According to industry data, many senior housing providers are increasingly focusing their construction efforts on memory care facilities instead of other property types. There are many reasons for this, ranging from the possibility of significant financial returns, to the desire of providers to meet increased demand for memory care services.
Memory Care Communities Can Offer Substantial Financial Returns
One of the reasons that senior housing providers are building more memory care facilities is because of the additional revenue they can generate by charging for various care services. Because memory care residents are a higher acuity population and have greater needs than residents in other types of senior housing properties, such as assisted living or independent living communities, memory care facilities are able to charge additional fees for the extra care services that they provide. For example, in addition to standard room charges, they can also charge separate fees for specific levels of care, various nursing services, and medication management. These fees don’t all hit the bottom line because additional staffing is required to care for these residents and some of these fees will be used to compensate them and purchase other items that are needed for their care; however, if it’s managed effectively, a facility can reap significant financial rewards from the additional revenue that care fees generate, while still providing fair compensation to the additional staff that it needs to care for its residents.
Increased Demand Bolsters Construction for Memory Care Communities
Another reason memory care facilities have gained favor with providers is the increased demand for their services that is being caused by the aging of the population. Cognitive issues are generally associated with older individuals; consequently, as the baby boomer generation gets older, an increasing number of people are finding themselves in need of the types of services that memory care facilities provide. Senior housing providers have taken note of this and in addition to building facilities that are solely for memory care residents, many of them are also building combination facilities that have both assisted living units and memory care units in them as well. These facilities are often popular with residents and their families because they allow for a smooth transition from a non-memory care unit, directly into a memory care unit. For example, because both types of units are in the same community, residents don’t have to spend time, effort, and resources moving into a different community when it becomes clear that they need to transition from assisted living to memory care. Furthermore, because the resident is already familiar with the community, its services, amenities, physical layout, and staff, the transition is much easier than it would be if they were moving into an entirely new community.
Good Management is Key
Although memory care facilities are very attractive to senior housing providers right now for the reasons we just discussed, it is also important to remember that having an effective operator is a key part of having a successful memory care facility. Even with a great design, strong staff, and attractive amenities, if a facility is not being managed effectively, the residents will not be happy, occupancy will decline, and the facility will not generate the kinds of financial returns it is capable of. Providers who have had success with memory care facilities are quick to mention the importance of having an experienced operator to manage it, high quality staff to care for the residents, and the importance of maintaining a constant dialogue with residents’ family members so that they are always aware of how their loved one is doing. Also, many facilities use best practices and partner with social workers, home care providers, and hospice care to smooth the transition for their residents. These methods contribute to the success of memory care communities by keeping residents and their family members happy, and in doing so, they can also bolster the bottom line of these facilities.
Today’s low interest rates are helping to fuel the construction of memory care facilities across the country and it is likely that this will continue at least until interest rates begin to rise. Before this happens and the cost of borrowing increases, senior housing providers and others who are interested in obtaining inexpensive capital for bridge financing, acquisitions, or other purposes should contact Cambridge Realty Capital to learn more about the many different financing programs that it offers.
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