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The senior living industry must do more to reach more middle-market older adults in the years ahead, or it may face a steep challenge.
To Gardant Management Solutions Co-President Greg Echols, the industry faces a looming “capacity of care crisis” that will force more companies to rethink the affordability of their services in the years ahead.
“Like it or not, I think operators in our industry are going to be addressing affordable care, whether that’s a specific strategy they embrace or whether it’s required of them,” Echols told Senior Housing News.
Now approaching 90 communities, Kankakee, Illinois-based Gardant is one of the country’s largest assisted living providers, with a model that keeps rates lower for residents through a blend of private-pay senior living and Medicaid waivers. With this mix in mind, Gardant has grown steadily in the affordable senior housing space, with the only ceiling on that growth being states with less-than-favorable waiver reimbursement rates.
Challenges in affordable senior living growth
The senior living industry is already facing a wave of demand from the incoming baby boomer generation in the coming years. Already, the senior living industry has too few units to meet demand in the years ahead if it does not greatly increase the pace of new development.
At the same time, the senior living industry has too few affordable options for the cohort sometimes known as the “forgotten middle.”
The issue is far from solved despite many different companies working to solve it.Affordable senior housing growth will continue to remain a challenge for the industry in the years to come, especially if state programs for Medicaid waivers and other public payment sources remain relatively rare across the U.S.
Gardant is well-versed in buildingMedicaid waiver programs in states including Illinois, Indiana and Ohio. But doing so has become harder in recent years as some states that previously offered favorable Medicaid waiver programs have changed, Echols said. For example, the state of Indiana recently enacted a Medicaid waiver waiting list that’s slowed down the referral process.
Medicaid waiver programs are the backbone of Gardant and other operators’ efforts to provide more affordable senior living services to the middle-market. And that is why it’s incumbent on senior living providers to raise awareness of the options available to older adults in regard to Medicaid participation, Echols said – as Gardant Co-President Julie Simpkins did earlier this year during a congressional hearing on senior living quality and affordability.
“We have to make the public aware that there’s an efficient way to manage growing capacity in our industry and those who have not properly saved for care,” Echols said. “If the federal government is going to be called upon to pay for care, what’s the venue that’s going to be accomplished in; considering the requisite cost of care in a facility which may not be aligned with the acuity of the beneficiary.”
Gardant and other senior living organizations are already involved in such efforts. For example, Gardant and Chicago-based operator Silver Birch Senior Living recently lobbied Ohio lawmakers successfully to increase the Medicaid waiver rate in the state. Along with increased public awareness, such efforts could help turn the tide in improving Medicaid waiver programs in states that currently prevent new affordable senior living growth due to perceived low reimbursement rates.
“The first two issues that come to mind are the reimbursement value for services we’re providing, and the other aspect is capacity, because if they aren’t embracing the business model, they may be asked to accommodate that level of service if the forecast demand outpaces supply,” Echols said.
The fact of the matter is that older adults will want and need more affordable sources, and operators will have to confront affordability in the years to come “whether they embrace it or not,” Echols said.
But it’s not too late for operators to build more affordability into their operations and growth plans, Echols said. Tools such as financing through the U.S. Department of Housing and Urban Development (HUD) Low-Income Housing Tax Credit program can aid those efforts.
“LIHTC financing was engineered to create a willingness to invest in a model that can provide housing and care for low-income residents, and it’s a model that helps facilitate the real estate cycle for conventional real estate owners,” Echols said.
To get more participation in LIHTC financing structures in senior living, Echols said there must be an “ideological change,” with a pivot towards educating the general public on the benefits of senior living at an affordable price point.
Looking ahead to 2025, Echols said Gardant could pursue new partnerships with new ownership groups to present Gardant as both a private-pay and affordable senior living operator to fuel future growth in assisted living.
“I think it’s public awareness that could help facilitate solutions in the industry more so than the pressure from a state or federal government,” Echols added.
Staffing efforts continue into 2025
Staffing is a big area of focus for Gardant and other similar operators, and that will remain top of mind for Echols and the company’s other leaders heading into the new year.
Gardant has already implemented retention-focused efforts such as new “stay interviews” with staff who had signaled a desire to switch careers or employers to determine what the company could do to spur a long-term commitment. Executive directors are a specific focus of that effort.
Gardant notched wins in employee retention this year through a deeper employee bonus program for executive directors that spurred top-line operating performance, Echols said.
“We often talk about what are the things we should be doing to change the company that will keep people focused on staying with us for the rest of their career,” Echols said. “We see our workforce mimicking what we see in our communities, an aging population that’s going to need care.”
This has spurred Gardant to consider new ways to reach younger adults to enter the senior living space, such as going upstream in the job market by engaging higher education institutions.
With multiple options before Gardant leaders to improve its staffing effort, Echols said the organization is seeking to work with community colleges and other higher-education institutions to raise awareness of senior living as a viable career path for younger adults.
“We’re exploring our opportunities to work with academic facilities on a cooperative basis, both for access to potential talent but also for training programs that would qualify workers to be in our communities,” Echols said.
