Housing
50+
Consumer Marketing The Need for Continuing Care Retirement Communities P. 1
Abstract
Long term housing care for elderly Americans is an increasingly important topic in the U.S., especially throughout California. As the Baby Boomer generation transitions into a phase of life where continuous care and assisted living options are necessary, many issues arise for both the individual and their families.
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I felt overwhelmed when starting to research appropriate housing communities for my grandmother. At the time she was 87 and independent. Due to a fall, she was starting to fear being alone in her multi-level house. I was looking for and questioning whether there was an option that would foster her autonomy, continue to enrich her life and accommodate any future care needs she may require. I found my answers in CCRCs. Built on the foundation of benevolence, CCRCs are comprised of professional individuals that are compassionate and caring. They were able to customize a living solution based on my grandmother’s current needs and explained the ‘age in place’ concept that would enable her to live in the same community the rest of her life.”
Identifying the Market MEDICAID EXPENDITURE In 2009, Medicaid’s expenditure in California for long term care reached $40,818 million, which included multiple senior housing options including Continuing Care Retirement Communities (CCRC’s). This amount has increased from $30,246 million in 2004, reflecting a 35 percent increase in expenditure. Digging deeper into the numbers we learned that spending on older adults and adults with physical disabilities has changed from $5,972 million in 2004 to $9,856 million in 2009 (Houser, FoxGrage, & Ujvari, 2012).
IDENTIFYING YOUR TARGET MARKET The decision by children or grandchildren to move parents to a new home is never easy. Children always bear this huge burden on their shoulders because the aging or aged indivdidual resists this change. However, research data shows that the Baby Boomers are different from their parents; they are more willing to move to a community on their own. The National Association of Home Builders (NAHB) conducted a study in 2010 revealing that more than 1.2 million households are planning to move to communities that satisfy their needs. This number represents 3 percent of the 55+ population in the United States, up from 2.2 percent in 2001. Moreover, the research emphasizes that the Baby Boomers are looking for age-restricted communities for the “active adults” lifestyle (NAHB, 2010).
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According to Steven Lefler, people are currently living under the stress of high unemployment and a slow economy. This trend will have a series of huge impacts on the existing market such as a decrease in household incomes, higher inflation rates, a drop in home prices, higher utility bills, and an increased demand for financial support from family (Lefler, 2013). In response to this, families are relying on grandparents to help with day care needs and may even rely on older generations to assist with housing costs by living together to share expenses of mortgage payments and utility bills.
FIGURE 1
Projected Growth in the Older Population in California
There are currently more than 11 million people aged 50 and up living in California. This segment makes up about 30 percent of the total population of California (37.7 million).
By the year 2030 the Baby Boomer population will increase by 16.5 million people, leading to a huge increase in demand for senior housing (EPPHC, 2012). However, in the ten years that follow, only 8 million seniors will be added to the U.S. population; 66 percent of which will be over the age of 85 (see Figure 1). It is expected that the demand for dementia care and disability care facilities will be very high in the next 20 years (Pendall, Freiman, Myers, & Hepp, 2012). Trends indicate that between the years of 2020 and 2030, approximately 15.0 million housing structures will be vacated by seniors as they transition to living with family members or renting property rather than owning homes (EPPHC, 2012). This statistic demonstrates the need for an increase in senior housing communities as Baby Boomers continue to age.
300% POPULATION (% OF 2012 POPULATION)
Future Trends
AS A PERCENTAGE OF 2012 POPULATION, BY AGE GROUP
250% 200% 150% 100% 50% 0% 2010
2020
2030
2040
2050 YEAR
AGE RANGE 50-64
75-84
65-74
85+
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Baby Boomer Housing Trends The Boomer generation is an active generation. With a sophisticated style and want for diverse housing options, Boomers are creating a demand for modern developments to senior communities. With the recurring trends to either move from established homes to settle elsewhere for retirement, or remodel current homes to provide flexibility in safety as they age, Boomers are having a huge impact on the trend for housing (NAHB, 2010). In addition, as Steven Lefler stated, a result of the current economic downturn is an increased amount of the Baby Boomer population looking for affordable housing.
IN-HOME OFFICES More and more Baby Boomers are following the trend to continue working past the traditional age of retirement, 65. This is attributed to their love for their work as well as the reality that they just don’t have enough money saved to retire. More often companies are allowing employees to telecommute from home as they believe it provides for higher job satisfaction (Isidore, 2013). This type of flexibility allows aging individuals to maintain a work-life balance. Builders are applying this knowledge to new developments by incorporating spaces for home offices in their structures (NAHB, 2010).
TECH-SAVVY GENERATION Baby Boomers are among the best customers when it comes to technology goods. Approximately 41 percent of existing Apple customers is categorized as Baby Boomers (Martin, 2012). This techsavvy generation wants their homes to support all of their electronics. This requirement includes structured wiring that is capable of driving a complete network of services from lighting controls to security systems and home media centers. Wireless broadband home networks are essential to support internet access and wireless streaming for these Apple product owners (NAHB, 2010).
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CREATING WIDER SPACES Baby Boomers are seeking to make wise long-term investments when it comes to their homes. The need for housing that adapts to the needs of the residents is being addressed by builders. The response is wider doorways and hallways. Prior to the need for wheelchair or walker accessibility, homeowners can use wider spaces as an advantage for moving furniture. It is important to Boomers that their homes maintain a sophisticated style while allowing them to get the most use out of it (NAHB, 2010).
LET THE LIGHT SHINE Beginning at age 40, the human eye starts to lose the ability to focus. As eyesight and peripheral vision deteriorates, more illumination is necessary to see accurately (Stroud, 2005). Builders are designing homes to have more windows that allow natural light to come in. Additional lighting structures and switches are included in key areas of homes such as the kitchen, bathrooms and walkways allowing individuals to see more clearly and prevent hazardous walking areas (NAHB, 2010). A unique and efficient implementation of a well lit home exists in a green modular home in Irvine, CA, which was developed by Modular Lifestyles, Inc. The walkways and bathrooms of the home are lit by natural light during the daytime using a solar tube. The solar tube then has a lamp in it for nighttime use. The residents of the green home recognized this lighting sources a selling point for them because it was energy efficient and provided lots of natural light (Hoffman & Hoffman, 2013).
FIRST FLOOR LIVING SPACES According to the NAHB 73 percent of buyers ages 55 and up are seeking single story homes or homes with the master suite on the first floor. By avoiding the use of stairs, Baby Boomers are able to prevent harm to their joints. There is also a trend towards bigger bedrooms and larger walk-in closets. Bathroom designs tend to separate the bathtub from the shower and include dual sinks (NAHB, 2010).
EXTERIOR AND OUTDOOR LANDSCAPES For Boomers, maintaining their landscapes and exteriors of their homes becomes harder due to the physical ailments of aging. Boomers that move to new communities choose residences that are free of maintenance responsibilities. Aging individuals that choose to stay in their homes are moving towards lowmaintenance exteriors such as stucco or brick. There is a trend for lawns to transition to decorative landscapes, gardens, flower beds or outdoor rooms (NAHB, 2010). The role of a grandparent today is one of increasing importance in the lives of their grandchildren. With 44 percent of grandparents who claim to be heavily involved in the care of their grandchildren, having adequate play areas nearby for them is becoming necessary (Stroud, 2005). Therefore, Boomers are seeking communities that include play areas or are located near public parks.
ISSUES FACING FACILITIES A car is only as good as its driver, a hospital is only as good as its doctors, and a CCRC is only as good as its staff. The people that run the facility on a day-to-day basis are the real make-orbreak assets of any facility. A negative experience with staff will
turn away any potential customers quicker than a badly decorated lobby. Senior living facilities, including CCRCs, will see an increased need for qualified professionals as those Baby Boomers continue to reach retirement age at an ever-growing rate. This will likely cause an upward spike in wages for these individuals due to the lack of qualified professionals in the field. However, this can also be seen as an opportunity for CCRCs to develop better benefit packages that will attract qualified individuals yet lower costs to the facilities themselves. Career development and benefits such as flexible hours and generous vacation packages generally cost less for companies but help attract top talent (Yedinak, 2012). We cannot discuss the housing crisis and potential growth for new and existing CCRCs without discussing funding. It is expected that interest rates from the Federal Reserve will stay low for some time, at least a couple of years according to their latest announcement (Kurtz, 2013). This means that CCRCs have an excellent window of opportunity to borrow money at incredibly low rates for the near future which should help reduce the financial hurdle that generally plagues many projects.
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Problem Definition The year 2013 brings the beginning of the statutory retirement years (age 67) for Baby Boomers in the United States. This new crop of retirees is only the tip of the iceberg in terms of the Baby Boomer population. This period of population growth lasted nearly 20 years in the U.S. from 19461964 with nearly 76 million Americans born between these years (US Census Bureau, 2010). California is currently home to nearly 11 million of these individuals (USGAO, 2010a; USGAO, 2010b). Finding proper affordable housing for this group is going to be an incredibly difficult task with tremendous profit potential for communities and builders that can successfully address this market’s needs.
ISSUES FACING OLDER ADULTS & FAMILIES For many Americans, the housing crisis of the late 2000s has created numerous short term solutions brought about by necessity rather than preference. Families are starting to convert single-family homes into multigenerational housing through creative home upgrades such as converting basements or attics into “grannie apartments”. Others are using prefabricated guest house solutions in available yard spaces that can be moved. Companies like Modular Lifestyles are creating these pre-fabricated homes which can be installed in about 1 hour (Lefler, 2013). While these improvements are vitally important to the comfort and care of the 50+ individual in the short-term, the long term ROI of these projects are negligible and are essentially sunk costs for the homeowner (Yedinak, 2012). Housing equity was not the only loss of personal net worth for individuals and families, the stock market and retirement accounts were also tied to this industry and thus personal finances suffered greatly as well. As a result, many Californians are starting to look at Long-Term Care Insurance to help offset the costs of future long-term care necessities. Basic pricing for this insurance is roughly $3,000$5,000 annually for couples aged 55-60 (AALTCS,
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2013). While this is an expensive upfront annual cost for many people, it can be significantly less expensive than the $900-$8,100 monthly charges incurred by some CCRCs (Government Accountability Office, 2010). For new and incoming residents these insurance options provide a more affordable option by paying ahead of time then waiting until the long term care is needed. CCRC facility should be happy to see this trend as well knowing that incoming residents with Long-Term Care insurance will have much greater financial stability than those who do not (Yedinak, 2012).
What is Aging in Place? Aging in place is a term associated with the idea that as adults grow older they should live in a residence that is equipped to accommodate their changing health care needs. According to the AARP, older adult home owners overwhelmingly prefer to age in place, which can mean continuing to live in their home safely, independently and comfortably. This can often be achieved by remodeling or simple modifications, such as, the installation of grab bars in the bathroom, lowering countertop height, converting first floor bedrooms and the installation of home elevators or chair lifts (AARP, 2013) The focus of aging in place is to help ensure older adults can live where they choose and get any help they should require based on individual needs. The goal of an older adult wanting to age in place is to maintain or improve their quality of life. Quality of life includes the ability to live in the same community, have access to health care, and have the option to participate in programs that support preventive care and personal interests (Healthy People, 2013). Older adults that move into CCRCs can also experience aging in place. CCRCs, by definition offer older adults the opportunity to age in place. Older adults that are active and independent may eventually experience health declines that will require assistance and supportive services. Older adults can feel secure and comforted in the knowledge that by residing in a CCRC they will be cared for and not obligated to relocate should their health status change at any point. Older adults residing in independent living or assisted living communities are often forced to relocate out of the community due to physical restrictions, impairments or increased health decline.
BENEFITS OF AGING IN PLACE INCLUDE: –– Being able to maintain an independent lifestyle –– Safety and comfort of familiar surroundings and people –– S ecurity to continue to live in your own surroundings without moving or making drastic changes –– F osters community continuity, which means having the option to visit your usual grocery stores, drugstores, churches, or other sentimental locations –– S taying connected with neighbors and friends that live within the community, maintaining valuable social networks –– S taying connected with neighbors and friends that live within the community, maintaining valuable social networks
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Commonly Sought Solutions to Aging in Place
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What I noticed when we were looking for [a continuous care facility] for my father-in-law, he had been diagnosed with the Alzheimer’s, and eventually, he could not stay in the home anymore with my mother-in-law. So we had looked up lots of facilities and more and more of them had a lock down Alzheimer’s care unit as part of their facility and I think we need more of that.” (Focus Group, Caucasian Female, 2013)
As older Americans begin to transition into the later stages of life there are a couple of commonly sought solutions to their housing needs. These include moving to independent living facilities, skilled nursing facilities or assisted living facilities. The difference of choosing between the three types of facilities is a matter of need versus want. Most aging adults aspire to live in independent living facilities as they mirror current lifestyles they have had up to this point in their lives. For the residents of assisted living facilities, they choose to live there based on a desire to stay in an apartment like setting surrounded by their own belongings with easy access to help when they want it. Skilled nursing facility residents have a need to live in those facilities based on failing health or cognition issues that require round the clock assistance.
INDEPENDENT LIVING FACILITIES Independent living residences, also known as retirement communities, or senior living communities are for older adults 55 and older that are generally in good health. Residents of independent living communities do not require assistive support or skilled nursing. Older adults are able to enter and leave the community at their own discretion. However, many choose to take advantage of the amenities, social opportunities, and activities that are offered within the community. In 2012, the approximate monthly cost of independent living communities in California was $3,600 (Senior Homes, 2013).
ASSISTED LIVING FACILITIES Assisted living facilities provide aging adults with a residence which includes services that support activities of daily living (ADLs) such as dressing and bathing. These facilities offer an assistive environment, which incorporates planned social activities, dining room meals and transportation. Residents of assisted living facilities require varying levels of support. However, most of the support services are non-medical in nature. Most assisted living facilities only accept private pay or long-term care insurance. Assisted living in California is almost entirely private pay. MediCal does not cover assisted living expenses. Assisted living costs in 2013 are estimated to be $3,600 per month (Poor, 2012).
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SKILLED NURSING FACILITIES Skilled nursing facilities, formerly known as nursing homes, are nursing and healthcare facilities which provide a residence for older adults who require skilled nursing and assistance with long-term services and supports (LTSS). Many facilities provide additional services such as dental care, dementia care, pain management, and palliative care. All nursing facilities in California must be licensed by the California Department of Public Health (DPH) and meet California nursing facility standards. In addition to being licensed, nursing facilities that participate in the Medicare and Medi–Cal programs are certified by the federal government to qualify for payments from these programs. Most California nursing facilities are certified to participate in both Medicare and Medi–Cal (CANHR, 2013; Poor, 2012). In 2013, the approximate monthly cost of a private room in California is $8,000 (SNF, 2013).
What is a Continuing Care Retirement Community? A Continuing Care Retirement Community (CCRC) is a residentvial community designed for independent older adults that offers the guarantee of additional health care services and assistance with everyday living should they need it. CCRCs are designed to incorporate all older adult living options into one community. These communities give older adults the option to live in one location for the duration of their life. This design was built on the concept of ‘aging in place’.
DIFFERENTIATING CCRCS: FINDING THE RIGHT FIT Historically, CCRCs were founded and operated by non-profit religious or fraternal organizations. Non-profit organizations still dominate the CCRC market. In California 80 percent of CCRCs are operated by nonprofit organizations (CCRC Taskforce, 2010). For- profit providers are progressively entering this thriving market with opulent and deluxe CCRC communities. CCRCs can exist as both non-profit and for profit organizations. The major difference between the two types is the religious affiliations held with nonprofit communities. Of the 80 percent of CCRCs that exist as non-profits, they can be broken down between Lutheran, Methodist, Presbyterian and Roman Catholic affiliations (CCRC Taskforce, 2010). Although other communities are for profit organizations, they still maintain the best interest for their residents. Regardless of the affiliation or organization type, CCRCs create a place for seniors age 62 and up to live with peace of mind and assistance when needed.
LUXURIES AND SERVICES Non-profit and for profit CCRCs offer multiple options for incoming residents. Depending on occupancy, residents can move in to any level of housing they require. All residents are required to be approved by a physician prior to entering a certain level of care within the community to ensure it is the best fit for them. Residents are also provided with options that accommodate their financial needs. Most contracts require a large sum to buy in to the community, however the different types of contracts are more flexible and allow residents to enter on a month-to-month basis as well. The most intriguing policy that that the majority of CCRCs in California offer is that of continued care for life. These policies allow a safety net for seniors as they age and as their need for care increases. Once residents buy in to the community they are guaranteed care at any level for the rest of their life, regardless if they have the funds to pay for it. Benevolence policies such as these prove to be the driving force behind these communities; it shows the residents and their families that the health and well being of the individual is of utmost importance.
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CCRCs vary between location and ownership. Among them, the idea of
continued care remains the same. However, the levels and types of services are diverse. Some communities are built with the idea of luxury in mind, while others are built on a more simplistic standard. The different luxuries and localities give options for residents to seek a community that fits their budget and lifestyle, while families are put at ease knowing their loved ones are in good hands and surrounded by a community that embraces activity and a good way of life. CCRCs focus on health, happiness and aging well. CCRCs are intended to be an all-inclusive living situation that can adapt to the needs of residents. Services such as housekeeping, meal preparation, laundry, and transportation can be included into a month’s rent at incremental charges. Depending on the community, some of these services are standard. It is common for meal preparation, housekeeping, and transportation services to automatically be included for residents. Not to mention amenities including pools, spas, beauty salons, physical therapy, libraries, game rooms, and dining areas.
THE STRATFORD The Stratford, a CCRC located in San Mateo, CA, was built to cater to aging individuals with higher incomes and is not only aesthetically pleasing, but is also known for its gourmet meals and reputation for the best health care and senior services in the area. This CCRC was created to be the most prestigious CCRC in the state of California, and the designer spared nothing to ensure it was pure luxury (Bowen & Wagonfeld, 2012). Among other CCRCs in California that are non-profit based, this is not the case. Communities that lack large amounts of funding to back them do what they can with what they have, making sure that health and care come before luxurious ambiance.
CARLSBAD BY THE SEA Carlsbad By the Sea Retirement Community, located in Southern California, encompasses “casual resort-style living at its very best”
(Front Porch Communities, n.d.). This active senior community emphasizes creativity, health and well being. Carlsbad by The Sea has programs including poetry classes, personal training, music appreciation classes, and astronomy classes. In addition to ample activities Carlsbad by the Sea offers fine dining and transportation as part of the package. Backed by a religious affiliation, Carlsbad by The Sea offers care at all levels of life and offers care in a clinical setting or in the privacy of the residents’ homes (Carlsbad by the Sea, n.d.).
TOWN AND COUNTRY MANOR Town and Country Manor is a non-profit CCRC located in Southern California. This community is affiliated with the Christian and Missionary Alliance. Town and Country Manor, in contrast to The Stratford and Carlsbad by the Sea, this is not a luxurious community. Although Town and Country Manor offers the same services such as dining, transportation and social activities; there is a definitive difference in the way the services are delivered. This community is a testament of the wide variance of CCRCs in California (Town and Country Manor, n.d.).
LEVELS OF CARE A typical CCRC has three to four different levels of care. Most commonly those levels include independent living, assisted living, memory care and/ or skilled nursing. The communities are usually separated geographically by the level of care as to accommodate the needs of residents more acutely. Independent living areas often include apartments or individual cottages. These floor plans are preferable in that they have the most resemblance of residents’ previous living environments and provide for the best transitions into the community. Higher levels of care can often be found as apartment style housing or hospital room style living. These living situations give caretakers the optimal setting to provide the highest levels of care (CCRC Taskforce, 2010).
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The state of California authorizes CCRCs to provide continuing care contracts. The main feature of the continuing care contract is the commitment to provide services and care for the remainder of one’s lifespan. Contracts offer accommodations, meals, transportation, and activities. CCRC contracts are based on a continuum of care that includes multiple levels of assistance, with the most common being independent living, assisted living and skilled nursing care. Increasingly, CCRCs have incorporated living arrangements for older adults with Alzheimer’s disease and dementia into Memory Care facilities within the community (CCRC Taskforce, 2010). CCRCS: A GREAT OPTION A person can spend the rest of his/her life in a CCRC, moving between levels of care as needed and therefore age in place. Why CCRCs have gained popularity among seniors who are financially secure? –– F or seniors who want stability and security, these communities take a lot of the unknowns out of the future. –– M oving into a CCRC at the independent living stage allows residents to enjoy all of the benefits of the community from activities to health care. –– C CRCs may offer the following services: Meals; Transportation; Lawn care; Gardening; Garbage and Snow Removal; Housekeeping; Social activities; Laundry; Some utilities; Health monitoring services; Emergency call monitoring; and Security. –– S eniors will be able to move into a unit on campus in a CCRC and avoid the stress and expense of a major move if they need advanced health care. They can make their own decision on where to live as they age. –– T he flexibility of transition between levels of care allows seniors to stay near spouses and friends within the community regardless of their respective medical conditions.
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In general, I think they are good. In some respects it’s similar to OLLI. They give you a setting or environment where you can be there with people of similar interests who are having fun. I think still having social interaction is a big deal as you get older and losing it, really affects your quality of life.” (Focus Group, Asian Male, 2013)
CCRCs provide benefits to residents in many ways. They offer the opportunity to age in place in familiar surroundings and more importantly, in some circumstances, there is guaranteed access to health care for life. Aging in place enables you to be part of a community that grows stronger over time, staying close to friends and loved ones. In this way, CCRCs are perhaps the best choice for spouses who are aging at different rates but want to remain close. In addition, the flexibility of housing arrangements, contract types, access to care, and superior amenities and services also make CCRCs a unique and adaptable housing option. “I think CCRCs are going to be required. I don’t think there is anywhere our society or our culture cannot have these. Because the physical ability, just the physical ability or inability for someone to take care of someone else. We are all going to live longer; there will be more of us around in late life.” (Focus Group, Asian Female, 2013).
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Downsides to CCRCS I think it is the funding part that scares me. More and more people will fall below the income line, that wouldn’t give them the ability to stay in caring facilities. Something we didn’t touch on, but is part of the whole question, is it any less expensive to have in-home care?” (Focus Group, Caucasian Female, 2013)
YOU STAY, YOU PAY CCRCs are a great option when you can afford them. With modified and fee-for service contracts, residents will be under the risk of a significant financial burden should they face health status changes unexpectedly and in turn possibly be required to pay out of pocket for these health care services. See Figure 2 for a better understanding of the buy in and monthly pricing for a range of CCRCs. Most contracts require a lifetime commitment of residents, with the expectation that they are entering during an independent stage of their life. It is also a very difficult and lengthy process—if it is even an option—to enter a CCRC at the assisted living level, as priority is usually given to current independent living residents (USGAO, 2010b).
Keeping CCRCs at full capacity is critical to funding general operations, building financial reserves and helping finance refunds—which are required under some contracts when a resident leaves or dies. Monthly fees that are collected from independent-living residents, whose cost to the facility is lower, help subsidize assisted-living and nursing care for others. Those independent-living residents are forced to pay out more than what they should (USGAO, 2010b). In the case of a CCRC failure, you can lose all or part of your entrance fee—or they may start being charged for services that previously were free. CCRC financial difficulties also can lead to unexpected increases in residents’ monthly fees (USGAO, 2010b). FIGURE 2
Range of Fees for Eight CCRCs by Contract Type for Single Occupancy* Life Care
Modified
Fee for Service
Rental
Entry Fee
$160,000 to $600,000
$80,000 to $750,000
$100,000 to $500,000
$1,800 to $30,000
Independent-living monthly fee
$2,500 to $5,400
$1,500 to $2,500
$1,300 to $4,300
$900 to $2,700
Assisted-living monthly fee
$2,500 to $ 5,400
$1,500 to $2,500
$3,700 to $5,800
$4,700 to $6,500
Nursing-care monthly fee
$2,500 to $5,400
$1,500 to $2,500
$8,100 to $10,000
$8,100 to $10,700
Source: United States Government Accountability Office, 2010 *In California, Florida, Illinois, Ohio, New York, Pennsylvania, Texas and Wisconsin.
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Proposed Solutions The growth rate of aging adults, and soon the Baby Boomers, is only exponentially increasing as we move further into the decade. There is an avalanche of need coming down upon the housing industry that is currently severely underserved. Finding new and innovative ways to address Baby Boomers in this market is imperative in addressing the situation upon us.
RENOVATION OF EXISTING FACILITIES In the State of California there are currently 97 CCRC facilities serving the needs of the older adults. The services these facilities provide run the gamut of specialties, and each has pricing adjusted to match the location and services
offered (CA.gov, 2013). Depending on the age of the location and land available at each facility, renovating existing facilities to appeal to Baby Boomers and increase capacity or is a viable option. Renovations addressing the age in place concept may incorporate more windows for natural light, more modern interior designs, or other such cosmetic changes. Utilizing modern energy saving technology such as solar power would be a selling point to Boomers. MODIFYING STRUCTURES Just as individual older adults can modify their homes to age in place, existing CCRCs can modify their facilities to increase bed capacity or assist new specialties such as Alzheimer’s patients. In California, construction costs range from $110-$120 per square foot for residential building costs for standard wood frame buildings (REED Construction Data, 2013). For every neww 700 square foot bedroom dwelling created, it costs an estimated $80,000 in construction with each new unit being priced out at an average of $160,000-$600,000 based on the location of the facility and the services it provides (United States Government Accountability Office, 2010). There is tremendous profit to be made when modifying existing structures to accommodate new customers (see Figure 3). The immediate negative issue for this plan is that it requires capital up front. An estimated cash outlay of just over $2 million dollars is necessary to create those 25 units based on the REED Construction data. However, with interest rates hovering at their current low rates and the Baby Boomers coming into the market, the risk is perceived to be minimal. FIGURE 3
Gross Profit Potential for Adding 25 Units BASED ON 700 SQ. FT. UNITS
$14M $12M $10M $8M $6M $4M $2M $-
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160K
270K
380K
490K
ENTREE FEES FOR NEW UNITS
COMMUNITY OPTIONS Community options will be imperative to attracting new and energetic residents into the facilities. Adding health and wellness programs for active older adults as well as dog parks or children’s playgrounds for the grandchildren are just a couple of ideas to attract these older adults. As Baby Boomers embrace their active lifestyle adding features and programs that appeal to their tastes will help dictate the success of the communities. Adhering to the old stereotypes of retirees sitting in rocking chairs through their golden years will only help to usher existing CCRCs into their own retirement years. BUILDING NEW FACILITIES Companies that wish to be successful in the CCRC field should begin to look at developing new facilities immediately. With only 97 CCRCs in California there is an immediate need for new CCRCs to be built. There are some distinct advantages and disadvantages to building new facilities in the age of low-interest rates and a-la-carte marketing programs. As discussed before, interest rates are lower than they have ever been and getting financing for new construction is relatively low cost in today’s market. When companies are not careful they can sometimes make the mistake of renovating and not understanding all of the costs involved and end up spending more than new construction would have cost. The other major benefit to building new facilities is being able to customize everything from the ground up. Building new affords you the ability to dictate every feature in the facility. Everything from the width of the hallways, windows for natural light and amount of light fixtures, to the fitness features available, down to the finishes of the paint on the walls. These customization options can be used as marketing tools to let new customers hand pick the features available in their new units.
Conclusion The market demand for long term care for Baby Boomers is growing exponentially for the next decade and beyond. As this generation ages they bring with them their own culture and sense of identity which is different than the generation preceding them. Because housing types are such an important part of the aging process, having options that are geared towards this incoming group of older adults is going to be vital towards the success of the facilities that offer the services they require. The market potential for CCRCs in California is growing every year as the Baby Boom generation begins to enter retirement and beyond. The services and features these new and newly renovated facilities offer will set CCRCs apart from one another. In order to thrive as a community, developers need to make sure their facilities address the wants and needs of the Boomer generation. It is important for marketers and investors to notice that the decision to move into a CCRC is no longer an individual choice, rather one that involves family members and loves ones. Due to shifts in the economy and social norms these choices have an impact on the entire family and are made by more than just the individual moving into the community. Facilities need to market their services accordingly and make sure they take into account the wants and needs of the family as well.
Of course the major drawback with new construction is that aside from the cost of the building there is also land cost involved. Land costs in California can vary greatly and should be a top factor when considering new project development. The good news is that the old definition of a local community footprint has extended to nearly 100 miles, up from 15 miles (Yedinak, 2012). This gives developers much greater flexibility in the placement of their facilities to build on land that is considerably cheaper. As stated above, the cost to build new facilities in California can vary greatly based on the price of land involved. The basic cost of $110-$120 per square foot for building costs of multistory wood frame residential dwellings still applies.
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Appendices APPENDIX A
Assisted Living
MARKETING CHECKLIST FOR CONSUMERS RESEARCHING CCRCS
1. I s the Assisted Living available in the same community?
THINGS TO CONSIDER FOR CCRC CONSUMERS
2. Are there any specialized services offered for Alzheimer’s disease or hospice care?
Personal Considerations:
3. Is the Assisted Living service provided by CCRC staff or by a contracted agency?
1. I s the location close to family, friends, and leisure activities? 2. Are the community programs and activities of interest to you? 3. What is the average age of residents? Are they individuals you can identify with? 4. Is there a waiting list for different accommodations should health decline? 5. Do you have a preference for non-profit or for profit? 6. If non-profit, what is the role and responsibility of the sponsoring entity? Affordability 1. Can you afford the entrance fee? 2. Can you afford the monthly fee now and in the future? 3. What are the costs for services for each care level?
5. Does the Assisted Living accept individuals from outside the CCRC as residents? NURSING HOME 1. I s Nursing Home care provided in the same community? 2. Is the service provided by the CCRC or under contract? 3. How long has the administrator, director of nurses and charge nurses worked at the CCRC? 4. What is the turnover rate for Certified Nurse Assistants? 5. Does the Nursing Home accept individuals from outside the CCRC as residents? Plans for Renovation & New Construction
4. Is long-term care insurance accepted?
1. How old is the community?
5. Does nursing care accept Medi-Cal as a form of payment?
2. Is new construction planned in the next 3 to 5 years? How much will it cost?
6. Does the CCRC have a funding to provide subsidies to residents?
3. For new CCRCs, will the assisted living and nursing home services be in place when you might need them?
Independent Living 1. I s there an initial health assessment? What is the criterion used? 2. Are Assisted Living services, such as assistance with activities of daily living offered in the independent unit? 3. What is the frequency of transfers from independent living to assisted or skilled nursing? 4. If one spouse goes to a higher level of care, what consequences does it have on the spouse in the independent unit?
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4. What are the qualifications and training of staff?
4. What is the expected impact on occupancy rates, entrance fees, and monthly fees?
APPENDIX B REFERENCES American Association for Long-Term Care Solutions (AALTCS) (2013). Long-Term Care Insurance Planning Basics. Accessed May 3, 2013, [available at http://www.aaltci.org/long-term-careinsurance/learning-center/planning-basics.php]. American Association for Retired Persons (AARP) (2013). Assessed May 20, 2013, [available at http://www.aarp.org].
Bowen, K., Wagonfeld, H., & Berkley, A. (2012). Raiser Senior Services - The Stratford (A). Harvard Business School Publishing. July 11, 2012. CA.gov (2013). Continuing Care Retirement Communities. April 4, 2013. Department of Social Services. Accessed May 6, 2013, [available at http://www.calccrc.ca.gov/res/pdf/findaccrc.pdf]. California Advocates For Nursing Home Reform (CANHR) (2013). What is a Nursing Home in California? Accessed May 18, 2013, [available at http://www.canhr.org/NH_Data/index.html]. Carlsbad by the Sea (n.d.). Accessed May 20, 2013, [available at Carlsbadbythesea.org].
Mallers, M.H. (2013a). Gerontology and Marketing: 2 Sides of the Same Coin. Slideshow Presentations, March 7, 2013. Mallers, M. H. (2013b). Personal Interview with Assistant Professor of Human Services and Faculty in the MS Gerontology Program, California State University, Fullerton. April 19, 2013. Martin, C. (2012). Are baby boomers an invisible goldmine for marketers? August 10, 2012 @ 8:22 am. Accessed May 5, 2013, [available at http://www.forbes.com/sites/work-inprogress/2012/08/10/are-baby-boomers-an-invisible-goldminefor-marketers/].
CCRC Task Force (2010). Today’s Continuing Care Retirement Community. Accessed May 6, 2013, [available at https://www. seniorshousing.org/filephotos/research/CCRC_whitepaper.pdf].
National Association for Home Builders (NAHB) (2010). Baby Boomers Dominate New Housing Trends. Accessed May 18, 2013, [available at http://www.nahb.org/search_simple.aspx?txtKeyword= boomers+dominate+new+housing+trends&submit.x=-916&submit. y=-55&submit=submit].
Front Porch Communities (2013). Carlsbad by the Sea. Accessed May 20, 2013, [available at http://www.frontporch.net/ourcommunities/view/2/Carlsbad_By_The_Sea].
Pendall, R., Freiman, L., Myers, D., & Hepp, S. (2012). Demographic Challenges and Opportunities for U.S. Housing Markets. Bipartisan Policy Center, Housing Commision. Economic Policy Program.
Focus Group, Female Participant, Asian, March 15,2013. B. Roberts, F. Almugairin, H. Welsh, & E. Tang, Interviewers.
Poor, S. (2012). Connected to the Community: Current Aging in Place. Accessed May 18, 2013, [available at http://www. secondjourney.org/itin/12_Sum/12Sum_Poor.htm].
Focus Group, Male Participant, Asian, March 15, 2013. B. Roberts, F. Almugairin, H. Welsh, & E. Tang, Interviewers. Focus Group, Female Participant, Caucasian, March 15, 2013. B. Roberts, F. Almugairin, H. Welsh, & E. Tang, Interviewers. Economic Policy Program Housing Commission (EPPHC) (2012). Demographic Challenges and Opportunities for U.S. Housing Markets. Prepared for Bipartisan Policy Center. Accessed May 1, 2013, [available at http://www.urban.org/UploadedPDF/412520Demographic-Challenges-and-Opportunities-for-US-HousingMarkets.pdf]. Healthy People (2013). 2020 Topics & Objectives. Accessed April 10, 2013, [available at http://www.healthypeople.gov/2020/ topicsobjectives2020/overview.aspx?topicid=31].
REED Construction Data (2013). Construction Cost Estimates for Apartment, 1-3 Story in Los Angeles, California. Accessed May 4, 2013, [available at http://www.reedconstructiondata.com/rsmeans/ models/apartment/california/los-angeles/]. Senior Homes (2013). Senior Homes: California Nursing Homes Accessed May 18, 2013, [available at http://www.seniorhomes. com/s/california/nursing-homes/]. Skilled Nursing Facilities (SNF) (2013). Free Advice for You and Your Aging Parents. Accessed May 28, 2013, [available at http:// www.canhr.org/NH_Data/index.html]. Stroud, D. (2005). The 50-Plus Market. United Kingdom and United States: Kogan Page Limited.
Hoffman, R., & Hoffman, J. (2013). Tour of Off-grid Home in Irvine, CA. March 28, 2013.
Town and Country Manor (n.d.). Accessed May 20, 2013, [available at www.tcmanor.com].
Houser, A., Fox-Grage, W., & Ujvari, K. (2012). Across The States, Profiles of Long-Term Services and Supports (California). AARP. Accesssed May 10, 2013, [available at http://www.aarp.org/content/ dam/aarp/research/public_policy_institute/ltc/2012/across-thestates-2012-full-report-AARP-ppi-ltc.pdf].
US Census Bureau (2010). Esri forecasts for 2012 and 2017: Age 50+ profile, California. Accessed May 5, 2013, [available at www. esri.com/ba].
Isidore, C. (2013). Survey: Americans say telecommuting works. Accessed May 18, 2013, [available at http://money.cnn. com/2013/03/14/news/economy/telecommuting-survey/index. html]. Kurtz, A. (2013). Federal Reserve sticks with stimulus. Accessed May 3, 2013, [available at http://money.cnn.com/2013/05/01/news/ economy/federal-reserve-stimulus/index.html]. Lefler, S. (2013). In-class presentation by Vice President of Modular Lifestyles, Inc. March 28, 2013.
US Government Accountability Office (USGAO) (2010a). Older Americans: Continuing Care Retirement Communities Can Provide Benefits, but Not Without Some Risk . Report to the Chairman, Special Committee on Aging, U.S. Senate. US Government Accountability Office (USGAO) (2010b). Continuing Care . Accessed May 9, 2013, [available at http://www.gao.gov/ new.items/d10611.pdf]. Yedinak, G. (2012). Top 10 Trends in Senior Housing for 2012. Accessed May 3, 2013, [available at http://seniorhousingnews. com/2012/01/09/top-10-trends-in-senior-housing-for-2012/].
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AUTHORS Faisal Almugairin, MBA Michelle Galves, MBA Brian Roberts, MBA Yining Tang, MBA Harmony Welsh, MS Gerontology GRAPHIC DESIGN Howard Tran, MBA
Mihaylo College of Business and Economics 800 N. State College Blvd. Fullerton, CA 92834
ACADEMIC SPONSOR & EDITOR Susan Cadwallader, Ph.D. Associate Professor Department of Marketing Mihaylo College of Business and Economics (657) 278-7565 scadwallader@fullerton.edu Š 2013 California State University, Fullerton Publication date: June 2013 CSUF and the CSUF logo are registered trademarks of California State University, Fullerton, an entity of the California State University system.
50+
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About the Research Our research journey started with surveying a sample set of the 50+ demographic that outlined their perceptions of aging as a consumer group. We gathered demographic information in regards to current and future housing environments. Our research continued with personal interviews that also outlined perceptions of aging as a consumer group. A focus group was performed with participants from the Osher Lifelong Learning Institute (OLLI) at California State University, Fullerton (CSUF), and resulted in conclusive information pertaining to the young outlook of the Baby Boomer generation. We had the opportunity to listen to a presentation about the benefits of building and living in Green housing given by Steven Lefler with Modular Lifestyles. In addition, the Hoffmans graciously hosted a tour of their own modular green home. Our experience continued with a meeting with Dr. Melanie Horn Mallers, Assistant Professor in the Department of Human Services and MS Gerontology Faculty, to gather her insights regarding the importance of family in the lives of CCRC residents and potential residents. We learned that the decision for Baby Boomers and seniors to move into CCRCs must also appeal to their families. In conjunction with our focus groups and interviews, we visited a pair of CCRCs in Southern California and posed as consumers seeking housing for our grandparents. These site visits gave us insight into the structure and aesthetics of the facilities as well as a closer look at pricing, contracts, services and overall ambiences of CCRCs. Our secondary research included reviewing a Harvard Case Study on the topic of The Stratford, a CCRC located in Northern California, as well as a handful of white papers and articles on the topic of Continuing Care Retirement Communities. Our research left us with the conclusion that there is a need for improvement of senior housing options and an opportunity for growth within the industry.
Consumer Marketing