More seniors will need an affordable alternative for housing and care as the consequences of the pandemic unfold.
As seniors housing owners and operators grapple with the day-to-day challenges of the COVID-19 pandemic, the longer-term ripple effects of the crisis are just now coming into focus.
A growing number of middle-income elders will likely be unable to afford today’s seniors housing and care offerings as the economic fallout of the pandemic plays out. Middle-income seniors had already been identified last year as a vulnerable population in the NIC-sponsored project, “The Forgotten Middle: Middle Market Seniors Housing Study.”
“Given the COVID-19 pandemic, the need for housing and care for the ‘Forgotten Middle’ is only going to get bigger,” said NIC Chief Economist Beth Mace.
A townhall-style session at the NIC Spring Conference addressed how best to provide housing and care for the growing number of middle-income seniors, a situation even more urgent in the wake of the disease outbreak. Session participants offered a number of creative ideas: providing services through Medicare Advantage plans; adaptive re-use of commercial properties; and the increased use of technology such as telehealth.
The “Forgotten Middle” study showed that 54% of seniors cannot afford today’s senior housing product, based on a monthly cost of $4,500, and do not qualify for assistance under the Medicaid program. By 2029, 14 million seniors will fall into that category.
Mace now expects that number to grow. While it’s hard to predict the depth of the economic upshot of the pandemic, several scenarios seem likely.
Seniors who draw down their savings will join the middle-income ranks of those who can’t afford the housing they need. At the same time, more of today’s middle- income seniors could fall into the low-income category of seniors dependent on Medicaid, putting more strain on an already overstretched program.
The slowed economy will impact consumer confidence, said Mace. “Confidence is a big factor in people’s decisions to move into seniors housing because it often involves choice.”
Consumers regard the stock market as a metric of wealth. Job losses grab headlines.
“Everyone gets skittish when a lot of people aren’t working,” said Mace. Also housing sales could slow to a trickle. That could impact the seniors housing market, at least in the near term.
Multi-Faceted Solutions
Amid this growing need for middle-market housing, the ideas presented at the NIC Spring Conference are even more relevant, noted Mace. The session was titled, “Planning for the Care Needs of the Forgotten Middle.”
The challenge is to create a housing and care model that is affordable. New approaches will be needed to finance projects and deliver care at a low cost.
“The middle market is where health and housing intersect,” said study co-author and session participant Caroline Pearson, senior vice president, at NORC at the University of Chicago, which conducted the original research.
Medicare Advantage plans, which cover a growing number of senior living residents, could provide a way to pay for the extra services needed by middle-income seniors, session participants agreed. Insurers are beginning to recognize the importance of the social determinants of health, such as safe housing, good nutrition and access to healthcare.
Expanded benefits for residents under Medicare Advantage plans could include payments for meals and the activities of daily living, according to Jan Eyer, regional president at Optum, a division of United HeathGroup. Optum consults with seniors housing providers on Medicare Advantage plans.
Different types of partnerships between senior living companies and insurers are emerging. Some operators are forming their own Medicare Advantage plans, while others are aligning with healthcare providers.
The big healthcare REIT Welltower formed a partnership with CareMore Health, a division of Anthem insurance. CareMore enrolls residents in Medicare Advantage plans and then offers healthcare on site at several Welltower-owned buildings. The arrangement helps offset costs, according to James Lydiard, general manager of CareMore’s Touch program for senior living communities.
Integrated healthcare models can reduce costs, said Kevin O’Neil, chief medical officer at Affinity Living Group. Many residents have chronic conditions and functional limitations best addressed in the senior living environment rather than in the more expensive hospital system. “Senior living should be the convener of healthcare,” he said.
Working with local health systems is a priority, session participants emphasized.
Presbyterian Senior Living offers middle market housing. Most of its projects are in Pennsylvania. A hospital system opened a clinic in one of the group’s buildings to help reduce hospital admissions.
“It took a long time of sitting together to figure out how to solve this problem,” noted Diane Burfeindt, vice president of population health, Presbyterian Senior Living. Managed care organizations will only partner with senior living providers that can track outcomes, she noted. “Data is huge.”
Serving middle-income seniors calls for multi-faceted solutions. Food costs could be reduced through programs such as Meals on Wheels. A small middle market property operated by Presbyterian Senior Living, for example, developed a relationship with a local restaurant to serve meals at the community.
Capital costs represent a big challenge. “Who will finance these projects?” asked Mace.
Unused properties, such as vacant schools might be converted into seniors housing. The low-cost basis of the property would help keep rents in check.
Government programs such as low-income housing tax credits could be expanded to provide an affordable financing vehicle to lower rents. Ground floor space could be rented to retailers to help subsidize costs. “It will take a multi-industry mindset,” said Lydiard.
Technology will play a big role to lower costs. Senior living providers are already adopting telehealth solutions in the wake of the pandemic. Remote visits by health care providers will help keep middle-income seniors healthier and avoid the costs associated with emergency room visits.
“Telehealth is the way to go to reduce the cost curve for the middle market,” Mace concluded.
