Senior living communities — such as nursing homes, retired living communities, assisted living communities, intermediate care facilities, memory care facilities and continuing care retirement communities — provide critical housing, independent living services and care for seniors. The demand for these services is rapidly increasing, as the U.S. home care market is expected to grow to $225 billion by 2024 (up from $100 billion in 2016).1
However, in recent years, senior living operations have faced continued pressure. Not only has the insurance market become increasingly challenging for most of these types of businesses, but threats related to staffing shortages, acuity creep, the COVID-19 pandemic and the introduction of medical marijuana as a treatment modality are significantly impacting the senior living space. All of this is occurring during a time when the population of Americans over the age of 80 is expected to double from 12 million to 24 million by 2035, further increasing the stress placed on senior living communities.2
As a result, it’s critical that agents who protect senior living communities (PDF) understand the trends in this complex yet caring industry.
Senior living industry staffing shortages
Attracting and recruiting qualified talent has long been a challenge for the senior living industry. This is especially true given how these businesses must compete with health systems, urgent care centers and ambulatory centers for clinical talent.3
However, given recent trends, issues related to staffing shortages are more apparent than ever. Even though nursing is one of the fastest-growing professions in the country,4 the demand for nurses and nurse aides continues to outpace the supply. In fact, an estimated 27 million individuals will need long-term care by 2050.5 Furthermore, in the short term, the population of individuals ages 65 and older is expected to grow from around 13% in 2010 to over 20% by 2030,6 and over a million new workers will be needed by 2025.7
Particularly concerning is the fact that common open positions relate to nursing and front-line staffing — positions that directly impact resident care. According to a survey from LeadingAge, senior living facilities are having the most difficulty finding8:
- Registered nurses
- Directors of nursing
- Licensed practical nurses/licensed vocational nurses
This is a serious problem, as staffing shortages in retired living communities can quickly lead to the neglect and abuse of residents. Workers at understaffed senior living communities are often asked to take on more responsibilities, which may cause them to prioritize certain duties over others. As a result, staff may overlook controlling accident hazards, maintaining sanitary conditions (e.g., keeping residents clean to prevent infections), observing changes in a resident’s health or preventing falls by helping residents move about the facility.9
Currently, there’s no obvious solution to the problems staffing shortages create, which results in many operations being forced to hire inexperienced staff. This can create additional concerns, because inexperienced staff often lack training on how to adapt to shifts in resident needs, what the basic rights of residents are and how to respond to various emergencies (e.g., a resident is confused or acting aggressively).9
Making matters worse, employee turnover is a common and costly issue for senior living communities. In fact, the average turnover rate for all employees at senior living communities ranges from 40% to 70%. Furthermore, the average cost to replace an employee ranges from $3,500 to $5,000, meaning that businesses with 100 direct-care employees could be spending up to $375,000 per year on employee turnover alone.10
Beyond the financial impact of employee turnover, continuous staff changes can negatively impact the emotional and physical well-being of residents. Notably, it’s crucial that caregivers at senior living communities build trust with residents. High turnover not only prevents this from occurring, but it can also be upsetting for residents.11
Senior living acuity creep
Residents at senior living communities require varying degrees of assistance, depending on their needs. To account for these differences, senior living communities provide distinct levels of care, including independent living, assisted living, memory care and skilled nursing. However, trends related to the aging population make it difficult for facilities to provide the care that certain residents require.
As it stands, the average age of a resident in a senior living community is approximately 84 years old.12 This represents a gradual shift in demographics, as the age of a typical senior living community resident of today is closer to the age of a nursing home resident of the past.13 One potential cause of this change relates to a movement known as aging in place.
Essentially, aging in place is when an individual chooses to remain at home during their older years in lieu of moving into a senior living community. According to a survey by AARP, more than 75% of Americans approaching the age of retirement wish to stay in their home as long as possible.14 While this allows individuals to retain a level of independence, it also means that, by the time they enter a senior living community, they are older and require more one-on-one aid.
This increased prevalence of older, frailer residents can lead to acuity creep, which poses a significant challenge for senior living communities. Acuity creep refers to a resident’s inability to remain at their designated level of care. In general, residents may begin to decline in their daily life, struggling with daily activities such as eating, bathing or walking. Not only is it difficult for businesses to identify when a resident’s level of care shifts, but some senior living communities may not even have the staffing or capabilities required to provide adequate care to individuals with evolving needs.
According to the most recent National Survey of Residential Care Facilities, approximately 50% of senior living residents have three or more chronic conditions. Another 42% of residents have Alzheimer’s or other forms of dementia.15 Given continued staffing issues, senior living communities are forced to address higher comorbidity rates with fewer resources that can negatively impact the quality of care residents receive.
This can put senior living community operators in the difficult position of deciding when to move a resident to a facility that can better serve their needs. However, this is often easier said than done, as residents may not want to leave their current living situation.16 Some facilities may add services and staff to accommodate the rising acuity of its residents. But this isn’t a foolproof response, as doing so can strain a business’s finances or even increase liability issues if they bring on underqualified staff.
Regardless, operations need to have clear acuity limits to avoid situations in which residents require more care than their staff is equipped to provide.
The impact of COVID-19 on senior living communities
COVID-19 has had a sweeping impact on a variety of businesses, and senior living communities are no exception. In fact, the senior living facilities were disproportionally affected by COVID-19. One survey from the Kaiser Family Foundation found that around 40% of U.S. COVID-19-related deaths could be traced back to long-term care facilities.17
Not only has the pandemic placed an emotional toll on staff and families of residents, but it has also exacerbated existing workplace concerns in senior living communities. While staffing shortages were already a major pain point for senior living communities before the pandemic, COVID-19 has made this issue even more apparent. According to a survey from the Centers for Medicare and Medicaid Services, approximately 25% of nursing homes reported shortages of direct care staff during at least one of the last two weeks of May 2020.17
As a result of this patient-to-staff discrepancy, already overworked employees were tasked with providing extra care and protection to residents — residents who were particularly vulnerable to the disease. Making matters worse, many caregivers didn’t have access to masks and other protective equipment they needed to attend safely to residents, especially during the onset of the pandemic. This meant that many front-line staff members were working harder, longer hours in more hazardous conditions. Together, this contributed to poor mental health, burnout and high turnover among staff.17
Aside from staffing issues, COVID-19 has also created long-term concerns the senior living space will have to contend with for years to come. Some experts believe the pandemic could cost the assisted living industry up to $50 billion through 2021.18 Many of those costs can be attributed to increased needs and expenses related to staffing and supplies. Additionally, to control the spread of COVID-19, many facilities have limited the number of residents allowed to move into their facilities, effectively reducing potential revenues.
Medical marijuana in retired living communities
One often-overlooked trend in senior living relates to the use of medical marijuana. As it stands, medical marijuana is legal in 31 states and the District of Columbia, but it continues to be illegal on a federal level. Specifically, marijuana is a Schedule I drug under the Controlled Substances Act (CSA) and is strictly regulated due to the high potential for abuse.19
This puts senior living facilities in a difficult situation, because they risk losing vital federal funding if they allow the use of medical marijuana in their facility. This is the case even if they operate in states where medical and recreational cannabis use is legal. To help mitigate this risk, many facilities implement policies whereby a family member of the resident has custody of and administers the drug.
Still, considerable uncertainty remains, particularly as it relates to whether the federal government will seek to enforce the Controlled Substances Act against senior living communities that permit medical marijuana as a treatment modality.
Compounding the issue, marijuana usage is more widespread than it’s ever been among older adults, potentially because it’s far less stigmatized. According to a recent study in the Journal of the American Medical Association, the prevalence of marijuana usage among adults ages 65 and older increased from 2.4% to 4.2% from 2015 to 2018.20
Retired living communities must strike a balance between managing medical marijuana usage in their facility and ensuring compliance with state and federal laws, thus underscoring the importance of having clear and concise policies. Senior living communities must account for the following:19
- Storage — Laws related to the storage of medical marijuana vary by state. Some states may allow senior living facilities to store medical marijuana in a central location while others may not. In some cases, residents may be allowed to store medical marijuana in their room in a locked storage box. To ensure compliance and navigate laws specific to their operations, it’s important that senior living facilities review their policies alongside qualified legal professionals. Failing to do so can lead to the loss of federal funding, as well as significant fines.
- The administration of medical marijuana — In addition to storage, senior living communities need to take laws related to the administration of medical marijuana into account. In some cases, a designated caregiver may be allowed to administer medical marijuana. This could be an employee of the facility or a friend of the patient, depending on the business’s policy. Conversely, some states require patients to administer medical marijuana themselves.
- Procurement — It’s also important for senior living communities to account for how residents procure medical marijuana as part of their policies. In most cases, medical marijuana must be procured from a dispensary. However, residents may not be able to get to a dispensary on their own. Furthermore, laws may prevent a friend or family member from picking up medical marijuana on a resident’s behalf. As such, facilities need to review applicable laws and determine internal policies for medical marijuana procurement, particularly to account for these unique scenarios.