result was a protracted construction process. 

“Challenges stemming from the pandemic, high interest rates, and other economic factors only contributed to the observed prolonged construction duration,” Zahraoui wrote. 

Construction durations are not uniform across markets, however. For senior living projects delivered in the past three years, 25% of communities were completed in fewer than 20 months, and another 25% took more than 30 months for delivery.

“The variability in construction durations, influenced in part by factors such as community type and size, also highlights the differences in access to capital and financing within the senior housing sector,” Zahraoui wrote. “Notably, even amidst the challenges posed by the pandemic, elevated interest rates, increased development costs and economic uncertainties, there remain senior housing operators who retain the ability to successfully secure financing and complete projects within reasonable and efficient timeframes.”

Q: How did you first become interested in the area of long-term care?

A: Probably similar to a lot of other folks, it was a little accidental. My background and training is actually in clinical psychology, but I had always been involved in research and initially aspired to be a professor in academia. Instead, I went into clinical work for a few years, and I still had a hand in the research side of things. But after several years of doing that, I joined Holleran, a research consulting firm in the industry. That’s really what opened up the doors to me to this whole world that I did not even know existed. I loved it from day one.

Q: What appeals to you about working in the industry? Why do you stay?

A: Hands down, it’s just the work that’s being done, and that’s across the spectrum. I’ve always appreciated the work that is being done and the trust that people put in you. It’s good work; it’s fulfilling work, and I like to feel that the work I’ve done the past 23 years with information and data and insights really just helps organizations and individuals to do all of that better.

Q: What are some of the ways that you’ve seen the industry change over time?

A: When I look back, even just in the past five to 10 years, things have definitely changed. You can look back and see where, first of all, there’s more choices for older adults these days and, frankly, even living in your home. We’ve seen a lot more technology support that has enabled some of the aging in place. And whether they need some support services or not, that variety of support is available in more settings. Some of that has had to do with the changing consumer, too.

The other thing that we’ve seen a greater focus on is this focus on living your best life and wellness — the prevention type of activities. We have shifted to, this is the place where you maybe go to retire, maybe slow down a little bit, to where you can come here and live your best life, and how can we enable that?

That’s part of what I’ve seen as the value proposition — what can we provide in this housing setting? The senior living setting is going to be much better than what you can have in your own home prior to moving in. Those are things that I think about.

On the hospitality side of things, the bar has been raised a good bit there, with a number of different things — dining options, housing options and settings.

Obviously, we think about labor and those dynamics that have changed in recent years. We’ve always had committed, wonderful people, but I think the focus on them and the importance of the staff as an equal customer to the older adult has really advanced a good bit in recent years. Those are things I look back on, and think we’re in a better place.

There are more choices for individuals as they age. I think their ability to do it in a way that’s self-directed by them is greater. And I’m proud of the sector for advancing in that regard. We’ve still got a ways to go, but I think that we’re more on top of some of the consumer preferences and wants and using some of the technologies and advancements to do all of that better.

Q: How have you seen the consumer change over time, and is senior living rising quickly enough to answer those needs?

A: If you think back to 23 years ago and all of the web-based review systems and information at your fingertips to inform the customer, whether it’s the older adult or whether it’s their family, you can see more reviews. You also can see more employee reviews of what is this place like to work here. I think that sort of transparency, whether it’s provided by you or your constituents, puts us in a place to all be doing a better job and continuing with quality improvements.

We know that the active adult segment continues to grow, so I do think that the industry is responding and trying to give more choices and options depending on where people are.

But at the end of the day, we know the majority of people still want to age in their own home. So where do we find that balance? 

The one area that has been very big and where we still have a lot of work to do is with the group in the middle. I think we could all argue here that having more low-income housing is as well. I feel like we’ve made progress. We have more today than we did even five years ago, but that cohort is so big. We’ve got to crack that nut as a sector, but it’s not easy. It’s tied to the economic conditions, and it’s tied to construction costs and a lot of different financing mechanisms.

Q: Talk about your new role as head of research and analytics at NIC. How does that compare with what you were doing at Holleran and Ziegler?

A: When I sit back and I think about it, it’s actually a blend of my 13 years.

When I was at Holleran, it was very heavily focused on a lot of resident satisfaction, family member satisfaction, staff engagement.

At Ziegler, I really covered a lot of the macro industry trends — how was the industry behaving and growing, and everything from technology to labor to consumer types of areas to home- and community-based services, but also with capital. 

At NIC, it’s really the gamut of all of that, which I appreciate. I also feel it’s a significantly large platform in terms of audience. NIC is an organization that is very well respected, and we have the ability to really impact the sector in some pretty meaningful ways. 

We’re also doing what we call sponsored research, and I’m really excited about these in particular. We had a recent announcement of a $3 million grant to the Milken Institute for the Center for the Future of Aging Innovation Collaborative. It’s exciting that a group is going to demonstrate leadership and do some consumer research. There is a lot to come out of that group.

We are continuing our work and released information around frailty of individuals living on their own in the greater community versus within a seniors housing community. We’ve got some really exciting research coming out around longevity that is being led by researchers from NORC at the University of Chicago, and continuing work on the middle market with four potential models of how to finance and scale those middle-market seniors housing and care projects. And then there’s a great research study coming out from the Harvard Joint Center for Housing Studies focusing on affordability. 

So I feel like what I’m doing right now is the next step in my career and really a blend of the past 23 years, both with Ziegler and Holleran.

Q: With your depth of experience, where do you think the senior living field is headed into the future? What trends are you seeing?

A: I think there will be a focus on wellness and prevention. Some of those technologies, like AI, and where you can start to predict everything from workforce-related things — where is this person at, and are they at risk of leaving, or who’s going to be the right fit for a new hire, to predicting potential falls.

I think about greater integration. I still think we can function in our silos a little bit — whether it’s the tech companies or the operators or the hospitals and health systems — I think we are seeing more of some of these value-based care partnerships and initiatives. How do we provide housing and support services where it’s needed for the whole person and not just manage certain aspects? I think we need to be more innovative when we think about what we offer. At the end of the day, for people who reside in our communities, we have a unique opportunity to make a pretty significant impact above and beyond just the day-to-day services that we’re providing, and keep them healthier for longer.

What we all intuitively have known for many years is that these settings can really make a difference in terms of some longevity, frailty and potential outcomes. So we’re excited to see some of that research unfold in 2024. And what does that mean for other sectors as it relates to payers like Medicare Advantage plans and CMS? Does that put a different perspective on how they view the industry and the benefits from a quality-of-life and longevity and outcomes standpoint?

A lot is underway. One of the things that attracted me to NIC and to take this position was, in the past year, the board and leadership put out a new strategic plan with five focus areas. I think they are really forward-thinking — age tech, the ongoing commitment to the middle market, partnering for health and innovative whole-person models, value-based care, active adult. I feel like we’re having some really great conversations and movement forward with that. To move forward — the strategic plan and how our team supports that from a research analytics and thought leadership standpoint — that’s what excites me when I look at the year ahead.

“You cannot be successful today offering plain vanilla assisted living. In order for operators to be successful, they’re going to have to supply more and more diversity of product.”

Those words of wisdom were shared by Robert G. Kramer in the very first issue of the print magazine of the media brand known today as McKnight’s Senior Living, in October 2003. A cartoon image of Kramer appeared on the cover, showing him tossing a vanilla ice cream cone while looking at other ice cream flavor options.

Many things have changed in the past 20 years.

In 2003, McKnight’s Senior Living was known as McKnight’s Assisted Living.

At the time, Kramer was president of an organization he founded named the National Investment Center for Seniors Housing and Care Industries. Today, he is a strategic adviser to the organization, now known by a slightly shorter moniker, the National Investment Center for Seniors Housing & Care. Kramer also is the founder of think tank Nexus Insights, which soon will merge 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.

Yes, things have changed. But Kramer still has many words of wisdom to share.

In 2023, he said, “I would say it’s diversity of product, and it’s also customization and personalization of product” that senior living operators now need to be successful.

A focus on living, not just care

That customization and personalization is warranted not only in price points, amenities, care plans and proactive management of chronic conditions, “but also in how we are customizing and personalizing engagement, which is actually key to healthy longevity,” Kramer said. “What I mean by that is not just having a care focus, but having a living focus.”

The product segmentation within the industry that was starting to be evident in 2003 in the relatively new stand-alone memory care communities operated by Silverado is now further manifesting in several ways — for instance, in high-end urban communities, intergenerational/multigenerational communities, active adult communities and offerings to appeal to middle-income individuals. Another change over the years, Kramer said, is that many continuing care retirement/life plan communities, which traditionally focused primarily on independent living and skilled nursing, have added assisted living and memory care, and “many are getting rid of skilled nursing, at least on campus,” due to staffing and regulatory costs and concerns.

Consumer needs, wants have changed

But at the heart of everything, from an operator standpoint, is an industry seeking to anticipate and respond to the needs and wants of an aging population, and those needs and wants have changed over the years. Kramer pointed out the shifting acuity levels in various settings that see some people who used to receive care in hospital units now cared for in SNFs, residents in assisted living today resembling the skilled nursing residents of a decade or two ago, and the independent living population of the present looking like the assisted living population of the past.

The new kids on the block, active adult communities, in many cases are becoming the independent living communities of yesteryear, enabling operators to “capture people sooner” and “creating enormous interest from investors and also from consumers who are not looking for care-driven settings and want a lifestyle type of setting,” he said.

In fact, in addition to addressing residents’ health-related needs, Kramer said, operators’ focus should be on “helping people discover and connect with their life’s purpose,” which will “make us a more aspirational setting rather than what we’re in danger of becoming with the public, a setting to avoid” due to a perception that senior living and care is a “continuum of decline.”

Providers have a six- to seven-year window before the oldest members of what Kramer referred to as the “Boom X” generation — which includes the baby boomers but also the older members of Gen X — start thinking in earnest about their next living arrangements. But the industry already knows that they don’t want what their parents wanted, Kramer said.

“They’re going to radically change our industry, which I think is exciting,” he said.

“This new generation is not looking for end-stage living,” he added. “They want something much more, and if you haven’t made the investments in technology and thought through how you’re going to deliver healthcare on-site but also provide that customized, personalized lifestyle that people are looking for, you’re going to find that the market is not anywhere near as big as you thought it was.”

Room for many flavors

In 2023, just as in 2003, room exists for many flavors of serving the needs of older adults, Kramer said, including not just next-generation residential senior living and care settings but also home care for people who want to remain in their homes, roommate-matching services for people who want to live “Golden Girls” style, and more.

“The demands and needs are going to be so great that we need to have all of the options,” he said. “It’s not either/or. It’s not this against that. The demands that are going to be there for affordable lifestyle options and for care are going to overwhelm the senior housing and care sector.”

As for federal regulation of assisted living? It was a topic of discussion in the 2003 pages of McKnight’s Assisted Living, but 20 years later, Kramer said he believes that the government’s “desire to invest the money to set up a federal regulatory apparatus is still going to be lacking,” although “there will be a lot of noise” about it.

“I do believe that we will deliver more and more healthcare where people live, which means in our communities, and much of that healthcare will be paid for by federal dollars — Medicare and, in some instances, Medicaid,” he said. “That’s going to mean more regulation, without question, but do I see an entire federal apparatus to regulate assisted living? I don’t see it in the near term because of the cost.”

But Kramer predicts increased state action.

“The things we see at the federal level now for skilled nursing, we’re going to see at the state level for assisted living and memory care,” he said. “The reality is that there are good operators and not-so-good operators. The more the industry can articulate and, in a sense, hold itself accountable for higher standards of care, the better off the industry will be, because we don’t want to go the direction of skilled nursing.”