MARKET FORCES: Strategic Trends Impacting Senior Living Providers – Part 2
In this multi-part newsletter and podcast series, we tapped into the knowledge of Minneapolis based author and consultant to the Senior Living Industry, Jill J. Johnson, MBA. Her career spans four decades and has become a go-to expert in the industry.
To prepare for this series, Jill provided us with a couple copies of her latest book entitled, Market Forces – Strategic Trends Impacting Senior Living Providers, and we dug into this book with a pen and highlighter in hand. The amount of intriguing, interesting, informative data, and experiences she’s dealt with were impressive. And yet, it was an easy read!
So, here we go with Part 2….
We begin by discussing what Jill calls The Strategic Impact of Evolving Demographics. The primary method for determining this is to review the Market Penetration rate. Essentially, Penetration Rates are a Ratio that calculates the number of existing and expected senior living units (supply) relative to the number of age- and income-qualified prospects (demand) for a particular type of senior housing. The truth is, many of the customers being served today in senior living communities, even in independent living, are actually much older than ever before. The National Center for Assisted Living reports that the typical resident for assisted living is an 87-year-old woman who needs assistance with two or three activities of daily living. What does this mean for some of the assisted living providers out there? Jill makes her point regarding this abundantly clear. “Weak competitors will not survive, no matter what their intentions are for providing quality and loving service to their residents.”
So, what is underlying the occupancy challenges? What is driving the demographic declines in the older age cohorts in the population we are seeing within many markers? What is happening demographically that is shifting the market and increasing the competition for those prospects who are the right age realistically moving into senior housing? It’s something that may sound a little ominous at first, but not so much once you fully understand it. It is called the Birth Dearth.
Most of the seniors being marketed to for assisted living services were born during the era of the Great Depression, somewhere between 1930 to 1936. For some communities facing occupancy issues, it is likely due to effects of the Birth Dearth. There simply is a dip in the population bubble between those years due to very hard financial times faced by these families during those years.
What we also know is where there is projected growth, it is the younger cohort of older adults age 75-79 who are masking the real opportunity for retirement housing today. There is even more opportunity for those pursuing development of well-designed and effectively priced active housing or age-restricted apartment homes with no services.
Our entire team at Vincent Companies as well as all our strategic partners have always taken pride in never being fine with the status quo. We welcome change. To us, these challenges present great opportunities for operators striving to make a positive impact in the senior living industry. While there will be many pivots over the next couple decades, we are ready, willing, and able to remain not only a leader in the industry but to remain the “standard” in which all others attempt to emulate.
We look forward to bringing you Part 3 of this series coming soon!
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