be those that differentiate themselves in the clinical and behavioral outcomes they produce, and the increased revenue per oc- cupied unit they deliver for their investors.” Frum said Silverado is bullish on the
future role of senior housing operators in the post-acute health care space. “There is a growing recognition of the
value we provide in controlling the overall cost of health care for our seniors from third-party payers in at-risk agreements with Medicare,” he said. Memory care’s future seems certain to be
busy because of the unfortunate need for it. “The memory care market is a needs-
based business and will remain stable for the foreseeable future, supported by an aging population and no cure on the ho- rizon for this horrific disease,” Frum said. “Although near-term economic conditions are challenging a family’s budget to pay for long-term care, inflationary pressures have increased home values providing some flexibility.” Mace said memory care typically is less
affected by the broader economic environ- ment than independent living is. “Memory care in assisted living tends to
be more need based, whereas independent living tends to be more choice based,” Mace said. “So, if I look at the broader macroeconomic environment, there's a lot of prognosticators out there saying that we're gonna go into a recession sometime in 2023 or early 2024. We know that the housing market has weakened a lot because of that interest rate increase we've seen in the last year, consumer confidence is kind of shaky right now, the stock market's kind of shaky – so all those macroeconomic considerations do affect demand for senior housing. But it tends to affect more choice- based independent living than need-based memory care.” Mace said an emphasis on early diagnosis
and wellness could help slow the symptoms of those with memory care issues, but “un- fortunately, the prevalence of memory care symptoms will continue and will continue to create strong demand for this sector for some time to come.” Ultimately, Slobin said, “The aging of the
population will continue to create a need for these facilities and illustrate the social value they provide.”
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Standalone vs. a memory care unit within a larger building
Omar Zahraoui, principal, research and analytics, National Investment Center for Seniors Housing & Care (NIC), said memory care units within continuing care retirement communities had the highest occupancy rates in the fourth quarter of 2022 at 85.6%, followed by memory care units within combined properties at 81% and freestanding memory care properties at 81.4%.
“Freestanding experienced the largest occupancy decline during the height of the pandemic, but in terms of occupancy improvement from pandemic-related lows, the memory care segment within freestanding and combined properties have been recovering relatively fast,” Zahraoui said.
“Occupancy in memory care has naturally recovered quicker in communities with independent or assisted living populations to pull through and fill memory care beds as approximately 60% of their assisted living population has some form of cognitive impairment,” said Jeff Frum, senior vice president of sales and marketing, Silverado.
Beth Mace, chief economist, NIC, said a high number of standalone memory care units were built about a decade ago, but now it is more common that they are built within a continuum of care. She believes part of the reason for that trend is that standalone properties tend to be smaller with fewer units, putting them in a more volatile financial environment — the smaller the property, the more a few vacancies will be felt.
Max Slobin, vice president, senior payments advisor at KeyBank, said memory care units within larger facilities also have more direct access to potential residents.
“To the extent a memory care wing is included in an assisted living facility or a continuum of care facility that also includes independent living, assisted living, and/or skilled nursing facility, the memory care wing can benefit from a natural source of referrals from these other units,” Slobin said. “Independent living and assisted living units can provide some balance, smooth occupancy and net operating income.”
Frum said there is an advantage for many families to have a continuum of care within existing facilities for when their family member’s dementia grows worse and the need for long-term memory care arises.
“However, these smaller units often exacerbate behaviors in some residents,” he said. “A significant number of residents who move into Silverado are moving from other memory care units because of behaviors that are disruptive in those environments. Oftentimes, we see these behaviors dissipate in our stand-alone communities, which are designed to be prosthetic devices to support the unique needs of the memory-impaired.”
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