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The Future of Assisted Living by Loren Shook, President / CEO / COB Silverado Senior Living

At a recent SeniorNetworking Roundtable event, someone commented that the future of Assisted Living (AL) and Independent Living (IL) was bleak because, in addition to the recent economic downturn affecting pricing and census, Baby Boomers will refuse to use AL or IL as they age. What do you think about that? 

My response: I believe the future of AL has never looked brighter than it does today.

More and more Boomers are struggling to convince their aging parents to move from the social isolation they experience at home into Assisted Living or Independent Living communities.  Boomers as a generation have traditionally embraced opportunities for social interaction and will continue to do so as they grow old.  If an elderly person living at home loses mobility due to inability to drive, lack of public transportation or shared rides, all too often the result is social isolation.  Living at home is wonderful when you can have social interaction plus the other support services you need. But when you lose social interaction and are living in the loneliness of isolation, then Assisted Living and Independent Living become excellent models for living life to the fullest at a lower cost than home care when your care needs exceed eight hours a day.

Research has shown that socialization contributes to cognitive improvement.  When we compare the cognitive improvement of people using a drug such as Aricept with those using only an environment featuring socialization activities and opportunities, good food, reasonable exercise and comfortable surroundings, after two to three months the results are the same.  However when we move out 10 to 11 months, the cognitive improvement of people in socialized environments far exceeds that of those who are simply taking a drug. Socialization also reduces the incidence of depression which also has the result of improving cognitive functioning.

In a year of difficult economic conditions, our industry outperformed other real estate classes as an investment.  Although home sales were off making a challenge of selling a home which may be required to move into IL or AL, the IL and AL real estate market still held up better than office buildings, retail, and other real estate markets.  The senior housing market is indeed a good investment during an economic downturn and this recent recession has proven that case to investors.  Although pricing for IL and AL room and services has not increased at the pace we saw earlier in the last decade, and there was significant discounting by many in our industry last year, we are projecting a two to three percent industry rate increase in 2010.  Although there is a risk of a double-dip recession, such a situation would probably result in flat rates and lower or flat occupancy gains, but not another year of reduction. Part of the reason is there has been very little new construction in the industry as capital for new construction is almost nonexistent and the demand for services continues to grow.

The improved economic environment will also have a positive effect on employment. More people than ever before are looking for jobs so employers can now hire better people and turnover has been reduced as people seek to retain jobs instead of move to different companies. The seniors housing industry is clearly a growth industry which is hiring in these challenging times demonstrating to many that there are great career opportunities in seniors housing thus attracting new talent and energy to the business sector.

The future of AL is filled with excellent opportunities for growth.  It’s up to us to maintain that perspective and build upon it to continue to develop and create the senior housing industry that we want for our loved ones and that we, too, will want to live in one day!