Assisted living needs to consider acuity levels, staffing and competition
Last week, I provided an overview of the state of assisted living and concluded that while occupancy has stabilized and modestly improved in recent quarters, and market valuations have remained near record levels, there are concerns. Principally, low levels of customer enthusiasm – over 2.5 residents are unsatisfied for every resident that is very satisfied – coupled with a shifting consumer profile mandate action by forward thinking operators.
Consumer preference to age in place has created a series of key implications for assisted living operators. These include:
1. Significant Increase in Acuity. The level of acuity is simply higher than historical standards and this trend will continue. Brookdale, the largest seniors housing operator, reports that their assisted living communities have an average age at move-in of 84 and that over a third of its residents have a diagnosis of Alzheimer's or other dementias, with many more that are undiagnosed. Today's residents within assisted living are older and have greater health needs.
2. Residents Need More than Housing and Care. With these greater health needs, residents need more health care infrastructure and services. In Dr. Robert Kane's 2010 commentary “Reimagining Nursing Homes: The Art of the Possible”, he is fair to criticize assisted living communities of “living conditions that are generally better than nursing homes, but services are scant and residents are discharged when their needs become serious.” This approach will not work in these new times because incoming residents are more likely to have serious needs. Assisted living will need services and systems that demonstrate responsible care leading to strong outcomes.
3. Increased Staffing and Training Needs. With higher acuity residents, greater levels of staff are required and they need stronger skills.Especially given the high levels of caregiver turnover – often far north of 50% annually at the entry level – proper training is also important. It is probably necessary to have an RN or LPN on duty at all times. Simply put: if residents' acuity resembles that of a traditional nursing home, staffing and skill levels in assisted living will have to match what we now require in skilled nursing facilities.
4. Greater Competition from Historically Lower and Higher Care Settings. As resident acuity increases, competition will take new forms. Seniors who don't need as much care or are cost conscious will opt for lower care settings, such as at home or within independent living, and have care delivered to them on an a la carte basis. On the other hand, assisted living will more directly compete with traditional but upgraded nursing homes that have updated their physical plant and embraced a more resident centered care model. SNFs may cost more, but they have the infrastructure and systems to provide appropriate care to high acuity residents. Some innovative operators, such as Brookdale with their SweetLife product and Trilogy Health Services, are creating a blended skilled nursing and assisted living product that provides the best of both worlds. Standalone assisted living communities will need to morph and adjust to not get squeezed by these competitive forces.
Next week, I will conclude with a close look at the specific solutions for Assisted Living to embrace the trends of aging in place.
Ryan Frederick is the founder and principal of Point Forward Solutions, a strategic consulting firm serving the senior housing and care industry.