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5 Key Takeaways from the Senior Housing & Care Conference & Expo

Shawn James O’Connor, Senior Director, Senior Housing/Healthcare, Valuation & Advisory

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Recently, I spoke on an Industry Perspective panel at the Colorado Real Estate Journal’s 2019 Senior Housing & Care Conference & Expo. Below are my top five takeaways from the panel on where the Senior Housing & Healthcare industry is heading.

1. Biggest Cost Drivers for operators in 2019 are a tight workforce, higher food costs, and utility costs.

A tight workforce is the biggest cost driver for senior housing and health care operators. For skilled workers, such as nurses, operators often compete with large hospital networks that offer attractive benefits in addition to higher pay. Certified Nursing Assistants (CNAs), maintenance, housekeeping, and dietary staff are often competing with local retailers, fast food chains, and general administrative employers. This problem has been recently compounded by minimum wage legislation in various states and municipalities. National retailers, such as Target, have announced an hourly minimum wage increase to $13 per hour in April 2019 in response to Amazon’s minimum wage increase to $15 three months earlier.

To remain competitive, many operators have introduced creative strategies to recruit and retain staff in a healthcare environment where the patients are considered guests or residents. These include annual retention bonuses on employment date anniversaries, recruitment bonuses for recruiters and new hires, and tuition reimbursements when CNAs are new to the field.

2. Disruptive Technologies are allowing operators to observe real-time expense changes and remote monitoring of resident acuity to generate staff efficiencies.

Many regional and local operators are beginning to use software to better align staffing with resident acuity in real-time, instead of weekly projections based on resident occupancy. In addition to the cost savings on the labor side, this ensures the operator is billing the resident for all documented assistance with daily living (ADL).

3. Most Attractive Assets for investors in 2019 are active age-restricted and traditional independent living communities.

Investors in the traditional seniors housing and multifamily sectors are beginning to direct more capital towards the development of active age-restricted communities as Boomers advance to retirement age. These Boomers prefer urban locations over the traditional semi-rural and suburban locations, which many developers and investors have focused on over the last three decades. These urban locations offer the aging Boomers an active lifestyle that promotes new experiences through cultural and educational enrichment.

4. Growing Semi-Retired Workforce is signaling design changes for active age-restricted and traditional independent living communities.

A Merrill Lynch study suggested that more than one-third of Boomers plan to move in and out of the workforce throughout retirement, cycling between interludes of employment and recreation. Many Boomers expressed an interest to stay mentally active and engaged later in life through their work, often seeking a new and stimulating second career. Others will need to work longer to offset investment losses, to support frail parents, to augment the wages of adult children struggling to start independent lives, or to supplement those retirement savings forecasted to last 10 years.

5. Repositioning Existing Assets to incorporate emerging trends in the senior living space to be remain relevant and competitive.

The most important trend starts in the traditional dining room where renovated space is being divided between a casual breakfast and bistro space and an elegant white tablecloth restaurant style dinner service space. Additionally, we’re seeing revenue generated from new space devoted to full-service coffee and juice bars. Technology is also being incorporated into the dietary department where residents can pre-order a meal via a tablet’s point of sale application found on the dining table or accessible via the property’s internal Wi-Fi network.

In summary, the face of senior care is changing. The aging Boomer population requires a more active, urban lifestyle, challenging developers and investors to update their past models. Meanwhile, technological advances are changing the way operations are run and seniors are served. Operators will continue to be challenged by staffing and operation costs. Despite the challenges, the opportunities are numerous as the Boomer population ages to retirement.

shawn-james-sj-oconnorShawn James O’Connor is a Senior Director in Cushman & Wakefield’s Valuation & Advisory group. He has specialized in senior housing and healthcare since 1999, and has worked on more than 900 assets in 48 states, as well as the District of Columbia and Canada. 

 

 

 

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