Nurse carrying tray of food in hospital
(Credit: Andersen Ross Photography Inc / Getty Images)

As long-term care operators prepare for 2024, the volume of senior living and care deals is down, Paul Branin, vice president of business development at management and consulting firm Health Dimensions Group, said Tuesday.

He was one of the experts who during a webinar shared predictions of trends that will shape aging services providers in the coming year.

The decline in the number of long-term care deals is “most likely due to the Fed policy of having raised rates continuously since March of 2022 in an effort to curb inflation, though a slower recovery in occupancy, increased operating costs and challenging labor markets have added to seniors becoming a less desirable commodity,” Branin said.

Higher capitalization rates are partly to blame as well, he added.

“As capital becomes constrained, the potential to invest resources, whether they be financial or human, into turnarounds becomes limited,” Branin said.

It might be a good time to divest of assets that have been a drain on resources and have had a negative effect on a provider’s bottom line, according to Branin.

“Regional team alignment can provide growth opportunities as well as ensuring that you have the right person in the right seat,” he said.

Funds move away from nursing homes

Another trend affecting aging services providers is “the transformation of Medicaid funding for home- and community-based services,” HDG CEO and Principal Erin Shvetzoff Hennessey said. 

The shift of Medicaid funding from institutional settings such as nursing homes to HCBS settings such as the home and assisted living communities is not new, according to John Capasso, executive adviser of senior care at HDG. 

“I think it’s important to note that this has been a trend over the past 20 years or so … [and] has continued to escalate” since the pandemic, he said. Additionally, he said, there has been an increase in Medicaid funding directed toward HCBS.

“The convergence of factors resulting in increased home- and community-based services has … decreased the occupancies of nursing homes,” Capasso said. “There are a lot of factors that could contribute to declines in occupancy, but the transition to patients being cared for in their homes rather than in institutions is an important factor and related to this Medicaid funding that’s occurring.”

He also noted that many states used American Rescue Plan Act of 2021 funds to transition care from institutions such as nursing homes to HCBS settings.

Older adults, particularly the baby boomers — those born between 1946 and 1964 — prefer to age in place in their own homes until it is medically necessary to move to a care setting, Hennessey stated. They tend to wait until they have chronic health issues or difficulty with activities of daily living, she added.

“What we have seen from that is assisted living really shifting from a safe apartment with some meals and minor assistance to a really comprehensive care environment that’s taking care of the whole person,” Hennessey said.

Half of assisted living residents have three or more chronic conditions, and more than 40% have Alzheimer’s disease or dementia, she said.

‘We really recommend watching’ active adult

Hennessey noted that 2022 was a turning point for the relatively new active adult segment. That’s when the National Investment Center for Seniors Housing & Care developed a definition for the community type. And the trend is not going away, she said.

“This is an area that we really recommend watching in the year ahead. While we’re seeing increased acuity in other settings, this is really a place for younger seniors to age and enjoy life,” Hennessey said. “This is also a great option as you’re balancing out how to provide care with much less staffing. So this setting really lends itself to a younger, healthier group of seniors.”

Among other long-term care industry trends discussed by the panelists were the changing aging services employment landscape in light of CMS’ proposed minimum staffing rule for nursing homes, growth in Programs of All-Inclusive Care for the Elderly, skilled nursing facilities challenges and the evolution of hospitals’ post-acute strategies.

For more coverage of the webinar, see McKnight’s Senior Living and McKnight’s Long-Term Care News.