Senior Living Industry Veterans Launch New Framework To Improve Frozen Penetration Rates 

Senior living penetration rates are stuck at around 11%, and could even decrease in the years ahead. A new framework posed by two industry veterans aims to buck that trend.

The new framework from Formation Capital CEO and Founder and Executive Chairman of the Senior Living Transformation Company (SLTC) Arnold Whitman and Vitality Society Founder Meredith Oppenheim, “VITALS,” proposes six principles to help take the industry from “surviving to thriving” and help operators “reinvent senior housing for residents and returns.”

The framework includes shifting operator priorities from occupancy to improved health outcomes of residents, broadening access and affordability, rebuilding trust in senior living through better care and building systems to better collect data. All of this is in service of giving residents more choice, identity and control, wellbeing and longevity.

The senior living industry is standing at the edge of a years-long demand runway, but it may struggle to serve the boomer generation due to growth, affordability and other constraints. NIC data shows that the number of adults age 75 and older is growing nearly 4% per year while senior housing inventory is only expanding about 1% in that time.

Penetration rates are currently about 11% for the entire industry, but if operators can’t serve enough older adults, those rates won’t only remain frozen, they could even decline. At the same time, the average age of a senior living community is currently 24 years, meaning many properties may well age beyond their usefulness in the years to come. That is a dual problem requiring big changes.

“We have consistently low adoption over decades, only about 11%, and it’s proof that it’s time for us to evolve,” Oppenheim said. She added that the industry “can no longer wait” to evolve.

Six-part framework to reshape operations

VITALS is an acronym that stands for value, inclusion, trust, agency, longevity and systems.

At the heart of the new framework is a need to shift and realign the industry’s value – new incentives to achieve different outcomes. For too long, senior living operators have measured success in occupancy. But there is a different KPI that operators should track, according to the duo: impact on residents. By enhancing clinical coordination, investing in data and tracking metrics that “truly matter” like mobility, cognition and resilience, operators can better serve residents and by extension their own returns without taking a blind focus on move-ins and move-outs.

“Senior living organizations that adopt outcome-based KPIs and align financially with healthcare stakeholders won’t only remain relevant, they will become indispensable,” reads a new ASHA brief on VITALS, released Tuesday.

The senior living industry must also boost inclusiveness by making its services more affordable.

More than half of middle-income older adults will not be able to afford private-pay senior living options by 2029 and not qualify for Medicaid, a group known as the “forgotten middle.” While “the challenge is well-known,” solutions for the middle-market problem are still “scarce.”

Nonprofit organizations are at the forefront of mission-driven affordability efforts bringing public-private partnerships, creative design elements and integrated health services to reach older adults unable to afford private-pay senior living, Whitman and Oppenheim wrote in the brief.

In the eyes of the duo, “expanding access doesn’t dilute value, it expands the market” by improving public health outcomes and strengthening the industry’s economic foundation.

“In order for us to succeed and to move to this middle market, we need to be more creative in how we look at unbundling and decoupling these services and looking at them in more efficient ways, both from a staffing and cost perspective, all with the goal to reduce the rates and make the industry more accessible and affordable,” Oppenheim said during the webinar.

According to AARP data cited in the ASHA VITALS report, residents engaged in “purposeful activities” and making social connections experienced 40% fewer hospitalizations. By measuring quality of life outcomes, health assessments and resident engagement can improve length of stay improvements of up to 85 days, the report states.

To further improve revenue, resident health outcomes and engagement, senior living operators should consider partnering with payers and providers in risk- and savings-sharing arrangements, like PACE or new CMS programs ACCESS and ELEVATE as the health care industry shifts toward more value-based models.

Senior living providers that install outcome-focused models with financial alignment with health care partners will stay relevant and become an essential part of the senior care landscape, the report states.

Trust is also an important anchor for senior living operators. To improve trust in the industry, Whitman said senior living providers can use “demonstration pilots” and the ability to have data that “measures the quality of life” senior living operators can provide. This comes as the industry is at a point where staffing remains the “most challenging aspect” of senior living operations today in finding mission-driven workers that seek a meaningful career helping others.

“I think the responsibility for us to encourage, empower, train, and elevate our workforce is an enormous task and opportunity to regain and demonstrate [trust] through measuring with utilization of technological tools the ability to show the public the actual effectiveness of what’s going on in these communities,” Whitman said.

Agency for residents is another pillar of the new framework. To improve agency in senior living, senior living providers must move away from a “one-size-fits-all” mentality, the ASHA report notes. For example, women are more likely than men to live alone, prioritize community ties and seek out engagement opportunities. On the other hand, men face social isolation, avoidance of care services and a decreased use of support systems.

These differences will require senior living providers to change design, programming and communication strategies to reach older adults and bring an outsized, positive impact to their quality of life. Things like modular living formats with short-term stays, along with identity-aligned programming could help empower senior living residents and help them feel more engaged rather than catered to, the report notes.

“We need to begin to think about how we adjust and tweak what we do and how we do it so we give more flexibility and autonomy to those who may want to come but don’t necessarily squarely fit into the box that we have created,” Oppenheim said.

Longevity is another piece of the puzzle. Operators must shift from “need and plead” to “aspire and desire,” the duo wrote in the report. As they do that, they must “attract people into a future of purpose, connection, and vitality to create earlier demand and better community reputations and identities.”

To inspire older adults to move into senior living, providers must position themselves through marketing to be aspirational and desirable as 70% of residents said they wished they moved in sooner, Oppenheim said.

But that’s not possible without empowering staff to help residents live happier, healthier lives—referencing the boomer’s desire to seek out wellness-focused lifestyles.

Data and systems to ‘outlast the rest’

If the senior living industry can achieve all of the above, it will be uniquely positioned to serve the next generation of older adults. But operators may not be able to handle such a herculean feat without the systems to organize their operations.

“Once we start to be able to measure the quality of what we’re providing and the outcomes that we’re getting, there is hope that we can destigmatize this business, this industry, in a way that is purposeful and appreciated,” Whitman said.

By showing outcomes to investors and prospective residents, senior living providers can differentiate themselves from competition, using technology and data initiatives as a way to stand out and improve bottom line revenue.

“Data is no longer a byproduct. It is a strategic asset to transformation and growth,” the report reads. “Those who treat it as such will outperform — and outlast — the rest.”

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