Determining the right cost of senior living units has never been a simple exercise. But looking ahead to 2025, it is among the top areas of focus that Anthem Memory Care CEO Isaac Scott thinks the industry should look into.
West Linn, Oregon-based Anthem, a memory care operator with 22 communities across the U.S., previously had all-inclusive rates for its units. That has “gradually evolved” in the last decade-and-a-half, Scott recently told Memory Care Business.
“A lot of our effort this year and going into 2025 is restructuring our pricing,” he said. “We’re moving … to six levels of care, and trying to make sure that for that lower acuity resident, we have something that’s price competitive.”
As he surveys the rest of the industry, he foresees steady demand ahead. But he believes that many memory care operators must get their workforce strategies in a better place in order to meet that demand.
“This is a very, very hard business to be in. It’s emotionally taxing, it’s mentally taxing, it’s physically taxing,” he said. And so we’ve got to figure out these keys that really attract and retain labor into our industry. That’s the challenge we’re facing.”
The following interview has been edited for length and clarity.
SHN: What is the biggest trend or trends that memory care operators should pay attention to right now?
Scott: From our perspective, it’s really completely revisiting how we’re pricing our units and pricing our beds. We started off back in 2010 with all inclusive pricing to make things super easy for families. We have gradually evolved to recognize that we’re caring for people at a far greater variance, so that all inclusive pricing does is really ask one group to subsidize the other.
A lot of our effort this year and going into 2025 is restructuring our pricing so we’re moving from a lower number of levels of care to six levels of care, and trying to make sure that for that lower acuity resident, we have something that’s price competitive. But yet, as they age in place and those folks that require a greater level of care, we have to charge appropriately for that. So, that’s a big focus for us.
I think as memory care operators continue to look for those margins that maybe they once experienced pre-pandemic. You’ve had to really look closely at pricing, and that’s the way we’ve approached it. I think that goes for a number of people in the memory care space.
How do you expect memory care demand to play out in 2025, and why?
I think that I am probably echoing what everybody’s saying, and we’ve seen over the last 18 months a very steady increase to our occupancy. It has come through gross move ins. Our move in numbers each and every month continue to outpace our move outs, and so we’re gaining occupancy month after month.
The feeling on the ground is that that is going to continue to not only happen, but pick up each month. It seems that there’s a more sense of urgency in families needing a spot for their loved one.
There’s a high volume of leads coming in … we have not seen a seasonal dip, or a lull from Covid that one might expect. Our expectation is demand is going to continue to increase throughout 2025, throughout 2026 and pretty soon … I would venture to say that the memory care industry as a whole will find themselves at 95% to 100% occupancy with no real development happening across the U.S.
For memory care, even assisted living, it’s just very difficult to figure out where the increase in demand goes, so that’s a challenge that I think we’re all looking at from us as an operator. It’s a really good problem to have that you’ve got a higher volume of people coming in. But it’s going to increase, and there’s no doubt about it.
What challenges still lie ahead for memory care operators in your eyes?
With all the good of senior housing populations increasing and the need for memory care increasing, on the absolute flip side it is the pending decrease in labor. There’s no statistics that we’ve been able to look at or find that would encourage or support that with the existing labor pool decreasing, that it’s going to be easier to care for our residents, and so that puts a lot of stress and strain on us as a company to make sure that we are creating an atmosphere and a culture that our current staff enjoy being, are feel supported in and attracts new employees into the industry.
This is a very, very hard business to be in. It’s emotionally taxing, it’s mentally taxing, it’s physically taxing. And so we’ve got to figure out these keys that really attract and retain labor into our industry. That’s the challenge that we’re facing, certainly at Anthem.
What are the biggest growth opportunities for Anthem in 2025?
For Anthem, there are existing opportunities that are out there, communities that are either stuck given their financial structure or stuck given the status of the operator. So, we’ll continue to see growth opportunities through 2025 in just picking up new communities. We’ve been able to enter 2024 and 2025 healthy. I think people will be attracted to us, in terms of those folks that want to run their existing building. So, that’s certainly a growth opportunity for us.
Development – if some of the stars can kind of come back into alignment – is something that I think has to happen. It’s difficult right now, given the costs and the interest rates kind of staying stuck. Some of those things need to come back into alignment for it to be really, really attractive to do development. But at Anthem, we certainly want to be in a position to take advantage of certain development opportunities, either that with a partner, or potentially kind of trying to tackle a development or two on our own.
I think, in the areas of operational efficiency, specifically with technology, we have opportunities. It really is very difficult to replace the efficiency and effectiveness of the human body … so that’s a really tough challenge for a lot of people to have. The use of technology certainly allows us to be better at our jobs. Potentially down the road, it may play a role in allowing us to take some of the pressure off the need for so much labor that’s yet to be seen.
How do you think memory care operators can make the most of value-based care and other public payment sources?
Well, it’s an interesting question for us. Specifically we have, we’ve nibbled around the edges, and we haven’t taken the big step forward on value based care. We’re still educating ourselves. It has not been an area that has been easy for us to get our arms around. I think one of the reasons is that we are spread out, and value based care programs are really done on a state-by-state basis.
We’re 22 communities spread out in nine states, and so our ability to take advantage of scale in each state is limited. However, we do know and recognize that there’s going to be opportunities for us to partner with other operators and come together and take advantage of value-based care programs.
We see this as probably a multi-year step for us to get there. And we think that 2025 will probably be the first big step that we take in value-based care. We see our role within value-based care as being an opportunity for us to be partners with folks in the other areas of healthcare and in other areas of our residents … providing greater programs that are maybe a little more all inclusive for each of our residents, a little more holistic for each of our residents. And if we could just accomplish that, we would be enthusiastic.
A lot of people have gotten into it, because there’s also a financial component … but I think that we’ll probably recognize that only after we can prove to ourselves that it’s a better approach and a better way for us to operate our buildings and to care for our residents. If that can be checked off, then we would look at what that means for us financially and the industry.
Do you think the industry is doing enough to create more middle-market options for residents, given the sheer amount of people who need those services but can’t afford them?
No.
I think that what we’ve gone through in the last two or three years has made it much more difficult for the middle-market to access services. It’s what we’re providing. The sheer cost of operating a community is dramatically different today than it was five years ago. So those costs – whether they be higher food costs, higher labor costs, higher insurance costs or greater liability contingencies – they’re all going up. And the only way to operate a community and a company in our space is to make sure that you’ve got the revenue that can cover those costs, and that means a higher cost for our residents.
We’re steadily getting farther and farther away from the middle-market. Because of the shrinking opportunities, because of the lack of development and some of the aging from our current communities and properties, the opportunities are kind of becoming fewer and fewer. I’s becoming much more difficult to do that.
I think in order to really improve the environment for the middle market, there needs to be some radical way of reapproaching this. Because to do it on private pay, and make sure that you’ve got a business that stays operating – and make sure that you’re totally compliant – is really difficult to do while keeping your monthly rents and revenues at a management level.
What advice would you have for a new memory care operator in 2024?
I think that on the positive side, there’s great opportunity. It’s an industry in a market that’s expanding, the need is growing rapidly and dramatically, and so you’re moving into a field that has a lot of tailwinds in terms of demand. So that’s a huge positive.
The thing I’d also be telling them is make sure you’re prepared. I mean, it is an incredibly difficult business to run. It’s going to naturally have high turnover, so your labor is going to always be an area of focus. And the reason why it’s going to always be turned over. As I mentioned earlier, it’s just very, very hard work, it’s physically, emotionally and mentally taxing. And so you’re going to have people that can sustain that for only a period of time, and then they have to go. So you can’t do it as a sideline effort.
We have been successful because all we have focused on is memory care, and with that as the focus, it allows us to keep our problems contained. If somebody was getting into this field in 2025 and 2-26 I’d say really come prepared to make sure that you are completely focused on the memory care business, because those that have not have typically failed. They get themselves spread too thin. They get their eyes off the ball. And the issues that pop up on a daily basis within this industry can eat you alive.