Improving economy will help senior living field, expert says

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Stuart Hoffman, PNC financial services chief economist
Stuart Hoffman, PNC financial services chief economist
Senior living operators should be cautiously optimistic due to the rebounding economy and increased consumer confidence, a lead economist said in March.

“The economy is on firmer footing,” PNC Financial Services chief economist Stuart Hoffman told a National Investment Center for the Seniors Housing & Care Industry audience at a regional event in Boca Raton, FL.

Consumer confidence has been bolstered by an uptick in hiring and a small rally on Wall Street. Hoffman noted that continued optimism is essential for a full recovery. That's because consumer spending accounts for about 70% of the nation's economic activity.

While gas prices were on the rise toward $5 a gallon, there was concern that buyers might be less inclined to spend money, including in senior care, Hoffman said. Plus, long-term care providers have remained worried about additional federal reimbursement cuts.

Hoffman, a self-described Republican, said a more balanced approach to fiscal policy that slightly raises taxes while trimming spending in a disciplined way would be far less jarring. He also predicted that interest rates and housing prices would likely rise in the next few years.

In an earlier NIC session, Avalere Health Chief Executive Officer Dan Mendelson said that successful operators must be able to demonstrate quality care, risk management expertise and find complementary partners. That may mean increasing staff, despite budget cuts, and implementing integrated data systems.

Overall occupancy rates in senior housing increased modestly in the fourth quarter of 2011, according to NIC. While nursing care occupancy rates dropped slightly, the overall average for senior housing properties was 88.2%.

Assisted living and independent living have seen more significant increases over the past few years.
NIC will hold its national conference Sept. 19-21 in Chicago.