Capturing Demand for Assisted Living Services: The Senior Living Challenge

The aggressive growth in today’s assisted living market requires industry providers to continually measure and react to demand to enhance their position as it relates to the competitive environment. The following discussion attempts to explain the evaluation of demand for assisted living services to allow providers to maintain momentum in a fast-paced, high-growth market environment. In light of these new realities, it is more important than ever to be able to determine an appropriate demand methodology and understand acceptable penetration rates.

Introduction

DHG Healthcare, the national healthcare practice of Dixon Hughes Goodman, originally issued this white paper in September 2008 to share our methodology for measuring assisted living penetration rates and add to this spirited industry-wide discussion. While our core methodology has not changed, this new version of the white paper reflects updates to statistics from various sources as well as new statistical data from our proprietary database to provide further context and comparison.

Recently, an industry task force assembled by Susan Brecht of Brecht Associates, Inc. and comprised of representatives from Brooks Adams Research, Clifton Larson Allen, Gerontological Services Inc., New Life, Plante Moran, PMD Advisory Services, Retirement Dynamics and Dixon Hughes Goodman (the “Methodology Task Force”), published a paper titled New Principles for Market Analysis. The purpose of this paper was to explore four major components of market analysis (data sources, age- and income-qualifiers, competition and adult child households) and present best practices related to all of these topics. Although the Methodology Task Force did not attempt to standardize penetration rate methodology, all of the concepts explored form the basis for the assumptions on which penetration rate analyses are built.