Why Need Alone Doesn’t Determine Senior Living Penetration Rates

New research shows about one-third of the top 99 metro markets in the U.S. defied conventional thinking with regard to penetration rates. The data indicates that more than just income levels shape senior living demand.

High income, more married couples and a lower older adult poverty rate can indeed determine a market’s potential demand, but not necessarily its penetration rate. The research, which the National Investment Center for Seniors Housing and Care released in February, showed market penetration rates are a product of whether factors like culture, affordability of services, workforce and policy are in alignment to one another.

“Need alone does not determine adoption,” said NIC Senior Principal Omar Zarhaoui during a June 25 webinar on penetration rates. “Some markets with lower [activities for daily living] prevalence still demonstrated higher penetration, which suggests that even assisted living can sometimes be a proactive decision shaped by awareness, planning, consumer preferences and market position, not just a reactive response to decline in health.”

Cultural awareness and consumer perception of assisted living can have a noticeable impact on penetration outcomes across markets, where multi-generational caregiving traditions may delay transitions into assisted living and product misconceptions or limited awareness among consumers and their families may influence adoption decisions, according to Zahraoui.

Consumers don’t always understand what senior living is or who it’s for, and that represents one of the biggest barriers the industry still needs to overcome, according to David Mills, president and chief operating officer of AgeWell Senior Living. The senior living industry must do a better job educating the public, including in the media.

Consumers might see senior living as a “Band-Aid solution” for older adults. But communities are more than that, they also “measurably improve quality of life, maintain vitality and hope,” said Gaurie Rodman, vice president of real estate strategy with Direct Supply, during the webinar.

“The consumer is not only the resident, I think the consumer is the broader society, it is adult children, it’s workforce, it’s the regulators, it’s the public policy makers,” she said.

Senior living residents, especially people relying on Medicare and Medicaid, struggle with the cost of staying afloat. Fee Stubblefield, founder and CEO of The Springs Living, said that one of the operator’s communities switched to private pay assisted living offerings years ago, which resulted in leasing “drying up” and was attributed to a shift in affordability perception.

Rodman noted one way the industry can work on shifting those perceptions and ultimately increasing the penetration rate is by focusing on the wellness aspects and tying it in with the cost of care.

“We need to switch the conversation to a wellness conversation around living in isolation in your home or having home health come for an hour or two,” Rodman said. “What happens when you’re alone and not connecting with human beings … There is scientific evidence about the fact that that fundamentally changes your opinion, and brings vitality and hope. That needs to be part of the consideration.”

Staffing could also be a “quiet engine behind future penetration curves,” according to Zahraoui, where markets with strong caregiver, or nursing assistant pipelines appear to be better positioned to support higher penetration over time.

Operators must understand consumers of today and tomorrow and engage with families earlier to make assisted living a more proactive choice and meaningfully increase penetration rates, Zahraoui said.

“The encouraging takeaway is that many of these factors are not fixed, they can improve,” Zahraoui said. “They can be influenced through better consumer education, stronger workforce development and more transparent affordability conversations.”

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