A recent report offers solutions to help senior living operators address affordability and create communities suitable for middle-market consumers. Published by the Milken Institute, in partnership with the National Investment Center for Seniors Housing and Care (NIC) and CVS Health, the report outlines ways to make senior living more affordable for all.
The report emphasizes the importance of identifying the “forgotten middle” and highlights the value-based care movement. While facing tight margins and longer revenue generation, senior living operators have begun considering middle-market development.
Additionally, the report predicts a likely influx of distressed senior housing properties in need of repositioning and capital expenditures, ahead of a potential foreclosure crisis.
The report’s four solutions are:
*Establishing an advisory council to refinance and rehabilitate distressed properties
*Designing a revolving loan fund to create long-term capital for future renovations or affordable projects
*Using a pay-for-performance model to attract investment and deliver long-term cost savings to offset care costs
*Launching a regional pilot program to create partnerships with operators and payers in value-based care
The report also proposes a multi-phase pilot program to facilitate redevelopment and better serve middle-market senior living residents. By creating a revolving loan fund, middle-market projects could become more common with readily available access to capital, meeting future demand and lowering borrowing costs for developers.
Furthermore, the report suggests a pay-for-performance model to attract private investment based on predetermined social outcomes. Investors would be repaid with interest when outcomes are met, creating cost savings for insurance payers.
Operators are encouraged to standardize data to demonstrate the value of senior living and care, allowing for increased investment and better resident care offerings.
