1999 Senior Housing Trends by Sandi Fein with contributions from BAI staff In 1999 increased consumer sophistication appeared to be a key sign of continuing maturation in the senior housing industry. The growing familiarity of assisted and independent living communities among the elderly and their adult children has resulted in more purposeful shopping for desired physical facilities, service amenities, and social and activity programs. Consumers also demonstrated greater price consciousness in comparing and evaluating housing options, and they demanded more flexibility in crafting service packages. Clear regional differences in preferences were also visible. Developers and communities catering to the newer more assertive consumers tended to fare well, and maintain stronger occupancy levels than communities which rested on a "one size or model fits all" philosophy. The following sections of this article will explore some of the specific trends noted by members of the BAI consulting team as they conducted feasibility studies and participated in strategic planning with clients across the United States. Physical Facility Preferences Consumer preferences with respect to community and facility design varied regionally, reflecting different experiences and expectations about the appearance of one's home. Residents in a number of middle to upper middle class northeastern communities appeared to pursue the philosophy that one's home is indeed one's castle in expressing their housing choices. Elderly in these communities asked for luxury level facilities both in size and quality of furnishings and finishes. They expressed a clear preference for non-institutional appearing communities which would blend well with their surrounding communities. In upscale neighborhoods, consumers expected the facility exteriors and landscaping to resemble those of well-kept private homes as closely as possible. In contrast, consumers in mid-western and southwestern communities shied away from glitz and glamour. They expressed discomfort with marble lobbies and grand staircases, and they sought lower scale more home-like communities with simpler furnishings. Some elderly in the mid-west expressed a preference for small cluster housing including cottages or ranch house style facilities, where they could live independently, yet receive needed services. In each of these geographic areas, newer developments tended to be smaller than the huge several hundred unit retirement communities popular in the 1970s and 1980s. Many newer free-standing assisted living communities typically topped out at sixty to eighty apartment units. Within these facilities, residents expected physical accommodations which would compliment their former lifestyles. Many wanted more spacious apartment units enabling them to keep cherished furnishings and mementos from their former homes. Smaller studio units were often harder to rent than the few deluxe apartment suites created as part of original facility designs. A number of northeastern communities made customized modifications to existing facilities in order to accommodate the increased desire for larger units. They combined smaller apartments creating larger units having separate living and sleeping areas and large bathrooms and walk-in closets. Even when elderly did not want huge apartment units, they did seek the separation of living and sleeping areas. Studio and alcove units proved to be less popular than one bedroom apartments. Consistent with the decline in preference for small studio units, most consumers expressed a clear preference for privacy over companionship. Shared units were typically viewed as a last resort and selected when financial resources were very limited. Pricing Issues The desire for spaciousness and luxury in some markets did not entirely supplant cost consciousness, awareness of competitive pricing, and perceived value for the dollars spent for housing. Especially in older, more saturated markets in the mid-Atlantic region consumers were found to be very savy shoppers who did extensive comparisons of fees and services before selecting a retirement community. Consumer behaviors such as shopping for the best deal did not exclusively apply to private fee for service housing in this region. We also found increased demand for "affordable" assisted and independent living units. Older adults and their families are increasingly becoming aware of Medicaid waiver subsidies and HUD rental fee subsidies, and many seek to obtain housing with these financial supports. Facilities reported that more prospective residents are inquiring about available waivers and subsidies. For many elderly, social security income alone is not sufficient to maintain a comfortable lifestyle, and waivers and subsidies can provide a safety net against impoverishment. Formerly negative perceptions about accepting entitlement funding are giving way to the realities of the high cost of living at the turn of the century. In efforts to provide more flexibility in tailoring services and fees to meet consumer needs, many facilities are unbundling the basic rent or "hotel service component" from personal care fees. This phenomenon appears to be expanding without respect to regional differences. Fee unbundling practices often result in base rental fees which appear to be more affordable at the lowest level, but which can spiral upward rapidly as more services are needed. It also appears that a greater proportion of facilities are establishing level of care based fees. While many "branded" communities established stratified fee systems at the outset, even some national providers who formerly offered all inclusive pricing are now moving into unbundled fees. Resident Characteristics The shift in fee structures is a reflection of changes in the demographic profile of retirement community residents. Two separate but interesting phenomena have been noted. Many assisted living communities across the United States have noted that residents moving into assisted living facilities tend to be older and frailer than previous residents. They are waiting longer and using more external community resources before giving up their private homes. Therefore, they also tend to require a higher level of personal care support which in some cases is approaching skilled care levels. These older frailer residents often require a great deal more assistance with mobility, bathing, and dressing than anticipated. The higher intensity of required services has contributed to the development of unbundled level of care fees. The second interesting phenomenon is that of the "social assisted living resident". An increased number of elderly are choosing to relocate to assisted living communities due to lifestyle issues. The loss of a spouse or friends often leaves older people without companionship. Coupled with the heavier responsibility and decreased capability for home maintenance, living alone no longer appears to be an attractive option to some older adults. Many elderly in this situation find that living in a supportive community relieves them of household duties and allows them to engage in a renewed social life. Since many assisted living communities are available on a rental basis, with no or very nominal entry fee requirements, they offer an attractive alternative. The lower scale of the facilities and the array of social activities in some ways mirrors resort living. The availability of extensive support services also makes another move less likely. Social residents are more interested in separating fees for the basic "hotel component" of the facility from personal care fees, and paying "only for what I really need and use". Levels of Care Increased competition in both the assisted living and independent living sectors, and the modification of service packages to accommodate a broader range of residents has led to the development of hybrid senior housing facilities throughout the country. Many independent living communities have observed the continued aging of their resident populations and developed a variety of in-house or contractual services to enable them to remain in their existing apartments. Typically, personal care services provided by a home health agency in the residents' own apartment has proved to be a popular alternative to relocation. As long as residents are able to manage the remainder of their personal affairs a move to an assisted living community can be forestalled. The home health agency typically tailors the assistance to the specific needs of the individual resident which allows for billing based upon only the services provided. In some cases, the fees for such personal care services are payable by Medicare, insulating the resident from at least a portion of the increased costs. As noted previously in this article, many assisted living residences are now offering basic "hotel service" accommodations including rent and meals in the Level One price package. This service level has appeal to many active seniors who are not in need of personal care services, but who wish to experience a catered lifestyle. These minimal service offerings mirror comparable packages available in some independent living communities, further blurring the distinctions between the two senior housing categories. While pricing for the level one services is generally appealing, it sometimes serves as a "loss leader" in attracting residents to a community. Some facilities base the care level fees on an assessment conducted upon admission by a nursing professional. Residents who fail to inquire about subsequent level of care fees may find that they rise steeply as more services are needed. Unlike the specific care level increments used in many assisted living communities, the newer personalized care plans do not always have an upper limit on fees. The personalized care and fee systems are increasingly being used in facilities developed under the aegis of several public corporations. Competitive Strategies Residents in each region of the country tend to have their own preferences regarding the senior housing models that they prefer. In many mid-western communities, elderly residents and their adult children have long favored church affiliated or other non-profit sponsored facilities for continuing care. However, even in this market and in many other parts of the country, consumer loyalty may be shifting toward "brand name" corporate developments. In some cases, well regarded local private developers are aligning themselves with larger public companies, blurring the line between home-town and corporate management. In marketing branded communities, nationally known corporations have emphasized their financial strength, their broad continuity of care capabilities, and their ability to access other needed resources. Many communities are beginning to tailor service and activity programs to the specific characteristics and preferences of area residents. Some communities located in upscale east coast metropolitan areas are offering more sophisticated hotel-like services to residents. These options include a high degree of service ranging from staffed concierge desks, restaurant-style dining with maitres d'hotel and full choice menus, and customized apartment configuration and decor assistance to whatever the guest needs for comfort. Many communities offer catering services for private parties using residence facilities or provide guest meals for holiday celebrations. The activity component of some upscale communities has also gone beyond bingo, to incorporate intellectually stimulating pursuits. Some facilities are offering computer classes and well-equipped computer labs for residents. Others are focusing on cultural and educational programming. They provide seminars, either in house or in conjunction with local organizations and colleges, or feature residents who have particular expertise that they wish to share. Some communities have developed their own musical ensembles. The key is that these communities are drawing upon the interests and strengths of their own residents in tailoring meaningful programs and activities, rather than making assumptions that all older people have the same interests. Site Issues Retirement communities are often shaped by the character of the communities in which they wish to locate. Local community preferences can affect the size, scale, and appearance of development projects. In some upscale suburban communities in the northeast region of the country, local zoning ordinances have placed strict limits on the number of facilities and units which can be developed and still retain the desired character of towns and villages. While many geographic communities appreciate the positive tax benefits of residential facilities for the elderly, some localities have concerns which supercede this issue . In some localities, site conditions that one would not expect to be desirable can be used to advantage. Typically, being located next to or near a railroad track or crossing would not seem like an attractive prospect. However, in portions of the northeast, the railroad serves as a link between major metropolitan areas and the suburbs. Developing a retirement community near these transportation hubs may be perceived as enhancing residents' ability to travel and families' ability to visit. Additionally, town officials may be supportive of a beneficial land use which will halt the decline of a marginal portion of the community. Another development in a landlocked mid-Atlantic community, took advantage of a formerly industrial site that offered an extra- ordinary view. Reclamation and clean-up of the industrial site presented an opportunity to create a distinctive community where no traditional sites were available. Some of these less desirable sites may also be obtainable at considerably lower cost or include some tax benefits which make development more feasible. Marginal site characteristics may be adaptable in areas where land for development and is scarce or the site flaw is offset by another balancing issue.