OPERATIONAL EXCELLENCE
The Middle Market Opportunity: How Might It Impact Communities?
By Sara Wildberger T
he number of middle-income seniors will nearly double in 10 years. And more than half of them won’t have
the resources to pay for housing and care. When “The Forgotten Middle,” a Na- tional Investment Center (NIC) funded demand study conducted by NORC at the University of Chicago, was released in April, its conclusions and accompanying resources and research caused a shock wave. Headlines such as “Middle-income seniors risk falling through the cracks” told one side of the story. But there’s another side that soon sur-
faced: Opportunity. For every notch down in projected cost, the market grows by leaps. NIC defines middle-market for seniors from 75 to 84 as those who have annual financial resources between about $25,000 and $74,000; from age 85 up, it’s $24,500 to $95,000. One of the measurements, for instance,
projects the average annual cost of assisted living rent and medical out-of-pocket costs to be about $60,000. By this measure, by 2029 only 6.6 million seniors—19 per- cent—could afford it. But if the industry can bring the annual cost down to $45,000 annually, the market opens wide—to 10.2 million seniors. The goal of the study was two-fold, says Bob Kramer, founder and strategic advisor at NIC: To shed light on a social issue, but also to “highlight a huge underserved mar- ket opportunity.” He finds it exciting—and he’s looking
forward to the creativity that will emerge as the industry works to meet the need.
What Can’t Change: Quality The study results were “not surprising to strategic-thinking providers,” says Charles
26 SENIOR LIVING EXECUTIVE JULY/AUGUST 2019 OPENING NEW OPPORTUNITIES
Average Seniors Housing + Care Costs = $60,000
Average Seniors Housing + Care Costs = $45,000
can’t afford 4.2M
6.6M can afford
can’t afford 7.8M
10.2M can afford
The NIC report estimated average annual cost of assisted living and medical out-of-pocket expenses at $60,000. But if that cost can come down by $15,000, the potential market expands by 3.6 million.
Source: National Investment Center
RESOURCES: NIC offers multiple free resources from the study and surrounding research and thought leader- ship, at
nic.org/middlemarket. An interactive tool produces data on how many seniors can afford senior housing at different price points.
Trefzger, Affinity Living Group CEO. Some of these thinkers have served the middle market for years—and there’s a lot to learn from their experience. Often, what they share goes counter to intuition (but aligns with common sense). The first middle-market myth to topple is
that a lower price means a decline in quality. Middle-market residences must offer the same level of quality as those priced higher. The place to make the difference is in the volume of services, not in performance, Trefzger says.
The provider needs to have an estab-
lished culture of efficiency, of looking for places not to cut corners, but to cut what’s unnecessary, and knowing how to tell the difference. The culture should also be open to change and innovation to put into prac- tice quickly new ideas that improve quality and cut costs. A multi-brand approach, similar to hotel
chains that have different brands at different price points, is one model quick to emerge. Others look at segueing from multi-family to middle market senior living. But pulling
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