I see Genworth has released its latest update on senior living charges. They climbed by a robust 6.67% last year, according to this most recent report.
As to why billings rose more than twice as quickly as inflation, Genworth cites two culprits.
One is a worsening nursing shortage, which is making it more costly to land and keep qualified staff. The other: residents have higher-acuity needs.
At first blush, those seem like pretty legitimate drivers. For if senior living operators increasingly are going to compete against skilled care operators for post-acute hospital patients — and against each other based on providing a luxe living experience – then operational and other costs will continue to escalate.
That’s the price of moving upstream and uptown.
But here’s the thing: Going forward, the great unmet need for senior living is not going to be among people who can afford to keep paying more. It actually will be for people with far less in their bank accounts.
And to put this as politely as possible, developers and operators in this sector for the most part continue to treat the middle-income market as if it doesn’t exist.
It is somewhat amusing to hear operators say that although they are willing to pour tons of money into creating what amounts to post-op or five-star environments, they just can’t take a chance on customers with less than $50,000 a year of disposable income.
So in the interest of keeping things positive, let’s see whether there might be a teaching moment here.
It was not that long ago, Gentle Reader, when the skilled care operators roaming the earth had a virtual monopoly on lower-acuity, private-pay residents. Those settings also were the places where many people with dementia lived out their final years.
Then, out of nowhere, this newfangled thing called assisted living came along. In short order, skilled care operators discovered that their best customers had vaporized.
What does this have to do with senior living? Maybe nothing. Then again, maybe this: While you are ignoring your best bet for full occupancy and chasing longshots, somebody just might come along and clean out your cupboard.
And if history is any indication, there’s also a good chance you’ll never see it coming.
That’s not to say this tale can’t have a happy ending. But for that to happen, many operators might want to consider a better story line.