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Working in the healthcare industry for the past 13 years, I gained more and more understanding of how the healthcare industry, such as senior living facilities, can be comparable to the hospitality industry. It’s wild, but think about it for a bit…Patients get admitted (or check in), but they also get discharged (or check out). In senior living facilities, however… the clients don’t always “check out”; they may wind up dying, leaving your caregivers and staff cleaning up a little more than a “messy bed” but maybe a corpse or two a week or a day depending on the type of facility and residents you keep. In my article, I hope to make the similarities glaringly apparent with my shared experiences from my 13 years in healthcare working in multiple types of senior living facilities ranging from group homes to skilled nursing facilities (SNFs). 

Hospitality and Services

If you just look at the two real estate asset types, you’ll see their goals are to deliver customer service and guest satisfaction. Fun FACT…The R.N. in my license actually stands for “Refreshments and Narcotics” (not really, though)... All my residents love their hot coffee with their tablet of 4 milligrams of Dilaudid (a strong oral pain pill)... And they both better come fast before you hear them hit their call bell a million times in “agonizing” pain while they play Solitaire on their tablet. I can’t tell you the number of times I rushed to give pain medication to a patient who was in “10/10 pain” only to find them smiling and walking around their room so leisurely.  I joke here…but some residents and patients truly think we’re only room service and don’t have actual pressing needs with other residents. In the hotel industry…well, only the coffee or coffee bag would be brought with such haste. Not like it’s drugs or anything…Caffeine technically is a drug that a massive population of the adult demographic worldwide (including myself) wakes up with each morning. Haha. That said, comfort, safety, and well-being can be highlighted as crucial cornerstones for senior living facilities, whereas hotels pride themselves on comfort and quality services as priorities. Both sectors focus on staff training and quality service for their guests as a means to retain long term residency or return guests. 

Occupancy

Occupancy as a key performance indicator (KPI) is essential to both sectors for their success. Revenue is modeled with occupancy levels in mind when planning for financial stability. When nurses and caregivers have to send residents out to the hospital because of acute health issues that can’t be managed in a senior living facility, occupancy gets affected, raising concerns of administrators and other management individuals. Similarly, hotel management gets concerned if occupancy doesn’t provide financial stability throughout the year. To maintain or raise occupancy for both, effective marketing strategies, exceptional customer service, and a shining reputation all bolster the bottom line generated with stabilization from occupancy. 

Facility Management 

How do you keep these properties managed? Housekeeping, maintenance, food service, and recreational activities. Such operations require structured systems to deliver memorable and enjoyable experiences. I have been in senior living facilities where the caregiver staff fought with the food service staff and vice versa because of poor communication and a lack of understanding of both departments. It was chaotic for a while until management finally intervened to organize the departments and rectify the situation to improve both the resident and staff experience. Nonetheless, both hotels and senior living facilities require care in management of such operations. 

Revenue Management 

Each sector has their own revenue models, such as dynamic pricing or package deals for hotels. Senior living facilities can also adopt dynamic pricing, as well, as prices can be adjusted on a demand basis, with the capacity of bundling services and/or amenities. Senior living facilities can also structure pricing models based on different levels of care residents may need. For example, if a resident requires memory care services and medication management support, a premium rate of $1500/month may be tacked on to the base rate as additional care needs for them. Robust revenue models can contribute greatly to how well both property types perform. Having intelligent design and execution of the models are significant in either asset class. 

Building and maintaining recognition through marketing and branding is essential to any business model, but especially senior living facilities and hotels. Trust, quality, and value are characteristics of well-known brands, and in turn, these traits have a tremendous influence on the maintenance and increasing of occupancy. The public’s perception of both sectors are driven by engaging tactics such as digital marketing, online reviews, and community involvement. I often see banners draped across the fronts of senior facilities in the eyes of the public for all to see. In the modern day, I also hear and see owners gaining an organic following via podcasts for their respective specialties; podcasts can be extremely engaging and revolutionary for marketing your capacities as a hotel or senior living facility. Both sectors are, otherwise, not strangers to marketing and branding. 

Wrap It Up!

From an investment perspective, both hotels and senior living facilities offer opportunities for stable, long-term returns. They each have unique risks and benefits, such as economic cycles impacting hotel occupancy and regulatory changes affecting senior living. However, the growing demand for senior living facilities, driven by an aging population, makes senior living seem to be a better investment.

In conclusion, while senior living facilities and hotels serve different primary purposes, they operate on similar business principles and face comparable challenges. Understanding these parallels can provide valuable insights for improving operations, enhancing resident and guest satisfaction, and making informed investment decisions.

Disclaimer: I am not a financial advisor, and the content of my article should not be perceived as providing calculated financial advice. Please do your own due diligence in the investment of any such purchase. 

Interested in learning more about investment opportunities in the senior living sector? Let’s connect and explore how this thriving industry can add value to your portfolio!

#SeniorLiving #HospitalityIndustry #RealEstateInvestment #BusinessStrategy #Healthcare #Hotels

When investing in senior living facilities, it’s crucial to do market research of the area where you wish to build or purchase. In my investigations of current markets and demographics, I uncovered major discoveries for particular geographic regions. 

• Florida: Cities like Miami, Orlando, and Tampa have seen a significant increase in the number of senior living facilities due to the large aging population and favorable climate.
• North Carolina: Charlotte and Raleigh have experienced rapid growth in senior living developments.

• Arizona: Phoenix and Scottsdale are popular retirement destinations with a high concentration of senior living facilities.
• Texas: Dallas, Houston, and Austin have substantial numbers of senior living communities, potentially leading to saturation in certain submarkets.

• Pennsylvania: Areas around Philadelphia and Pittsburgh have seen considerable growth in senior living developments.
• New Jersey: Proximity to New York City has driven an increase in senior living facilities in Northern New Jersey.

• Ohio: Columbus, Cleveland, and Cincinnati have a growing number of senior living communities.
• Illinois: Chicago and its suburbs have a high concentration of senior living facilities.

Considerations

Some considerations I am mindful of in my market research for investment of senior living facilities include:

-Demand Analysis: Take a look at what demographics and demand looks like relative to aging population, income levels, and local competition. Such factors can make it really prevalent if a particular area or region is hurting for some old folks homes such as skilled nursing facilities (SNFs), assisted living (AL), or memory care (MC). 

-Occupancy Rates: How full are these facilities? Higher occupancy will relay a higher demand with the obvious converse statement also being true. Take heed also of how new some of these facilities are as they may be brand new OR have added newly built additional units, and are in their “fill up” phase. Maybe their acuity (intensity of how sick patients or residents are) is very high, so they keep the occupancy a little bit lower to maintain staff (staff-to patient/resident ratios are not always a great reflection of how intensely acute patient/resident needs are); as an active nurse and caregiver, we have ratios that vary based on acuity of residents/patients and care needs. Do some research by picking up the phone to find out why these facilities may not be at high occupancy. 

-Emerging Markets: Keep an eye on what the aging population looks like in not only primary markets, but in secondary and tertiary markets. Having the foresight in the secondary and tertiary markets surrounding the primary markets can be indicative of great facility locations. Be keen on where the “target” is going, not necessarily always where it currently is…This can help you hedge yourself when it comes to facility placement or purchase in a market. 

-Demographic Trends: What’s the retiree population look like? How many folks are migrating to the markets of interest? See where the wave of the Boomer Tsunami is going! 

-Specialized Services and Lifestyle Amenities: What services is your facility going to offer? Memory care (MC)? Rehabilitation? Long term acute care (LTAC)? Hospice company partnerships? Hot tubs? Tennis courts? Figure out how your facility will stand out from the rest in the area! What’s the hottest thing you can offer at your facility?

-Feedback and Reputation: What the heck are people saying about the property of interest or market of interest? What is going well for the facility? What needs to get better? Where can the facility be in the future? Would YOU put YOUR parents or grandparents there? The longevity of a facility and its success is founded on the satisfaction of not only its bottom line but also on the satisfaction of the residents, their families, and staff! Don’t discount their thoughts, opinions, and suggestions. They will spread word of your facility whether it’s good information OR bad! The senior living facility community is smaller than you think…

-Continuous Monitoring: Keep an eye on what’s changing in the senior living facility realm of your market of interest regarding rules, regulations, licensing, accreditation, certifications, etc. Such legal and regulatory concerns are important to dive into for where you want to buy or build your facility. For example, some states can be freaking annoying to deal with in their process of licensing, taking anywhere from 6-12 months or even longer, further increasing the “holding costs” and initial operating expenses before the facility even starts to operate or fill up!

Conclusion

I personally haven’t been looking to invest in senior living facilities in Chicago, Illinois (me being a 45-50 minute drive out), but that doesn’t make it a bad area to look at. Do your own market research and due diligence. I personally am currently going after my first acquisition for a senior living facility with 100 beds or less in Milwaukee County and surrounding counties in Wisconsin; I’ve been doing heavy research and a lot of underwriting for a lot of deals both off AND on market, but I am still searching for my whale of a deal. I keep tabs on these considerations as I have highlighted in this article, plus my experience of 13 years in healthcare helps in understanding a lot of the operations behind the scenes that I need to find out with my gut instincts as an active registered nurse (RN) (in both Wisconsin and Illinois). Find your market(s) of focus, then dive deep!

Disclaimer:

Investor/buyer discretion is advised as I am not delivering financial advice, nor do I claim to be a practicing financial advisor. Please consider all due diligence in your process. 

Let’s connect if you want to chat about senior living facilities! 

-A.S.

Old folks need a home, right? For a plethora of reasons, they can’t always reside with their adult children. Maybe the adult children live too far away. Perhaps they have a few needs they can’t always manage to take care of themselves. The adult children may have mental health issues and may be mentally unstable to care for their elderly parents; on the other end, maybe the adult children have poor physical capacity to care for their parents. In my 13 years of the medical field, I have also seen where the adult children are no longer living; such scenarios often make me, a parent, sad to think about. Enter senior living facilities. A location where seniors can rest assured that they can get more attention than they would living by themselves, whether that’s medical attention, companionship, or even self care needs, like getting to the hair salon. The demand for senior living continues to rise at an alarming rate, so this opens the door for senior living facilities to become a thriving investment opportunity for those willing to get involved. Let’s investigate why the demand continues to soar higher and higher!

One of the primary drivers of increased demand for senior living facilities is the aging population. The Baby Boomer generation, which encompasses individuals born between 1946 and 1964, is now entering retirement age. According to the U.S. Census Bureau, the number of people aged 65 and older is projected to nearly double from 52 million in 2018 to 95 million by 2060. This demographic shift is creating a substantial need for senior housing options. Consider this statistic as a wake up call to the number of facilities that need to be established to accommodate for the boom of “The Boomers” and even the generations that come after them!

Modern medicine continues to advance, further extending life expectancy. Older folks need places to stay. They also need attention of all sorts: medical attention, self-care, engagement in hobbies, mental stimulation, and more. Specialized care and assisted living can facilitate such attention in a wonderfully controlled environment suited for such seniors. The National Institute on Aging reports that the global number of people aged 80 and older is expected to triple by 2050, further amplifying the demand for senior living facilities.

As a nurse, I have seen that adult children are not always able to reside together with their senior parents who need full-time care. Some reasons for this include:

• Adult children and their spouses both working, reducing time available to care for their senior parents 
• Smaller family sizes, limiting the number of individuals who can assist in the care of senior family members
• Geographical distances from adult children
• Mental illness of adult children
• Physical incapabilities of the adult children
• Adult children may be living in facilities themselves 
• Death of adult children
• Lack of progeny (end of a bloodline)

The sadness of these factors are why senior living facilities exist. To cater to this rising need.

Senior living facilities can be built like communities as there can be an independent living component to their business structure ranging up to complete assisted living, memory care, behavioral care, and even long term acute care (LTAC) requiring ventilators and other life support machines and equipment. The idea is many seniors have preferences to live independently in a community where there is help and support services available if they should need it. If their health condition declines, they then know and trust that their community or facility can manage their change in conditions. I have seen seniors in facilities go this route as they waver from their independent living style room in a facility to the long term acute care floor and then back again to their independent living room. Such facilities and communities make it very attractive for families and their senior family members to make the transition.

The increasing demand for senior living facilities has a profound impact on the investment landscape. Here’s how:

With the way demographics are trending, there is strong demand for senior living facilities as investors can anticipate consistent occupancy rates; consistent occupancy rates drive the stability of senior living facilities as an investment vehicle, capable of withstanding economic downturns better than other real estate sectors. Having worked as a registered nurse (RN) in facilities across Illinois and Wisconsin during COVID, I saw tremendously high occupancy rates in all the facilities I worked in despite the economic distress of the world. Whether or not this was healthy on the staff to have such high resident to staff ratios is a discussion for another article…That being said, senior living facilities can be a resilient investment vehicle even in times of chaos.

There is high yield possible for senior living facility investing as there’s high demand and premium pricing that is connected with care delivered and amenities available at a facility. There’s consistency in income from monthly resident fees AND… specialized care fees for needs such as assisted living care needs, memory care needs, or even skilled nursing needs (if the facility is a skilled nursing facility). Revenue streams also include entrance fees or buy-in fees, especially common in Continuing Care Retirement Communities (CCRCs); sometimes this fee is refundable to the resident upon departure. If a facility offers physical therapy (PT), occupational therapy (OT), wellness programs, housekeeping, laundry, and linen services, these can be a la carte additional fees a facility can charge to increase revenue streams. Specialized meal plans, outings, fitness classes, and transportation (for medical appointments, shopping trips, or recreational outings) can also further drive revenue potential. Fees for high-speed internet can also be an amenity that can be charged for. Some facilities also have guest rooms for visiting family or friends on a nightly basis if they wish to spend the night. There’s also retail and personal services that can be offered such as on-site convenience stores, beauty salons, and barber shops, that can be on the properties. Pet care and personal spa services can also be revenue producing, as well, if a facility has these amenities. Partnerships in revenue sharing with healthcare providers, laboratory services, radiology services, etc, can also be additional revenue streams to bolster returns, as well. With so much revenue coming into a facility, the property value can appreciate quite effectively, as well!

There’s much opportunity and room to grow on multiple fronts of senior living facility investment. Do you want to do a new development? Do you want to renovate an existing facility? Can you implement new technologies? These are all areas and thoughts to consider when looking at opportunities. Modernizing to compete with trends using smart home technologies, telehealth, and eco-friendly design will drive attention and residents to your facility. 

Having an engaging role in the care for seniors can play a great impact in the psyche and mentality of investors. Investors can feel great that their investment is providing a place for the elderly to stay and be well taken care of from both a medical standpoint and a well-being standpoint. The social impact can boost investor reputation and draw in additional investors who want to make a difference in the world. Not only are investors earning income, but they’re able to be proud that they are contributing to society in such a tremendous way. 

The high demand and the impact that investors can have on a social level is apparent. Not only will investors have the ability to have a social impact, but they will also be able to benefit from stable returns from the multiple revenue streams and market resilience that senior living facility investing can have! Changes in demographics, increased life expectancy, family dynamics, and independent living preferences drive significant demand for senior living facilities. The demand positions investors for a financially lucrative and socially impactful opportunity in both real estate AND healthcare. Through investigation of the factors of the demand and carefully investing in this market, investors can benefit on all planes financially, mentally, and emotionally! 

Disclosure: I am not a financial advisor, nor do I claim to be one. Please conduct your own due diligence prior to investing in such ventures. 

Let’s have a chat today about senior living facilities and the ways you can impact society!

#seniorlivingfacilities #demand #outcomes #socialimpact #silvertsunami #seniors #elderly #impact