The Key to Stabilizing the Seniors Housing Industry Isn’t a Vaccine — It’s a More Agile Business Model

By Jess Madison, contributing writer on aging

It’s no secret that residents of long-term care facilities have been the hardest hit during the coronavirus pandemic. While the coronavirus’ impact on nursing homes is most commonly referenced in news reports, the virus has hit assisted living and other long-term care facilities similarly hard. Statistics show elder-care residents account for some two in five U.S. deaths, and that one in 20 residents has already died from the virus.

On one hand, it makes sense: Long-term care facilities are home to some of our most fragile and susceptible people. Residents often have co-morbidities and chronic medical conditions (such as heart disease, diabetes and kidney disease) that increase the virus’ severity. They often live in close quarters with shared rooms and communal social / dining areas.

But would any of that have mattered if the industry itself had been more agile? If it had been better able to shift to meet the needs of elder care residents when the pandemic began?

In business terms, agility is the ability to respond to change quickly. But the “business” of senior care is not — and never has been — exceptionally agile. This applies not just to state-run nursing homes but private assisted living communities, as well. That’s because the industry involves layers of widely varying state and federal regulation as well as layers of operators, investors and developer partners, all of whom stand to win or lose based on public perception of the industry.

Right now, public perception isn’t great.

As of Dec. 20, more than 29,000 long-term care facilities in the United States have known cases of coronavirus, even amidst strict regulations meant to protect residents from such outbreaks. The question now is not why coronavirus has impacted so many long-term and elder care residents. We already know that answer. The question now is how a more agile business model could keep elder care residents safer and happier — and the industry afloat — not just until the pandemic is over, but in the post-coronavirus world.

Challenges Beyond Coronavirus That Demand More Agility
There are many issues that demand a more agile senior care industry. The first is overall emergency response.

Emergency response has never been a strong suit of the aging care business. When Hurricane Irma rocked Florida in 2017, eight nursing home residents at one single facility died because there was no back-up generator on hand. Federal emergency guidelines existed at the time. But a lack of oversight at the state level meant many communities simply went without observing them. And although the hurricane helped resurface the issue of emergency preparedness in long-term care facilities, it didn’t do enough to prepare these facilities for what was coming: the coronavirus pandemic.

Ironically, in 2019, the Emergency Preparedness Requirements for Medicare and Medicaid Participating Providers and Suppliers (Emergency Preparedness Rule) was updated to add emerging infectious diseases to the definition of all-hazards approach. Unfortunately, research shows almost half of nursing homes were not fully adhering to the requirements before COVID-19 hit. Be it a lack of staffing, budget, or oversight: the industry as a whole simply wasn’t positioned to respond quickly enough to such a large-scale health emergency.

The impact on seniors housing residents has been painful. The impact on the industry, from a business perspective, has been just as severe. In fourth-quarter 2020, seniors housing occupancy hit a(nother) record low, according to the National Investment Center for Seniors Housing & Care (NIC). The average occupancy rates in the markets NIC follows fell to 80.7 percent, 680 basis points lower than in the first quarter. In first-quarter 2020, before the pandemic hit, 33 percent of communities reported occupancies of 95 percent or greater.

Even if vaccines quell the coronavirus for good in 2021, it is unquestionable that other emergencies will continue to surface, challenging the industry to become more agile. In addition, many other trends will continue to demand greater agility in the industry. These include:

  • Economic challenges: The majority of senior care communities in the United States are private-pay communities. They’re also very expensive. In 2019, NIC published a report outlining the idea that by 2029, more than half of all middle-market seniors would not be able to afford senior housing. Once the pandemic hit, NIC updated its projections to indicate the number of Americans to be priced out of quality care will only get worse due to the long-term economic fallout from the pandemic itself. Indeed, many of baby boomers who pay for senior care for their parents are going through their own economic issues due to the virus. Their ability to pay for their own out-of-home care will only decrease in the coming years, making the future of seniors housing even more precarious.
  • Changing geographic trends: The above economic challenges are ones the industry was already aware of. But the pandemic has brought surprising challenges to the fore, as well. Until this year, it was widely believed that the U.S. population, including seniors, was moving toward cities. Thus, the new senior care communities cropped up near larger metropolitan areas. In 2020, we’re seeing a sudden change in preference, with many choosing to live in more open, less crowded spaces. It is nearly impossible to “move” a $20 million seniors housing community from one space to another. It’s similarly difficult to quickly erect a large community in a more rural area based on sudden geographic demand. What does that mean for the many senior communities already being built in major metro areas? And for aging people who don’t want to move to those metro locations?
  • Investor pressure. The global market for elder care was $914 billion in 2019, with some half of that in the United States alone. Companies funding seniors housing initiatives have advertised returns of 15 percent or more for potential investors. Clearly there is a lot to gain for the industry as a whole to remain as it is. But is that really possible? And even if it were, would it be the best thing for seniors themselves?
  • New Technologies. Technology itself has already promised to disrupt the industry by offering new ways for older people to “age in place.” With telehealth booming due to coronavirus, it makes sense that many older people will have already found new ways to connect with doctors, friends and other services they once needed to leave their house to find. Not anymore, which makes senior housing less necessary — and less relevant — than ever before. For seniors housing to remain workable, it must find new ways to work with technology to create more agile models of care.

New Agile Models of Care

Luckily, there are a number of new models of elder care cropping up around the country that could help the industry rebound post-pandemic. The following are a few of the more promising models that allow for agile growth and safe living environments.

Single-Person-Centered Care

One of the most exciting new models in senior housing is single-person-centered care. A company called Living Solutions has developed a way to provide portable “micro care centers” for lease for families looking to care for their loved ones at home. The ppod structures are designed to reduce caregiver fatigue and include a kitchenette, sleeping and living areas, bathroom, hepa air filtration, heating and cooling systems, and telehealth connectivity. A single pod can be placed in just a few hours on concrete, gravel, or dirt, making them easy to place in a driveway or backyard. The ppod costs 25 percent less than the average private care for Medicaid-eligible seniors and nearly 50 percent less for self-pay seniors. It was designed for clients living in rural and suburban areas where care options are limited or non-existent.

  • Pros: The ppod model of single-person-centered care seems incredibly relevant because it allows aging people to stay in a safe, familiar environment, such at the home of their child or other caregiver. It is also much cheaper than the traditional aging care model. It can also be placed in clusters for those seeking to live in proximity to other aging people. When the need goes away, so does ppod. Its unique design allows it to be easily removed and sent back to Living Solutions for refurbishing and disinfecting before going the next client. From an investment standpoint, ppod seems like a smart move because the model itself is agile — ppods can be easily distributed or collected due to changing client needs.
  • Cons: Because ppods are not regulated at the state or federal level, residents will receive whatever care is deemed necessary by the individual caretaker. In addition, residents living in ppod may still require considerable care from the aging person’s family, which some families do not have the resources to provide.

Residential Homes

No, residential assisted living (RAL) homes are not exactly new, but these family-style living areas are finding increased favor in the post-pandemic world. Due to their smaller size — most residential care homes have between 10 and 20 residents — seniors enjoy the benefits of companionship with less risk of viral exposure than those living in larger communities. In fact, residents generally have single rooms, which makes viral transmission far less likely.

In addition, the communities are small enough that they are better able to shift protocols quickly to keep residents safe. One RAL company, Green House, reported that of its full family of 256 homes, there were just 28 COVID-19 cases and three deaths. In addition, because they have a small family environment, community residents may choose to “quarantine together,” eliminating the problem of social isolation plaguing larger residences.

  • Pros: Safer, more family-feel, less lonely. Because they are smaller, they are more agile, and better able to shift if geographic preferences change.
  • Cons: Can be just as expensive as other forms of seniors housing. They may also not be able to serve residents with more extensive health needs.

At-Home Care

With so many people concerned about the spread of coronavirus in elder care communities, it makes sense that many families have increased their focus on at-home and on-demand care. Programs like CAPABLE (Johns Hopkins) have popped up to help less advantaged older people age in place.

CAPABLE focuses on providing a care team consisting of a nurse, occupational therapist and handy worker to address the health and home environment needs of older people. According to the program, a $3,000 spend per aging person yields some $20,000 in savings in medical costs. It’s also been shown to improve function, reduce depression and increase motivation — all clear indicators of higher quality of life for older people, who prefer to remain living at home as long as possible.

  • Pros: Seniors can stay safe at home, surrounded by loved ones. In addition, because staff are constantly rotating, the model is much more agile and able to meet the needs of older people, wherever they are.
  • Cons: At-home care is expensive. At the moment, it’s still not considered a medical necessity and may also still requires active participation by the caregiving family. Only about 1 percent of U.S. homes are “aging ready,” meaning they have all of the following elements: no-step entry, single-floor living, extra-wide doorways and halls, accessible electric controls/switches, lever-style faucet handles, and accessible bathing options to provide safe handling of family members. These major upgrades are very expensive for shorter term care needs.

There is no way to know if people will continue to avoid senior care communities as they currently stand. In the future, the smartest seniors housing operators will offer a hybrid model of the above types of care — reaching into the local community to provide at-home services while offering in-center care for those who have higher needs. By partnering with ppod, for instance, existing assisted living communities could serve as a telehealth provider for aging people in more rural areas, allowing the senior to easily transition to onsite care if the need arises.

For the industry to move forward, it must in fact be willing to move forward. It must be willing to take steps that allow it to become more agile. That means considering entirely new models of care, not just the same type of care in nicer buildings.

Many investors may feel entrenched in the current system because it takes so long — upwards of five or six years — for a seniors housing community to see completion. It may seem like shifting course to an entirely new care model simply isn’t viable. However, by encouraging existing trusted providers to consider hybrid models of care, the industry will be better positioned to respond to changing market needs, be it the next pandemic or the next financial crisis.


Jess Madison is a contributing writer on aging, technology, mental health and the greater longevity economy for publications such as Changing Aging, The Mighty and Next Avenue. She was formerly a communications expert for Senior Living Fund.