Breathing Space

If you were studying business charts, what would you make of curves that looked like these? No doubt you’d say that these industries are in decline, and pretty precipitous ones at that. What if you learned that these showed the historical growth patterns of three sectors of long-term care—independent living, assisted living, and skilled nursing, respectively? Shocked?

Yet this is the startling picture that emerged from a study released last week at the National Investment Center for Seniors Housing and Care annual conference, cosponsored by the NIC and the American Seniors Housing Association—a historical snapshot “first.” Everyone knows that the skilled and assisted sectors have hit occasional snags over the last decade or so, and that growth has slowed. We also know that some areas of the country have been the exception, with rather impressive growth in some markets.

But it’s striking not only that long-term care facility growth saw its best days in the late ‘80s and mid- to late-‘90s, but how much better it was (examples: IL—11.6% in late ‘80s, 2% now; AL—14.4% in late ‘90s, 1.8% now; SNF—4.5% late ‘80s, 0.3% now). Commenting on this, NIC president Robert Kramer also noted a drop off—about 12%—in new units attributable, at least in part, to the sub-prime mortgage crisis, and suggested that the drop-off would become even steeper before leveling out after 2010. When asked whether a credit crunch slowdown following an historical decline wasn’t a bit, well, alarming, in view of baby boomers turning age 65 in 2011, he responded thusly: the real demand for long-term care services in all sectors intensifies for people in their late 70s and 80s.

In short, today’s market is responding rationally to actual need and demand, and the development pressure is off, at least for the moment. The take-home message for readers? They should assess in their own areas as to whether market growth—or penetration, more accurately—is strong enough to be a cause for strategic reassessment, or whether their facilities simply must renovate, no matter what. In general, though, today’s operators just might have found some breathing space to consolidate their resources, plan new ventures and initiatives in the careful, controlled manner demanded more than ever by today’s lenders, and work toward preparing their facilities for the Really Big Show starting about 10 years from now. Maybe you’re not quite the center of attention you thought you were, but when the time comes, you’ll definitely be ready for your close-up.

I Advance Senior Care

I Advance Senior Care is the industry-leading source for practical, in-depth, business-building, and resident care information for owners, executives, administrators, and directors of nursing at assisted living communities, skilled nursing facilities, post-acute facilities, and continuing care retirement communities. The I Advance Senior Care editorial team and industry experts provide market analysis, strategic direction, policy commentary, clinical best-practices, business management, and technology breakthroughs.

I Advance Senior Care is part of the Institute for the Advancement of Senior Care and published by Plain-English Health Care.