The focus of modern medicine has been centered squarely in the curative camp for a long time. As Atul Gawande put it in his recent New Yorker article, modern medicine is a practice in "rescue medicine," meaning the goal of treatment is to immediately and summarily save the patient. Unfortunately, in life, some diagnoses are not so easily remedied. Though in today's world, a cancer diagnosis is by no means a death sentence, neither is it a free pass. Patients diagnosed with serious illnesses are not always capable of being "rescued;" nor do they necessarily want to give up their autonomy over their own health and quality of life to the health care system. In most cases, patients have their own set of goals for the future, some of which may have nothing to do with medical treatment. Nonetheless, those goals are complicated because of illness and may be omitted from the care plan.
The consideration of a new development raises a lot of questions. How successful will a proposed property be in its initial lease-up period and will it be able to capture some of the existing demand as well as a portion of the current and projected growth? What is the optimal combination of care types? How about the mix of unit prices and floor plans; how many one- or two-bedroom units should be planned?
Increasingly, operators of seniors housing and care properties are reporting labor shortages in all occupations across their operating platforms, ranging from care managers to executive directors. More broadly, U.S. employers in April advertised the most job openings in 16 years, yet hiring fell and fewer people quit work. Indeed, job openings rose 4.5% in April to more than 6 million, the most since December 2000, while hiring fell 4.8% to just over 5 million. Moreover, with the national unemployment rate falling to a 10-year low of 4.3% in May 2017, the challenge of recruiting and retaining employees is expected to only grow.
Investment returns for seniors housing historically have outpaced the overall NCREIF (National Council of Real Estate Investment Fiduciaries) Property Index (NPI), a property-level index that tracks investment return performance for commercial real estate. But while seniors housing returns outperformed the NPI in the first quarter of 2017, the total annual return for this sector has been slowly trending down since mid-2014.