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Future-Proofing Your Business: Why Senior Living is a Smart Investment for Nursing Home Owners



As the senior care industry continues to evolve, nursing home owners must be ready to adapt. With increasing regulatory pressures and a rapidly aging population, the need for diverse and adaptive care solutions has never been more pressing. In response to these pressures, we are seeing many nursing home owners exploring new avenues for growth. More than ever before, they are recognizing the importance of diversifying and are investing in senior living communities.


Here’s why this investment is not only smart but essential for future-proofing your business.


1. Diversifying Revenue Streams Amid Regulatory Changes


The regulatory landscape for skilled nursing facilities (SNFs) is becoming increasingly complex. By diversifying into senior living facilities, nursing home owners can create multiple revenue streams and reduce their susceptibility to the heavily regulated SNF sector. Independent living and assisted living facilities have more flexibility in their operations as well, allowing for different care models that can adapt more readily to changes in the market.


At the beginning of 2024, the national average rental rates for assisted living were reported at $6,000-$6,500, highlighting the revenue potential in this sector.


"On average assisted living facilities operate at a 20% margin, but often times we see really well-run communities operating closer to 30% margins," - Hank Fuller, Director at ESI

Evans Senior Investments has observed a trend of clients divesting a portion of their SNFs to diversify with seniors housing. These clients have found that the less stringent regulations for the seniors industry provides a more predictable operating environment, allowing them to focus more on quality care and service innovation rather than regulatory compliance. They have reported a significant reduction in compliance-related expenses, enabling them to allocate resources to higher priority areas.


2. Tapping Into Medicaid Reimbursement Opportunities


A significant trend in the senior care industry is the expansion of Medicaid funding for assisted living & memory care services. Many states are either already reimbursing Medicaid dollars for assisted living care or planning to implement such policies. This development presents a lucrative opportunity for nursing home owners to access additional revenue streams.


States like Connecticut, Delaware, Florida, Indiana, Massachusetts, Ohio & Oregon are already providing Medicaid reimbursements for assisted living and memory care. As these states pave the way, other states are likely to follow. By investing strategically in assisted living and memory care, your communities could potentially benefit from the same Medicaid funding, ensuring long-term financial viability.


For more detail information on the benefits and eligibility criteria in different states, refer to this resource: Medicaid & Assisted Living: State by State Benefits & Eligibility


3. Meeting Growing Market Demand


The demand for senior living communities is on the rise. Seniors are increasingly seeking environments that offer a blend of independence and support, making assisted living the preferred option over traditional nursing homes. By investing in this sector, you can cater to a larger demographic and capture a larger market share.


The majority of baby boomers are still in the labor force, but by 2030, all baby boomers will be age 65 or older, leading to an increased need for long-term care communities. According to McKnights Senior Living, there are currently 14 million Americans in long-term care, and that number is expected to double in the next 25 years, creating a long-term demand for assisted living services.


Currently, national occupancy rates for assisted living facilities are around 81%, according to the National Investment Center for Seniors Housing & Care (NIC). As the population ages, these rates are expected to rise, potentially exceeding 90% within the next decade.


In Illinois, the occupancy rates for memory care facilities have been particularly strong. As of 2024, memory care facilities in Illinois have reported an average occupancy rate of approximately 87%, which is much higher than the national average of 81%. This increase is driven by the rising prevalence of Alzheimer’s disease and other dementias. The high occupancy rates in Illinois are also influenced by a slower rate of new memory care facility construction, creating higher demand for existing facilities.


Investing now will position your business to capitalize on this growing market.


4. Leveraging Existing Expertise


One of the key advantages of transitioning into the senior living sector is the ability to leverage your existing expertise. As a nursing home owner, you already have valuable experience in long-term care, regulatory compliance, and facility management. A licensed nursing home operator likely already has the resources and operational expertise to manage assisted living to successfully expand their business in this direction.


By applying these skills, you can maximize your investment and operational efficiency. According to ESI's Proprietary ownership data, over one-third of all skilled nursing owners in the country own both skilled nursing and senior living facilities. Interestingly, when considering groups that own two or more buildings, that percentage jumps to 70%. This data underscores the trend of diversification in the long-term care space and emphasizes the potential benefits of expanding into assisted living.


Seniors Housing Investment Opportunities


If you are interested in acquiring seniors housing communities, sign up for Evans Senior Investments' online Deal ProShop. ESI works exclusively in the senior care sector, and we always have a range of opportunities on the market including independent living, assisted living, memory care, and skilled nursing.


If you have questions or if you would like to speak to our team about your specific acquisition criteria, contact us at acquisitions@evanssenior.com.


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