NIC – Future of Senior Housing
The Future of Senior Housing
Bill Pettit
President and COO
Merrill Gardens LLC
NIC – Future of Senior Housing
If you can’t make money in
senior housing right now…you
should not be in the business.
• How do we maintain this momentum over the
next five years and beyond?
NIC – Future of Senior Housing
ProMatura 2006 Survey
• 6,300 seniors asked about likelihood of
moving into various forms of senior housing
– Active Adult
• Minimum age requirement
• Ownership
• No meals/care
– Independent Living
• Onsite dining
• Monthly rental
• Housekeeping/care
NIC – Future of Senior Housing
ProMatura 2006 Survey
– Assisted Living
• Three meals per day
• ADL’s
• Monthly rental
– CCRC
• Campus setting
• Meals/housekeeping/care
services
• Nursing care center
NIC – Future of Senior Housing
Likelihood of Moving to
Senior Housing by Age
Unsure
Very Likely + Likely
Active Adult
IL
AL
Active Adult
CCRC
IL
AL
CCRC
50%
20%
40%
15%
30%
10%
20%
5%
10%
0%
0%
55 to 64
65 to 74
75 to 84
85+
55 to 64
65 to 74
75 to 84
85+
Source: ProMatura Group, LLC
NIC – Future of Senior Housing
Likelihood of Moving to Senior Housing
by Age and Income
55-64
65-74
75-84
85+
50-69.69k
70-149.9k
20.0%
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Active
Source: ProMatura Group, LLC
IL
AL
CCRC
150k+
NIC – Future of Senior Housing
Unsure of Moving to Senior Housing
by Age and Income
55-64
65-74
75-84
85+
50-69.69k
70-149.9k
50%
40%
30%
20%
10%
0%
Active
Source: ProMatura Group, LLC
IL
AL
CCRC
150k+
NIC – Future of Senior Housing
ProMatura 2006 Survey Overview
• Consistent potential market of unsures based
on age and income
• Lower income level less likely
• Continued preference for Active Adult
community may be due to definition and the
fact the many seniors are in denial over their
future care needs
NIC – Future of Senior Housing
• Key to industry success is converting
the 40% of seniors who are unsure if
they would move to senior housing
and capturing the 15% who are likely
or very likely
NIC – Future of Senior Housing
Changing Characteristics
of Senior Population
• Year of birth = mindset
• 1922 -1927 WWII
–
–
–
–
–
Current residents
Homogeneous
Like thinkers
Limited diversity in wants or needs
Usually lived close to adult children
NIC – Future of Senior Housing
Changing Characteristics
of Senior Population
• Year of birth = mindset
• 1928 – 1945
– Some current residents
– Silent Generation
– Beginning of divergent
values and attitudes
– Individual freedoms
NIC – Future of Senior Housing
Changing Characteristics
of Senior Population
• Year of birth = mindset
• 1946 – 1954
–
–
–
–
–
–
–
Future residents
Baby Boomers (first wave)
Very diverse in wants and needs
Hard to peg …do their own thing
Rising segmentation
First generation raised with television
Less likely than other generations to live near adult
children
– Focus on individual freedoms
NIC – Future of Senior Housing
Population Growth by Age
55-64
65-74
75-84
85+
45
40
35
30
25
20
15
10
5
2005
Source: U.S.Census Bureau, Interim
State Population Projections, 2005.
2010
2015
2020
2025
2030
NIC – Future of Senior Housing
Population Growth
• In 1990 there were 37,300
people 100 or over
• In 2003 there were 50,454
people 100 or over
• In 2004 there were 88,289
people 100 or over
• Increase expected to
continue over next 30
years as people live longer
NIC – Future of Senior Housing
Higher Education Attainment
by Age Category
Women
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Men
Total
5,044
3,377
2,669
2,375
1,901
1,476
55-59
60-64
Source: US Census, 2005 (Bachelors and/or Graduate Degree)
2,134
1,648
1,246
888
65-69
966
682
70-74
NIC – Future of Senior Housing
Likely Characteristics
of Future Residents
• Larger number of college
graduates/will want to use
education as they age
• Interested in living in more
than one location through
the year – used to vacation
homes
• High level of income in
baby boomers will mean
increase in parent’s rent paid
by children
• More residents who may
still be working either by
choice or need
NIC – Future of Senior Housing
Interests for Seniors
with College Education
•
•
•
•
•
Gardening
Reading
Civic affairs
Intellectual activities
Recreational
cooking/gourmet food
• Wellness
NIC – Future of Senior Housing
Population Growth Overview
• More college educated
seniors
• Seniors living longer
• Variety of divergent
interests
NIC – Future of Senior Housing
Adaptive Models of Housing
• Increased stratification among four basic
models
• Active Adult will add traditional AL and AL/IL
and ALZ communities
• Active Adult will blend into supportive care
options Active Adult campuses will support a
large wave of uncertain population migration
but single seniors will move to be close to
adult children.
NIC – Future of Senior Housing
Adaptive Models of Housing
• CCRC’s will continue to grow with higher income
preferences for upscale amenities and ownership
• Strong rental options will emerge in the more
affordable segments
• Buildings built in the 1990’s that are small with small
units won’t maintain primary pricing power but will
become entry level private pay AL or Medicaid
communities
• Traditional IL/AL providers will add
intergenerational components with elements of
traditional multifamily housing on IL/AL campuses
NIC – Future of Senior Housing
Construction Trends and Mixes
Units
65,879
65,000
55,000
50,667
45,000
35,305
35,000
32,184 32,138 32,100
28,964
25,000
28,696
21,495
15,000
1998
1999
2000
2001
2002
Source: NIC/ASHA - Senior Housing Contruction Trends Report 2006
2003
2004
2005
2006
NIC – Future of Senior Housing
75 - 84 and 85+ Population
Compared to Units/beds by Region
100%
90%
-
-
20%
20%
6%
28%
80%
70%
25%
24%
14%
13%
21%
22%
60%
50%
40%
30%
12%
11%
20%
10%
27%
21%
20%
16%
0%
75-84
NC
85+
NE
SC
SE
Beds
West
Source: U.S.Census Bureau and State of Senior Housing 2006
No Response
NIC – Future of Senior Housing
Percentage of Units/Beds by Region
NE
SE
NC
SC
West
No Reponse
6%
11%
28%
27%
12%
16%
Source:State of Senior Housing 2006
NIC – Future of Senior Housing
Increase in Home Values by Region
105%
Pacific
38%
Mountain
33%
MidWest
West SC
East SC
25%
18%
48%
SA
67%
NE
0%
Source: US Census, 2005
20%
40%
60%
80%
100%
NIC – Future of Senior Housing
Owner Occupied
by Age of Householder
85
80
75
70
65
45-54
55-59
NE
West SC
Source: US Census, 2005
60-64
MidW
Mtn
65-74
SA
Pac
75-84
East SC
Total
85+
NIC – Future of Senior Housing
Converting the Unsure/How They Pay
• Even with increasing development costs and
rents, residents should be able to afford private
pay
• Home ownership and equity keeping pace in
all regions
NIC – Future of Senior Housing
Long Term Care Insurance
• Currently less than 10% of population over age
40 has LTCI
• Optimistic industry estimates number will
grow to 16% over next five years
• Employer offered policies are fastest growing
segment of industry
NIC – Future of Senior Housing
Policy Characteristics
• Overall policy average cost is $1,800 per year.
• Most offer coverage in the form of daily
benefits
• Some have monthly options available in
addition to daily benefit offering
• Policyholder's benefits increase at five percent
compounded annually
NIC – Future of Senior Housing
Confusion Among LTCI Buyers
• 50% did not know whether benefits will be
taxed
• 35% unsure of daily benefit
• 50% think premiums can’t increase in future
• Over 25% think the policy does not have an
elimination period
NIC – Future of Senior Housing
Reasons for Not Buying
Government will fund long-term care
Advised against by family/friend
Did not qualify for coverage
Concern over care applicable in future
Other plan better suits needs
Still shopping
Policy too complex
8%
10%
4%
12%
12%
14%
26%
16%
13%
19%
74%
19%
32%
20%
50%
Could not decide what to buy
Too expensive /couldn't afford later
Long-term care risk not great
Too expensive/couldn't afford now
26%
16%
Undecideds
Decliners
31%
18%
33%
31%
46%
NIC – Future of Senior Housing
2005 MetLife Study of
Retirement Income Decisions
• Many upcoming retirees underestimate future
healthcare expenditures .
• Don’t understand long term care costs and
payment methods
• 62% said they would use Medicare for senior
housing needs
• 40% said they would use health insurance for
senior housing needs
NIC – Future of Senior Housing
Long Term Care Insurance
Challenges/Opportunities
• Limited penetration
• Consumer confusion
• Senior housing industry needs to work with
LTC industry to promote sales and
understanding
NIC – Future of Senior Housing
Converting Unsures
• Growing population with ability to afford
based on rising home value
• Long Term Care Insurance opportunity for
industry
• Key is providing a desirable lifestyle to seniors
with divergent wants and needs
NIC – Future of Senior Housing
ProMatura 2006 Survey
83% of seniors in the ProMatura survey
agreed with this statement:
“I would rather live in my own home
even if it meant spending most of my
time alone”
NIC – Future of Senior Housing
AARP and MetLife Survey on the
Future of Retirement Living (2004)
• 86% would like to continue living in own home
during retirement if they are able to without ongoing
assistance
• 49% would prefer to stay in own home even if they
begin to need day to day assistance or ongoing health
care
• Only 14% actually expect they will need day to day
assistance or ongoing health care at any point during
their retirement
• Living under one’s own rules is most important
reason given for wanting to stay in their own home
NIC – Future of Senior Housing
Changing the ‘Stay at Home
No Matter What’ Mentality
• Senior housing must fight the belief that
independence means staying at home
• Show independence is associated with how seniors
live
• Operators of the future need to move from doing what
is convenient for operators and selling it to residents
as the product.
• Provide buildings and services that allow residents to
live in communities as they would at home but under
the envelope of security with design convenience.
NIC – Future of Senior Housing
Changing the ‘Stay at Home
No Matter What’ Mentality
• Attractive
buildings/larger
apartments
• Individualized programs
• Desirable lifestyle
• Freedom and security
• Allowing residents to
live like they did in their
own home
NIC – Future of Senior Housing
Working Residents
• 2005 ASHA survey
• 70% of Americans age 50-64 who are
currently working say they plan to work either
full or part time after their retirement
NIC – Future of Senior Housing
Population of Employment Market by Age
In millions
15-24
25-34
35-44
45-54
55-64
47
45
43
41
39
37
35
2005
Source: U.S.Census Bureau, Interim
State Population Projections, 2005.
2010
2015
2020
2025
2030
NIC – Future of Senior Housing
Working Residents
• Will mean a
change in
transportation
services, dining
hours and social
offerings
• Wireless internet
in every apartment
NIC – Future of Senior Housing
Lifestyle/Customer Expectations
• Individualize the
experience. Incoming
seniors want the
socialization but won’t
want to be part of a
‘herd’.
• They want the personal
attention while part of
the community setting
• Offer services to
maintain the individual
experience
NIC – Future of Senior Housing
Premium Dining
• Incoming residents will
expect options
• Display cooking
• Dining hours to reflect
resident lifestyle
• More sophisticated
presentations
• More alternatives
• Better service in dining
room
NIC – Future of Senior Housing
Facilitating Resident’s
Individual Lifestyle
• More demanding
residents
• Personalized concierge
type services
• Accommodate a variety
of lifestyles
NIC – Future of Senior Housing
Activity Opportunities
• More sophisticated
offerings
• Diverse wants and
needs
• Recreational cooking
opportunities
• Gardening
• Wellness
• Technology
NIC – Future of Senior Housing
Technology
• Incoming residents and baby boomers
represent the first generation to grow up
around technology
• Expect a wave of innovation over the next 10 20 years to meet the growing needs of this
market. This is the group that will be shopping
for their parents now.
• Technology developments aimed at keeping
seniors at home longer
NIC – Future of Senior Housing
Technology Breakthroughs
• MIT AgeLab – Goal is to remove the stigma from
technology products to help seniors. Future systems
will be cool and hip and won’t broadcast “I’m sick”
NIC – Future of Senior Housing
Technology
• Pill Pets remind owners
to take a pill or go to the
doctor.
• If a senior fails to report
back to the Pill Pet it
simulates sickness or
death, prompting an
emotional response
NIC – Future of Senior Housing
Technology
• Driving systems –
prototype ‘aware’ car
equipped with warning
systems to control speed
and monitor distance of
oncoming traffic.
• Helps drivers make left
hand turns and tailors
airbag and steering
wheel placement for
seniors of smaller
stature.
NIC – Future of Senior Housing
Technology
• GPS sneakers
• GPS embedded in sneakers outfitted with a
microcomputer with satellite tracking can find anyone
24/7
• Broad implications for senior housing
NIC – Future of Senior Housing
Technology
• Technology will bring many new tools to the
industry including safer and less intrusive
monitoring, new ways to take and monitor
medications and tools and techniques to tackle
ambulatory assistance
• Technology and home care will afford many of
the ‘unsure’ segment of seniors with safer
solutions to staying in their own home
NIC – Future of Senior Housing
Wellness
• “Senior housing/retirement communities should focus on
prevention and management of disease. That is where this
form of housing will make the biggest impact”
– Dr Chris Fordyce,
– Director of Geriatrics, Group Health
NIC – Future of Senior Housing
University of Washington Study
to Improve Senior Health
• Studied 40,000 seniors on variety of impacts
including:
–
–
–
–
–
–
Medication
Chronic diseases
Hospitalization
Smoking
Drinking,
Variety of variables we could change to improve
health in seniors
NIC – Future of Senior Housing
University of Washington
Study Results
• Most Negative impact on senior health:
Social isolation
• Most Positive impact on senior health:
Physical activity
“The key to the senior community living
environment is keeping people socially and
physically engaged as they age” –Dr Fordyce
NIC – Future of Senior Housing
Next Generation of Residents Will
Look at Health Care Differently
• Will use internet and other sources of
information
• Will look for self competence in taking care of
their issues vs. current residents who followed
doctor’s orders
• Will do much more shopping around for health
care
• Will understand more with a focus on choice
NIC – Future of Senior Housing
Wellness
• Will next generation of residents be ‘healthier’?
• This group might be more focused on health but still
face challenges
– Higher rate of obesity than previous generations leading to
health issues
– Heart disease is still biggest killer but there are advances in
the management of heart disease that will increase
longevity
– Advances in other areas such as knee and hip replacements
mean people will get back to functioning quicker
NIC – Future of Senior Housing
Journal of the American
Medical Association Study
•
•
•
•
90 -100 year olds in nursing homes
Exercised 3x per week for 30 minutes
Results = doubled their strength in each case
Seniors who engage in at least 30 minutes of
activity each day will see a dramatic increase
in their overall health and mental attitude,
regardless of medical problems or disability.
NIC – Future of Senior Housing
Journal of Gerontology:
Medical Sciences Study 2006
• 60-80 year olds walked 3X per week
for 6 months
• Results:
– Increase in cognitive flexibility.
– Brain volume increases with moderate
aerobic exercise (walking)
– People who exercised had the brain
volumes of people three years younger.
– Older adults show greater benefits from
exercise than younger adults.
– Seniors brain can fire up new cells and
improve thinking, remembering and other
brain skills
NIC – Future of Senior Housing
Journal of the American Medical
Association Study 2006
• 2,800 healthy adults
• Average age 73 years old.
• First definitive study to show honing intellectual
skills can bolster the mind like physical exercise
bolsters the body.
• Results:
– Ten sessions of exercises to boost reasoning skills, memory
and mental processing speed staved off mental decline
– Found a bigger payoff to mental exercise than physical
exercise because benefits last longer
NIC – Future of Senior Housing
Wellness Overview
• Senior housing will need to be
proactive in providing health
services and alternatives
• Take the lead in developing
programs that increase mental
and physical health
• Work with residents to manage
and decrease health risk
• Manage chronic diseases for
quality of life
• Senior housing needs to put the
supports in place to allow people
to lead as independent a life as
they can - similar to what they
always have.
NIC – Future of Senior Housing
Workforce challenges
• Decreasing workforce
• Demanding residents
who want an individual
experience
• Increase in employees
with English as second
language
• Appropriate
compensation
NIC – Future of Senior Housing
Senior Housing Opportunity
•
•
•
•
Focus on human resource management
Increased training/online training
Customer service focus to meet resident needs
Home health care will have trouble finding
quality employees too.....could give senior
housing an edge
NIC – Future of Senior Housing
Senior Housing
Challenges/Opportunities
•
•
•
•
Convert the unsures
Prepare for different resident
Use technology to enhance experience
Provide proactive health and wellness
programs
• Provide an individual experience
• Operators doing the minimum will be left
behind
NIC – Future of Senior Housing
• Successful operators of the future
will serve seniors in the way they
want to be served rather than the way
operators want to serve them.