Erin Hennessy

In addition to the significant financial and regulatory changes expected to affect senior living in 2018, Health Dimensions Group anticipates major shifts in the industry as operators meet the demands of a growing senior population. To that end, HDG expects 2018 will bring changes in senior housing including increased demand, the rise of medically complex patients, occupancy challenges amid fierce competition, and continued industry-wide shifts to value-based payment.

Adapting to the rapidly growing senior population is the first challenge to look for in 2018. The U.S. senior population continues to rise and new products and companies are entering the senior living market to meet this need. The U.S. Census Bureau projects that by 2020, there will be a senior population of 56 million and by 2030, that number will balloon to 74 million seniors. 

In the face of this dramatic increase, existing campuses and facilities will need to adapt their services and pricing to remain competitive. Senior living operators will also need to be mindful of two parallel trends affecting the populations entering their facilities. At the same time younger seniors are entering communities, the average resident has become older and frailer than before. Senior living operators will have to care for more complex residents while simultaneously remaining attractive to young, technologically savvy seniors.

To better accommodate the influx of older, frailer residents, providers will need to move toward the medicalization of senior living. The average age of an assisted living resident has risen to 87 years, according to the Assisted Living Federation of America. Older residents bring unique health challenges such as chronic conditions and increased risks for falls and other issues. To adapt internally, facilities should simplify their pricing structures and ensure residents can access resources to age in place. Senior living operators should also build strong partnerships with external partners ranging from primary care providers to home health and hospice services, to provide wellness and therapy programs on site.

While senior living demand is growing dramatically, skilled nursing facilities are feeling the squeeze of shorter stays and falling occupancies. Nursing home occupancies continue to decrease as payment changes and new options have encouraged many individuals to skip the nursing home entirely and use alternative services, such as home health. Today’s primary user of SNFs is vulnerable and frail. From 2012 to 2017, nursing home occupancies fell from nearly 86% to less than 82%, according to the National Investment Center for Senior Housing & Care. The financial pressures from value-based and risk-based payment models have also led to reduced lengths of stay at SNFs.

The value-based trend has also led to increases in managed care and new partnerships between acute and post-acute providers. Today, Medicare Advantage (MA) accounts for one-third of Medicare beneficiaries, up from 22% in 2008 – and that figure is even higher in places like Minnesota where more than half (57 percent) of Medicare beneficiaries have Medicare Advantage. The growth of MA has affected the post-acute and long-term care sectors. To make the most of this trend, providers must secure a sufficient number of managed care contracts with adequate rates, especially in areas with high MA penetration.

Finally, in 2018 expect to see the growth of formalized financial and operational partnerships between acute and post-acute care providers. These partnerships are cornerstones to success in the shift from fee-for-service to value-based care. Post-acute service providers will forge partnerships with hospitals and health systems to provide the full continuum of post-acute services, with the goals of improving quality, lowering costs, and increasing patient/resident satisfaction.

While 2018 is expected to bring radical change in senior care, there are no challenges that cannot be overcome with provider ingenuity and innovation. Ultimately, these industry trends will make the senior living industry more diverse, integrated and quality-driven. As senior care consultants and operators, Health Dimensions Group is here to help.

Read part one of our 2018 Trend predictions here:

Erin Shvetzoff Hennessey is the Executive Vice President, Consulting at Health Dimensions Group.