By Jack Cumming
Most of the senior living trade media proclaim, “Happy days are here again,” pointing to the arrival of the demographic boomer bubble and speaking of demand vs. supply yielding showers of plenty. That happy quantitative assessment ignores the fickleness of people who have a disconcerting tendency to make their own decisions.
A Stimulating Afternoon
This came to mind recently when Steve Moran asked, “If you could spend an afternoon with a business great, who would you choose?” With senior living front of mind, I immediately thought of the disruptive effects of increasing longevity and reducing infirmity.
I’d love to spend an afternoon with those in the aging services market discussing the impacts of this complex overlapping web of demographics, health and wellness, popular perception, and emerging societal culture. Jonathan Rauch has written recently in The Atlantic about this wellness revolution.
Just as the quantitative simplicities of Economics 101’s supply and demand curves seem compellingly plausible, so are the disruptive effects of the healthy-aging wave. The “boomer” wave will move through the 21st century, soon to be gone. The vitality wave is likely to endure.
Facing Realities
The realities, though, will be more nuanced than mere demographics, with its assumption of “all else being equal.” Human nature does not follow the expectations of the social scientists. Senior living in 2050 and thereafter will be nothing like what it is as we enter the year 2025. Wise are those who create change, for they will inherit the future.
There’s not much talk about these complexities and the urgency of change for senior living. Society’s attitude toward aging is shifting. That’s impacting senior housing results, with age at move-in and other metrics less favorable than they once were. It’s often easier for those exercising ownership authority to make excuses instead of accepting responsibility. Adapting is harder than continuing the status quo.
It’s common to blame subordinates instead of encouraging change. That’s a recipe for obsolescence. The evidence of a blame response lies in the increasing pace of C-suite churn. We also often see evidence of blame games and C-suite churn among the not-for-profits as well. Boards often divert blame elsewhere rather than accepting the board’s own sclerosis.
Growing Demand and Shrinking Market
My observation is that there is friction between the demographically driven prospect for more eligibles and the changing need for what the senior housing industry emphasizes. The potential market of those eligible by age and wealth for senior housing is growing. At the same time, the age at move-in is increasing. That rising entrance age mirrors a growing reluctance of older people to give up home ownership and other dignities to become residents in what many consider a “facility.”
These trends are moving in countervailing directions. The increase in move-in age reflects the growing perception that people can safely stay independent far longer than has ever previously been the case. Combine that popular sense, whether well-reasoned or not, even among those in their late 80s, that they likely will not need care with the perception that CCRCs are institutional, and the industry is ready for a reality check.
Unscientific Sampling
My college classmates from 1958 may not be a scientifically select sample of residents and prospective residents, but we are all now age 88 or 89. A few already live in CCRCs, but most are just now beginning to consider whether moving to a CCRC is a wise decision. They tend to view it as a health care decision, with the attraction being the presence of care services on the campus. Some are making the move, while most do not sense the need. This is despite the looming likelihood of our reaching our 90th birthdays soon.
That reluctance to make a move reflects the advances that are allowing people to live longer in relatively good health. Many of us are still very active, which leads to the common focus on “readiness.” That raises the question of what the industry might do to offset readiness as a governing popular opinion. Selling senior housing as luxury living for old people hasn’t worked.
Beyond the Status Quo
Meantime, industry optimism is fueled by trade sources that tell operators what they want to hear. Opportunity is here for senior living and services, though it’s not clear whether it will be led by today’s leaders and by new entrepreneurs. I thought of this recently when listening to Mark Cuban. In describing entrepreneurial opportunities for disruption, in less than five seconds he seemed to be describing today’s senior housing industry. Click here to let him speak truth to you.
The sad truth is that plodding administrators often drive entrepreneurial thinking out of established businesses. Entrepreneurs take risks and make mistakes. They learn, they adapt, and ultimately, the great ones succeed.
Too often, though, those thinkers and learners are purged at the first stumble while the smiling administrators plod on. Plodding has more excuses than adapting and evolving. The best excuse for failure is, “We were just doing what everyone else was doing.”
Thoughtful Discussion
Below are some questions that could fuel that intense afternoon of conversation among senior living industry leaders. There’s much to be gained from collaborative conversation. Think of how such conversations often unfold.
A provocative question is asked. A quick, smart aleck dismissal ensues, e.g., “That’s not going to happen.” A more thoughtful leader ponders and sees truth. That truth grows into constructive action. One company is transformed and succeeds in selling its differentiated value proposition. Others follow. The industry adapts.
Or, then, there’s the alternative. Federated Department Stores, now Macy’s, under James Zimmerman was once a giant. So was Sears. Then came Amazon. The future of serving those who are aging is a story that is yet to be written. Just as Macy’s and Sears missed the challenge, perhaps senior housing is now at a high point.
Questions to Ponder
What are some questions that might come up in that afternoon confab? Can the residential senior housing industry benefit from the increasing numbers of age and wealth-eligible prospects?
- Is the age requirement necessary, or can it be replaced with an aging focus but without the connotation of one’s final home?
- Is the subordination of residents to corporate oversight essential, or can a more laissez faire approach, like that in multifamily co-ops, condos, and rentals, be more effective?
- Is the industry’s association with old age a benefit or a hindrance? Is the answer obvious? If so, what is to be done?
- Using Simon Sinek’s thinking, what is the “why” that could resonate emotionally with the public so residents could feel pride in their residence?
- Can the services be reconfigured into multiple pricing bundles to make residential living accessible for a larger percentage of the aging population?
- What can the industry offer those who don’t move in and who prefer to linger in general market housing until that is no longer viable? Why isn’t that already a business opportunity?
- Are there lifelong adaptive benefits that the industry might offer to broaden its market to all segments of the populace?
- Is the appearance of a luxury lifestyle essential to attracting residents, or would a homestyle offering be more affordable and less intimidating? Does the emphasis on luxury discourage some prospects who just want a safe haven where they feel at home?
- How can we encourage successful entrepreneurial action within the industry? Are today’s senior leaders up to the adaptability challenges?
Many more questions come readily to mind, and one wonders why the industry is so complacent in its thinking. Let’s start a dialog to help aging Americans live as fully as possible with as much self-agency as they are capable of for the full duration of their days.