While it’s no secret that middle-market senior living is a vastly underserved market, newly released data shows how stark the situation is in the most populous state in the nation.
The population of middle-income older adults in California is set to increase more than 60% by 2033, reaching 1.6 million people. Of that group, more than half probably will lack the financial resources to afford assisted living and medical care in the next decade. And if home equity is not accounted for, about 90% will struggle to afford private-pay assisted living at current rates of $75,000 annually.
These statistics are from NORC at the University of Chicago, which was a key organization behind the “Forgotten Middle” study first released in 2018 and recently updated.
The watershed Forgotten Middle study quantified the coming demand for middle-market senior living at a national level, but market and demographic conditions greatly vary from state to state. This is why the researchers focused specifically on California in work that was shared through a recent National Investment Center for Seniors Housing & Care (NIC) blog post.
California is “significantly” more racially and ethnically diverse than the United States as a whole, for instance. By 2033, people of color will make up 47% of the population of middle-income older adults age 75-plus.
In addition, the average assisted living cost is 17% more expensive than the national average, the NORC researchers pointed out in a slide deck of their findings. One in five people in the middle-income seniors cohort has “significant” housing equity, but even so, 49% of this group will have annual financial resources of less than $75,000 annually by 2033.
Furthermore, California residents are more likely to lack children living within 10 miles, and nearly 60% of middle-income seniors will be unmarried in 2033.
“Seniors who are unmarried (divorced or widowed) and those without children nearby may not have unpaid sources of care,” the researchers noted.
And by 2033, more than 1 million California seniors are projected to be “near duals” — that is, nearly eligible for Medicaid as well as Medicare. This group is in danger of spending down to qualify for Medicaid. And 46% of the cohort will be people of color; 57% will likely have mobility limitations, while nearly 50% will have three or more chronic conditions.
Even within California, there is dramatic variation in affordability from market to market.
In one hypothetical case study, the researchers present a woman with dementia who needs day-time care and has $79,484 in annual financial resources. Living in El Centro, full-time personal care services would take 49% of her financial resources and assisted living would use 88% of her financial resources. Living in San Francisco, full-time personal care would use 98% of her financial resources while assisted living would use 90%.
As is the case nationally, senior living providers have an opportunity to greatly increase their market size if they can reduce the price point of assisted living. Cutting the price point by $10,000 would mean that 209,000 additional Californians would have the resources to afford the product, representing market expansion of more than 25%.
Yet, providers still have a long way to go to create a scalable middle-market assisted living product. Companies such as Merrill Gardens are making moves in this direction through the launch of brands with novel operating models. Truewood by Merrill — the Merrill Gardens mid-market brand — has started to offer assisted living and memory care at more accessible price points in California.
And the demand for a middle-market senior living product is even greater than the numbers reflected in the NORC studies, Merrill Gardens President Tana Gall said at last year’s Senior Housing News BUILD conference. That’s because some affluent older adults are attracted to a more economical way of living.
“That customer base is bigger than even we think,” she said.
The post Middle-Market Senior Living Demand to Surge in Pricey, Diverse California Market appeared first on Senior Housing News.
Source: For the full article please visit Senior Housing News
Be First to Comment