PHILADELPHIA — Will today’s emerging aging-in-place technologies, designed to help the elderly remain in their own home for a longer period of time, lead to significantly reduced demand for seniors housing?
The question was a hot topic at the InterFace Seniors Housing Northeast conference last Thursday in Philadelphia following a recent front-page article in The Wall Street Journal under the following headline: “Boomers Want to Stay Home. Senior Housing Now Faces Budding Glut.”
The piece argues that aging-in-place technology poses a challenge to builders of senior living communities, particularly at a time when developers are adding new supply at a healthy clip and occupancy rates remain relatively stagnant.
Nationwide, the occupancy rate for seniors housing (assisted living and independent living combined) was 88 percent in the third quarter of 2019, up 30 basis points from the prior quarter, but down from 90.2 percent in the fourth quarter of 2014, according to the National Investment Center for Seniors Housing & Care (NIC) based in Annapolis, Maryland.
Seniors housing developers added 21,332 units in 2018, more than double the number added in 2014, The Journal reported based on NIC data.
Venture capitalists and other companies are expected to invest about $1 billion this year in aging-in-place technologies, according to The Journal. Among the new products and services are sensors that respond to a variety of medical conditions; facial recognition for identifying visitors; and houses equipped with malleable fixtures that can be adjusted as residents age.
“The article goes on to really imply that the seniors housing market is not going to survive. Seniors aren’t going to need seniors housing anymore,” said JP LoMonaco, president of Culver City, California-based Valuation & Information Group. LoMonaco moderated “The Power Panel,” which included five leading executives in the seniors housing industry.
“How does this group respond?” LoMonacao asked pointedly. “Are we all going to be out of business in five years? Is seniors housing going to be able to withstand the technology wave that is going to be hitting us?”
Eric Mendelsohn, president and CEO of Murfreesboro, Tenn.-based National Health Investors (NHI), a real estate investment trust that specializes in seniors housing, medical office buildings and hospitals, made clear his belief that this is not “new news.”
“This is why seniors housing companies have sales and marketing staffs. It’s still a product that needs to be sold,” said Mendelsohn. “There are still barriers to getting people who have lived solitary lives to become joiners, to join your community. That’s what the sales and marketing process is all about.”
“The technology is great, but that will only get you so far,” he continued. “It won’t get you up when you fall. It won’t brighten your day by giving you a cheery hello. Siri (a virtual assistant) is not the same as the relationship you have with your caregivers and your neighbors at a seniors housing community.”
Mendelsohn’s comments came during the second panel discussion of the morning and followed the keynote address by Richard Hutchinson, CEO of Discovery Senior Living. The day-long conference at the Philadelphia 201 Hotel, drew 289 attendees representing all facets of the seniors housing industry. All totaled, there were seven panels covering everything from architecture to operations to the capital markets to market studies.
Brenda Bacon, CEO of Brandywine Living based in Mount Laurel, New Jersey, who appeared on the panel with Mendelsohn and LoMonaco, is well aware of the impact technology can have on seniors. Her 91-year-old mother-in-law lives with Bacon’s family. Following a recent business trip, Bacon said she arrived home and was walking through the living room when she heard a familiar voice.
“She has an Alexa in her room, and Alexa tells her to take her medication. She says, ‘Thank you, Alexa, I love you.’ And I said to my husband, ‘I am taking that thing out of there.’ She’s talking to the computer and saying I love you just because she’s a nice person,” recounted Bacon.
In short, Bacon said technology provides some wonderful benefits, but emphasizes that it can’t replace human contact and connectivity. She views each of Brandywine Living’s approximate 30 communities as a small town or neighborhood. “At home talking to Alexa or Siri, or sitting there with a home health aide who is on her phone and not paying much attention, is no way to live your life. We have to do a better job of saying, ‘There is a way to live your life, to laugh again, and to have a reason to get up in the morning and enjoy the day.’”
Ken Assiran, managing principal of Capital Health Group LLC, which owns or operates 87 largely high-acuity seniors housing communities in 19 states, said first and foremost he’s in the service business.
“The consumers are telling us they really want good, basic services. They want a good environment. They want quality meals, and they want great care,” said Assiran. While the industry uses technology effectively for clinical and other reasons, he believes that there is a lot of technology on the market that isn’t providing anything extra to the consumer.
The seniors housing industry is facing a lot of headwinds that create difficulties in delivering the basic services as well as operators would like to, said Assiran. “And costs are going up all the time, from tort issues to wages to insurance and other factors. All of those issues affect the services that we’re providing,” added Assiran. (Capital Health Group is part of Baltimore, Maryland-based Capital Funding Group.)
Kelly Cook Andress, president and founder of Springfield, Pennsylvania-based SageLife, whose portfolio includes eight communities totaling 950 apartments and three under construction for another 600 apartments, said that the news media are missing the real story.
“If you ask people where do you want to live, they say their home. If we instead would force the issue [and ask] how do you want to live, you will find there is a dramatic difference. In fact, they are often in contradiction of each other,” said Cook Andress.
“People want to live in their home often because they don’t want to move,” she added. “As a country, we are paralyzed by our ‘stuff.’ We have a lifetime of stuff that we don’t know how to divest ourselves of. When you ask people how they want to live, the aspirational vision of what we offer is much more in line with how people want to live. But by asking them ‘Where do you want to live?’ we allow the narrative to be ‘seniors housing is bad, residential home is good.’”
Michael Stoller, managing partner and CEO of Norwood, Massachusetts-based LCB Senior Living, an owner and operator of 28 assisted living properties, echoed the comments made by Cook Andress. “We allow the perception that we are an industry that houses people. We are an industry that provides life, provides communication, provides activities, that provides choice. People thrive in our communities. We have to — as an industry — talk about that,” said Stoller.
“Much of our industry is high-acuity providers, and that unfortunately is defining what our industry is. We need to change that,” he added.
The LCB executive reminded the audience that while the aging-in-place technology firms are working aggressively to sell their product, the seniors housing industry doesn’t take a back seat to them. “That product has a shelf life that is far more limited than the shelf life of our industry and what we do for our people, what we do for our residents.”
— Matt Valley