By: Pam McDonald | SeniorHousingForum.net
As Senior Vice President of JCH Consulting Group, a full-service real estate brokerage company and Senior Housing Forum partner, Shep Roylance stays on top of industry trends. Here’s what he’s seeing as current major trends.
Mergers and Acquisitions
Mergers and acquisitions within the senior living industry reached over $16 billion in 2014 and continued into 2016. However, conditions in the senior housing mergers and acquisitions market have shifted from where they have been in the last few years.
Real Estate Investment Trusts (REITs) have become much less acquisitive, creating an opportunity for private equity, regional, and small owner operators. The trend for mergers and acquisition was sparked by positive economic news, favorable demographics, and demand creating a healthy environment for both seniors looking for retirement choices and senior housing providers looking to expand.
However there is relative consensus that reimbursements will remain flat, pressure on operating and overhead costs will increase, and there will be continued uncertainty of regulatory and audit processes.
The plethora of choices for seniors and senior housing professionals presented both opportunities and challenges. For the healthcare provider, right decisions have grander implications today versus a few years ago since operators need to be even more mindful of how money is being spent. Seniors are driving demand for facilities with all the latest technological services, upscale care and wellness services.
Digital-Based Marketing Strategies
Technology can no longer be considered a differentiator in senior housing, whether it is being used by residents and staff, or to market communities. Competitive advantage for marketing will be achieved by the quality of a community’s technology services, messaging and offerings, not the availability.
Employee Recruitment and Retention With increasing competition, the prudent provider must review recruitment strategies, but just as important, retention strategies. Employees weigh staff rewards, flex-time, and regular performance reviews as important as compensation. The retention of experienced employees is worth the additional cost and, in the long run, favorably affects the provider’s bottom line.
CCRCs Without Walls
LeadingAge, the trade association representing nonprofit senior living providers, recommends operators of Continuing Care Retirement Communities (CCRCs) now refer to them as “Life Plan Communities” to better appeal to the current cohort of seniors. These communities offer a compelling range of options for both seniors and providers, with living and services in a centralized location.
CCRCs Without Walls have attracted significant attention as providers look to connect long-term care services with client living outside the centralized location. Services need to be within a reasonable distance to make this a viable alternative. The rising cost of individual transportation and needed assistance becomes a problem if the extended service is not in close proximity geographically.
Discretionary Spending In Revenue Models Drives Growth
Managed care through Medicare and Medicaid Accountable Care Organizations (ACOs) and others associated with cost containment and risk management create the opportunity for revenue growth. In 2015, providers saw more pressure to deliver and defend their practices in the eyes of their constituents: owners, regulators, and auditors as well as seniors and their families.