Senior Living Sector Update: Where we are and What’s to Come Post-Pandemic

Emerging from the pandemic, senior living organizations face a heightened cross-current of conditions, combining pandemic-related factors with long-term trends. Many of these factors have been accelerated by the crisis – impacting marketing and sales, staffing and operations, and financial performance and position. With a return to a (new) normal, shaped by perspective gained through the pandemic, providers are well-positioned to navigate these latest challenges and capitalize on a range of opportunities as they continue to serve residents across the service continuum. 

Expanding & Realigning Services 

Demand for senior living services is rebounding, albeit varying by region and across service lines. Areas of opportunity include:

• Expanded offerings of Middle-Market & Affordable Seniors housing in addition to Market Rate
• Expanded contract and pricing offerings including Rental and Entrance Fee Contracts in combination with more sophisticated pricing models
• Realigning Health Care Services and Facilities, across Assisted Living/Personal Care, Memory Care, and Skilled Nursing
  

Of these three opportunities, health care realignment remains the most multi-faceted, combining likely revenue reduction, uncertain expense impact, and pressure on profitability.

Growth Strategies

With the return to more normalized resident demand, senior living growth strategies are once again of critical focus, with implications for the composition of senior living campuses and services. Areas of opportunity include:

• Repositioning and Expansion of Existing Campuses
• Development of Satellite Campuses, in many cases involving only Independent Living
• Home & Community-based services offerings, both on-campus as well as the broader external community and in-home

While expansion via new construction or major renovation remains a central aspect of this growth path, there are significant pressures at the present time, particularly with increased construction and development expenses. This places heightened importance on careful advanced planning and consultation with project and financing teams, combined with creative approaches to cost management throughout the development process ... spanning land acquisition, development/entitlement, project scoping and design, phasing/timing of construction and contracting, and preparations for opening and operation.

In light of the above, alternate growth strategies should be considered and may represent more cost effective means of growth. In addition to affiliation and acquisition, these include collaboration and partnership with other providers and business partners, including developers, contractors, and financing intermediaries.

Financing Conditions & Strategies

With implications for much of the foregoing, informed evaluation of financing strategies remain of utmost importance. This applies both to an organization’s existing capital structure as for new funding. With interest rates at multi-decade lows, capital is widely available at attractive terms, presenting unprecedented opportunities for refinancing as well funding of new growth opportunities.

HJ Sims, with more than 85 years of organizational history and senior bankers, individually possessing multi-decades of personal experience, continues to collaborate with senior living providers across the U.S. in addressing this latest set of conditions in continued service of residents.

HJ Sims is pleased to share more on this topic, as a co-sponsor, at the LeadingAge PA Fall Finance Conference Oct. 13-14  in Lancaster, PA.