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November 9, 2015

Senior housing includes a broad range of independent living, assisted living and nursing care properties operated as stand-alone, multi-property and continuing care communities. Occupancy, rental and new construction rates have increased since the end of the Great Recession of 2009 to 2011. Labor costs and turnover rates, especially for low-wage health care aides, remain a concern, though given the private pay nature of senior housing, are subject to pass-through rental increases.

Alvarez & Marsal (A&M) estimates an increase in unit demand of 30,000 to 35,000 units per annum in 2015 to 2025. Longer-term demographic trends are favorable. The advent of capitated reimbursement represents a major opportunity for senior housing operators to better engage residents in preventive care, focusing on ambulatory care-sensitive conditions (e.g., asthma, chronic pain, chronic obstructive pulmonary disease (COPD), diabetes complications, hypertension, congestive heart failure, pneumonia and urinary tract infections). An additional opportunity exists for senior housing operators to proactively partner with hospitals, post-acute care providers and home care agencies to reduce the 30-day re-hospitalization rate, facilitate site-of-care transitions, enhance care coordination, improve quality and increase satisfaction levels.

Senior housing industry is highly profitable (with effective execution)
Senior housing comprises a range of options based on the need for alternative housing, combined with ancillary services such as hospitality and supportive and medical care. The vast majority of senior citizens prefer to age in-place with: assistance from family members, nurses and health aides; participation in adult day care center activities; and accessory (boarder) apartment living. Independent living and assisted living is expensive and requires, with exceptions, out-of-pocket payments from the vast majority of residents.

Senior Housing: Extension Opportunities Across the Continuum of Care (pdf)