Demographic Dip: Excuse or Imposing Reality? Irving Stackpole & John Spooner

How bad is it??

Retooling for the Next Generation John Spooner | Co-Chief Executive Officer

Life Span

25 68 Age

Vit

ality

80 92

100%

1965 2015 2050

Morbidity Compression: Live Long, Die Fast

25 68 Age

Vit

ality

80 92

100%

Health Span: Extending Wellness in Aging

25 68 Age

Vit

ality

80 92

100%

U. S. Senior Population: 2010-2050

Total 65+ 75-84 85+

2010 296,000,000 39,561,000 7,104,000 (2.40%) 5,180,000 (1.75%)

2020 325,600,000 52,857,000 9,768,000 (3.00%) 6,512,000 (2.00%)

2030 358,200,000 68,345,000 15,223,500 (4.25%) 9,850,500 (2.75%)

2040 393,900,000 74,984,000 17,725,500 (4.50%) 13,786,500 (3.50%)

2050 438,000,000 81,100,000 17,520,000 (4.00%) 17,520,000 (4.00%)

Pew Research Center: U.S. Population Project

2005-2050

Beyond the Picket Fence…

A NEW Senior is Emerging

TOPIC

CCRC

Market

Life Span/ Health Span

Attitude

Health

Employees

RECENT PAST NOW

• Housing • Services • Health Care

“Oh, I Didn’t Think I Would Like It, But I Loved It!”

FUTURE

Institutional Image Hang-Over

Consumer Acceptance Increasing

• Housing • Hospitality • Wellness

Public Health Terminology

Longevity and Morbidity Compression

Entitlement Confusion

Directed Advice

Self-Directed

Job/Career Career

Demographics Double

Health Span: Focus on How Long One Lives Well

Consumer Activist

Engaged Self-Care

Profession

TOPIC RECENT PAST NOW FUTURE

Hospitality

Who Pays?

Average Age

ILU/RLU

AL

SNF

MS

High Resident Satisfaction was Enough

• Ritz

• Four Seasons

• Disney

Medicare/Insurance Co-Pay/Deductible

• ILU: 78-85 • ALU: 80+ • HC: 80+

Convergence in Age

• Granite • Larger Apartments

• “Amenity Ladder” • Open Plan

AL and ILU Converge • Expand AL • Highly Competitive

HC and AL Converge • Downsize Nursing • Shift to Rehab

• Growing Most Recent Addition to Levels of Living

• Training

• Systemized Expectations

• Cross-Category Comparison

• Fluid Expectations

High Deductible

Longevity Blurs, Morbidity Defines

• Double Masters • Super Fridge • Casual Living

• Specialty AL • Efee AL • Deregulation

• Specialty HC • Rehab Spa

• Growth Market into the Future

TOPIC RECENT PAST NOW FUTURE

CONTRACT TERMS

Terminology

• “Continuum”

• “Levels of Care”

• CCRC

• Independent

• Assisted • Memory Care • Nursing Care

• CCRC • Residential

• Levels of Living • Levels of Service

Transfers

Changes in Terms Due

to Changing Policy/Mark

ets

LTC Risk Allocatio

n

Contracts

• Defined • Sponsor Discretion • Cooperation Expected

Same

• Specifically Defined

• Sponsor Discretion

• Specific Acknowledgement by Resident/Advisors

• Consequences for Non-Cooperation

• Not Mentioned • Right to Amend

Same

• Specific Mention of Unknown Future Changes in Health Care Delivery May Require Change

• Types A, B, C • Closed Insurance Pool

• Modified

• Defined

• Resident Cost Sharing

• Closed Insurance Pool with High Deductibles

• Dynamic

• Control Cost with Full Recapture

• Cross-Level Benefit Use

• High Refund • Traditional

3-5 Alternates to Broaden Market

• Consumer Financial Profile

• Shift to “Asset Status”

….…So,

TOPIC RECENT PAST NOW FUTURE

• NFP Status • “Green” • Marijuana Use • Assisted Suicide • Digital Privacy

• Social Accountability • Silver Tsunami

• ACO’s

• Property Tax Exemption

• Succession Planning

What’s Hot?

(The Cleaver’s) 48% of WWII Generation

(Modern Family) 37% of Baby Boomers Generation

(Kardashians) 25% of Millennium Generation

Traditional Family

Composition (U.S. Census

2013 Affluent Senior

Households)

The New Language of Senior Living

1. “Care” is being excised

2. Evolving senior living language

− Health span

− Age compression

− Flex spending

− Long-term support and services

− Levels of Living

− Levels of Service

− Support days

− Connected-care technology

− Service Excellence

− Apartment-for-life

Demographic Dip: Gravity is Unavoidable Irving Stackpole

How bad is it??

• Numbers

• Negativity

• Money

Realities

Occupancies are poor because • The age qualified markets are declining

• Increased options / choices

• Negative perception

• The economy

• The role of “Intermediaries”

The need for change is URGENT

Currently

~83%

Currently ~ 87%

Stackpole & Associates, Inc. 22

2016

Born 1930

85 yoa

2020

Born 1934

85 yoa

Negativity?

Sector NOT thought of as the valuable

resource it is …

They are seen as prisons – awful places

– The “F” word

– “Don’t want to put / place mom in a nursing

home.”

– “I’d rather be dead.”

Deep metaphor of negativity

Stackpole & Associates, Inc. 23

Responding to a declining market

Defend, protect & fortify

• Manage to Loyalty

Increase Productivity / Efficiency

Innovate

Differentiate

Stackpole &

Associates, Inc.

25

Stackpole & Associates, Inc. 26

Efficiency

Technical, Productive, Allocative

– Technical Maximum improvement from resources

– Productive Best health outcome for given costs or

reduction in cost for the same outcome

– Allocative Best outcomes for society

Facts of Life

The age qualified market is shrinking

Intense cultural negativity

Continued pressure on payments

Continued pressure on utilization

Where is the demand?

Demand for Arthroplasty

209 253

384

572 450 663

1520

3481

40.8 47.8

67.6 96.7 38.3 55.3 121

268

0

500

1000

1500

2000

2500

3000

3500

4000

2000 2005 2010 2015 2020 2025 2030 2035

Nu

mb

er o

f p

ati

ents

(x 1

,00

0)

Year

Primary total hip

arthroplasty

Primary total knee

arthroplasty

Revision total hip

arthroplasty

Revision total knee

arthroplasty

29

We are Here

Demand for ARD Care

-

200

400

600

800

1,000

1,200

1,400

1,600

2010 2015 2020 2025 2030

Medicare/Medicaid Costs per year (billions of dollars)

Inflection Point

We are Here

QUESTIONS???