After years of languishing in the backwater of healthcare, nursing homes and other businesses that cater to senior citizens are riding a tidal wave of popularity.
The recent $1.8 billion merger plan between Living Centers of America and GranCare is only the latest vote of confidence for a long-term-care industry once preoccupied with inadequate reimbursement rates, labor woes and a poor public image.
Irving Levin & Associates reports that the price paid for long-term-care and retirement housing units hit record levels in 1996. The price for nursing homes, as an example, climbed five consecutive years to $42,300 per bed last year. Meanwhile, the overheated senior-living industry shows little sign of cooling. Price Waterhouse estimates the senior-living segment-independent living, assisted living and private-pay skilled nursing-will require about $400 billion in capital over the next 35 years.
The demographics look wonderful. The population of Americans over age 65 is expected to double from 33.8 million in 1996 to 69.4 million in 2030. Today's seniors have more money and are healthier than any generation in history. And right around the corner are the baby boomers, with their notorious demands for quality, value and choice.
Despite the rosy outlook, potential risks must be evaluated. Seasoned long-term-care managers know the trials and tribulations of a business that in the past has been plagued by oversupply, bankruptcy, the unpredictable actions of lawmakers, wacky zoning codes, inconsistent regulation and unexpected changes in reimbursement policies.
It's important that elder-care businesses push to attract the kind of work force needed to admirably house, feed and care for this most precious of assets. Real estate developers, financiers and marketers are there in the good times, but it's the caregivers and administrators who will ultimately determine the winners.