All signs point toward the rapid growth of demand for memory care in the coming years. To meet the market, providers must pursue transformation and innovation while addressing daunting challenges related to issues such as staffing and supply constraints.
As it stands, an estimated 6.7 million older adults 65 and older in the U.S. live with Alzheimer’s or other forms of dementia. By 2050, that number is projected to double to 12.7 million.
At the same time, the senior living industry is still grappling with hiring new workers to help provide the intensive care that memory care requires. By 2030, an additional 1.2 million additional care workers will be needed to care for the growing population of people living with dementia, according to the U.S. Bureau of Labor.
Meanwhile, the memory care sector is still recovering, having been rocked first by a period of oversupply and then the shockwaves of the Covid-19 pandemic. And the evolution of technology and medications, as well as the continued rise of value-based care, mean that the old ways of doing business no longer suffice.
These drastic shifts are forcing operators to consider increasing health care services, both not only within a community’s four walls, but in other settings. And they are rethinking just how to balance operations and drive more revenue from memory care as margins remain compressed.
No matter what, this is not a time for memory care companies to rest on their laurels, according to English Meadows CEO Mike Williams. Blacksburg, Virginia-based English Meadows operates 10 communities and is seeing strong demand across its Lavender Hills memory care program.
“It truly is a crisis and a call to action for our industry to deal with solving the many challenges to providing memory care services,” Williams told Senior Housing News.
Trends driven by disruption
The years prior to the Covid-19 pandemic were tumultuous for memory care providers. With some markets oversupplied, occupancy in freestanding memory care communities hit a low point of 80.7% in the first quarter of 2017, according to data from NIC MAP (now NIC MAP Vision).
Then, the Covid-19 pandemic drove change by necessity across seemingly all aspects of the senior living industry. Given the high-acuity nature of the product type, many memory care operators faced some of their toughest challenges ever, with woes ranging from difficulties staffing communities to isolation of residents during visitation restrictions.
But as tough as the pandemic was to navigate, it was also a clarifying moment that shined a “very bright light” on the industry and sector, according to Anthem Memory Care CEO Isaac Scott.
“We saw the spotlight on our role in the health care space and it became very evident,” Scott told SHN.
From a socialization standpoint to how meals were delivered, the pandemic changed operations at all levels. As the number of Covid-19 cases decreased across the country, Scott said, Anthem and other operators experienced a spike in demand for senior living services and memory care.
That spike in demand also led to an increase in residents entering the continuum with higher acuity levels. The average assisted living (AL) resident manages 14 chronic health conditions, according to a 2022 study.
“When we were allowed to open up, we did, and we brought people in because their care just couldn’t wait any longer,” Williams said. “That was a lightbulb moment for us that really showed how demand for memory care is increasing.”
To meet the moment, many senior living providers revamped and relaunched their memory care offerings. Examples include Sonida Senior Living, Discovery Senior Living, the Aspenwood Company, Strive Senior Living and more.
English Meadows launched a memory care program known as Lavender Hills prior to the pandemic. The launch helped bring cohesive structure to the company’s dementia care structure, while enriching programming for residents.
The pandemic also spurred an increase in operators defining and executing on delivering more in-depth, “person-centered care,” according to Brightview Senior Living’s Corporate Director of Memory Care Cole Smith. That led to engagement at new levels of programming to help give residents purpose and increase their quality of life.
“We should be looking for non-pharmacological interventions to help meet the needs of our residents and thus reducing behavioral expressions,” Smith told SHN.
But at the same time that operators are focused on reducing reliance on medications, new pharmacological breakthroughs also are offering hope for more effective drugs to slow cognitive decline. Yet, these medications — such as Aduhelm and Leqembi — are controversial for several reasons, including their price, level of effectiveness, and potential side effects, and providers have responded with a high degree of caution and even wariness. Still, Federal Drug Administration (FDA) approval of new Alzheimer’s medications raises the prospect of further progress in the years to come.
“Just remember that lots of drugs, early in their evolution, offered minimal help for whatever problem they were designed to treat; you could say that about a lot of diabetic medications, right?” said Sharon Maguire, vice president/director of health services at LCS. “So at the end of the day, do these drugs hold promise? They do. Will they help as many people as we had hoped? Probably not … but again, [I’m] very hopeful.”
And memory care providers also highlight other drugs — including cannabis — that they say are proving effective for certain individuals.
“For somebody who is … having a little problem in the afternoon, it’s amazing what a gummy bear will do,” Loren Shook, CEO of pioneering memory care provider Silverado, said at Senior Housing News’ 2022 BRAIN conference.
And forward-thinking memory care providers continue to work closely with research institutions to elevate care and develop evidence-based best practices.
“We’re seeing more programs that enhance the ability of older adults and help prevent any decline,” Jessica Fredericksen, Goodwin Living Brain Health Program Manager, told SHN. “It’s about that prevention piece as well as acknowledging people living with dementia and creating opportunities for them to thrive.”
English Meadows has worked closely with Alchemist Design and students from Radford University and Virginia Tech Gerontology, and has developed guiding principles for the physical environment within a memory care unit.
“The care is important, the most important thing, but it’s also about where they live and the spaces that these residents are in,” Williams said. “It’s about finding the environment that works in connection with technology.”
‘Era of supply constraints’
Even as they strive to raise their memory care operations, operators — and investors — are concerned about creating the capacity needed to meet the coming demand wave.
At the tail end of 2023, construction remains low due to high interest rates and cost of capital. Recent data from NIC shows that units under construction in the second quarter of 2023 made up 4.9% of the existing senior housing inventory. That represents the lowest level of construction since 2014, and construction has fallen 2.8% from a high of 7.7% reported in the fourth quarter of 2019.
That lack of supply is a double-edged sword. For memory care operators already in the space, that could help drive occupancy more quickly. But supply constraints could make it hard for those companies to expand further as demand rises.
“This is the era of supply constraints,” Scott said. “There’s been very little development in the memory care space, but demographically, when you look at demand versus supply for the next 10 to 15 years, you just scratch your head because there’s no real answer for it, and it’s going to define memory care.”
Pegasus Senior Living CEO Chris Hollister said successful memory care programs will remain small-scale and range between one and two dozen units, with some operators making shifts in AL portfolios to add additional memory care units.
“Free-standing memory care is something that can work, but you need to be careful because it’s still a needs-based product and it works better in metropolitan areas,” Hollister said. “We’re at an inflection point with demand because of the leading edge of the baby boomer generation.”
As it stands, Hollister added that he feels the industry is at a moment when technology will play a larger role within the sector, with operators having to balance tech integration over the next 24 months to better capitalize on the impending demand. That’s in part why Hollister believes the current moment within memory care is defined by technology and innovation.
“But … where you’re going to fail is if you don’t have the right culture and right training to have the right people in place to be there day in day out, because [senior living] is a special calling,” Hollister said.
Brightview’s Smith said he envisions a memory care space with more dementia care neighborhoods that offer outside community services, with operators hosting events that foster intergenerational connections.
“This is how we break stigmas,” Smith added. “We must find ways to truly allow our residents to have purpose.”
Operators such as Bella Groves also are seeking to expand their memory care offerings without necessarily building dramatically more capacity in terms of traditional communal living settings. Bella Groves does operate a small memory care community, but also offers education and services via a subscription model, in order to create a more robust memory care infrastructure even for people who are still living in their single-family homes.
Meanwhile, the face of today’s senior living customer is changing. A recent American Seniors Housing Association (ASHA) and ProMatura study helped define baby boomers and some of their desires when it comes to moving into a community. In the years ahead, many of the nation’s 76 million baby boomers will move into senior living, and understanding their needs will help go a long way in capitalizing on unrealized demand, Smith said.
“This generation’s wants and needs will likely look very different from the generation we’ve been caring for,” Smith said. “We will be able to more meaningfully infuse technology into our dementia care neighborhoods because baby boomers will have a frame of reference for the technology.”
Capitalize on demand, improve for the next generation
New technology is not only necessary in order to meet the expectations of a new consumer cohort. Anthem’s Scott said he believes memory care’s next era demands that the industry “increase dramatically” in sophistication, with technological upgrades being an essential component. At Anthem, a program called Pathways of Purpose brings scientifically-based engagement to improve resident care.
“We’re utilizing our partnerships with engagement companies to help support our engagement program,” Scott said.
The next wave of technology also could lead to operators considering changes to electronic health record (EHR) systems and other clinical platforms to help inform care and better address resident-specific issues.
“Operators need to focus on making sure they’re taking the right technical and technological partners and getting their programming right to make sure they’re staying current to deliver the best quality care,” Hollister said.
Having the right tech in place also will be essential for the data capture necessary to participate in value-based care payment frameworks, which are becoming more prevalent through the senior living sector.
In these models, providers must have access to key metrics such as hospitalization rates to demonstrate their value to payers, such as Medicare Advantage plans, if they have any hope of being appropriately compensated for the savings that they are helping to achieve by keeping high-risk populations healthier for longer periods of time.
And having the right technological backbone is essential for memory care providers that intend to become payers themselves, by launching or joining Medicare Advantage Institutional Special Needs Plans (ISNPs). Providers and organizations such as Juniper Communities and other members of the Perennial Consortium; Lifespark; and the Senior Living Transformation Company offer some examples of how providers that offer memory care are harnessing technology, along with more robust models of integrated care, to make value-based care plays.
“I think Medicare Advantage is going to change our world,” Maguire said, noting that large-scale providers like LCS have a natural advantage in terms of being able to participate in payer networks with cost- and risk-sharing arrangements.
Where this is all headed remains to be seen, but Smith said he envisions a memory care sector that will be able to help residents experience the most in their final years.
“I see all of these great things as leading us to a place where we can truly mimic routines and honor choice and preference for those living with dementia,” Smith said. “We will be able to connect families from around the world to their loved ones in meaningful ways.”
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