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For years, senior living operators have struggled to increase average penetration rates, with penetration rates hovering between 10% and 12% nationally, according to recent NIC data. In 2024, increasing penetration rates has become the industry’s “holy grail.”
While the demand for senior living continues to grow, industry visionary Bob Kramer of Nexus Insights warns that without innovation, increasing penetration rates is not a foregone conclusion. Operators must go beyond their current offerings to attract new consumers and communicate the value of their services.
According to NIC Head of Research and Analytics Lisa McCracken, understanding the reasons behind the muted overall penetration rate remains a mystery. She believes that operators need to change their sales and marketing strategies to better connect with prospective residents and increase value.
In this week’s members-only SHN+ Update, I delve into the current state of senior living demand and penetration rates, addressing topics such as:
- Solving the puzzle of stagnant penetration rates
- Challenges faced by independent living operators
- The importance of demonstrating value to prospects
Despite a strong demand outlook on paper, senior living occupied penetration rates have not seen significant growth. Occupied penetration rates for assisted living and memory care units have increased, while independent living rates have remained stagnant. This discrepancy in penetration rates across the industry presents an opportunity for operators to better engage with consumers in rural markets and adapt to changing demand dynamics.
Operators are encouraged to differentiate their services and emphasize the value they provide to attract residents. While the high-acuity trend in assisted living and memory care continues to drive demand, finding a scalable middle-market model may help in increasing penetration rates. Operators must also prioritize showing the value of senior living through resident health outcomes and value-based services.
Improving sales practices and timely engagement with prospects could also contribute to a more rapid increase in penetration rates. Marketing consultancy Bild & Co. has found that a significant portion of inquiries do not receive timely personalized responses, highlighting the need for improvement in senior living sales practices to align with current demand.
Overall, creating models of senior living that appeal to the next generation of consumers and effectively communicating the value of senior living are crucial steps in driving penetration rates. While challenges persist, addressing these issues can lead to a brighter future for the senior living industry.
