What Does the Future Hold for CCRCs?

Mike Buzalka

Aging ain't what it used to be. Years ago, older Americans either lived with their families, remained stubbornly independent or—if neither of those was practical—went to the 'old folks home.' Statistically speaking, they didn't stay there long because the self-selecting process that determined 'old folks home' populations pretty much guaranteed a preponderance of the sick, the feeble and the incapacitated. No wonder the popular view of these places was that 'you went there to die.'

Those attitudes began changing in the face of post-World-War-II population and demographic trends, evolving cultural attitudes and sheer necessity. Demand for a middle way between complete on-your-own independence and the rigid institutional environment of the traditional nursing home sparked the emergence of the so-called "assisted living" market in the 1970s and 1980s. That model soon spun off a hybrid alternative, the continuous care retirement community, or CCRC.

Unlike assisted living facilities or nursing homes, where residents are locked into a fairly rigid level of care, CCRCs offer flexibility. Residents can live almost completely independently in apartments, townhouses or individual cottages located on the property. Then, if their needs change, they have the security of knowing they can move into an onsite assisted living or skilled nursing unit.

It's a tidy sales pitch, but not an airtight one. With seniors living longer and generally in better health, CCRCs—which prefer that most of their residents reside in the independent living units—must overcome the traditional view of eldercare facilities that says you only go there after you can't live on your own.

So to convince still-healthy seniors to sell their homes and move into their communities, CCRCs must lay out an attractive array of services and amenities ranging from help with everyday chores and maintaining standby emergency medical services, to offering plenty of options for socializing, amusement and personal development. One of the most important is the quality of the onsite dining operations.

Making CCRCs' task even more difficult is the generational turnover that is changing customer expectations and forcing operators to expand the services they offer, all while keeping costs—especially increasingly expensive labor—in line.

"I think the retirement community generally is in transition," offers Mitch Possinger, president of Cura Hospitality Services, a foodservice management firm based in Oreville, PA, that manages 70 retirement communities, including 20 CCRCs. "There's a generational shift going on, and the old model of having some 300 independent living apartment style units complete with skilled nursing and assisted living sections is being upgraded. Now it's more like a cruise ship on land, with an array of services targeted to different individual needs."

Hard to Define Numbers
The specific number of CCRCs currently in operation is difficult to determine because the concept remains somewhat self-defined. "Not every state licenses CCRCs as a separate entity," explains Douglas Pace, director of assisted living and continued care at the American Association of Homes & Services for the Aging (AAHSA). "While the higher levels of care, the assisted living and skilled nursing, are licensed, the independent living component often is not."

On its website, AAHSA cites 2,100 as the number of CCRCs currently in operation, but the Continuing Care Accreditation Commission (CCAC) has accredited only about 350, according to Business Development Executive Susanne Matthiesen. Matthiesen estmates that there may be some 2,500 such facilities around the country, "and I've heard estimates as high as 3,000," she adds.

The growth in the CCRC sector overall has been matched by the growth of its foodservice component. According to the Technomic, Inc., foodservice research and consulting organization, the CCRC segment's food and non-alcoholic beverage purchases has shown a healthy six percent annual rate of increase over the past five years, more than double the 2.5% annual growth rate of the eldercare segment overall. Currently, CCRCs account for about $1.5 billion of eldercare's annual $4 billion in food and beverage purchases, says Technomic Senior Principal Joseph Pawlak.

Pawlak says CCRCs have grown faster than the other eldercare sectors because they enjoy a competitive edge when marketing to seniors.

"Nursing homes have had negative stigma," he explains. "Because of the clinical component, they're associated with illness and frailty. By contrast, CCRCs don't position themselves as nursing homes, or at least not primarily as healthcare providers, but rather as 'lifestyle' providers for people who may need a little more assistance with their lives than they did when they were younger. That's much more positive."

Dining Operations
For foodservice professionals, dining operations in CCRCs are significantly more complex than in the typical eldercare facility because they have to accommodate different populations. Bedridden patients in the skilled nursing unit may require threemealsa-day patient tray service, while others who are more mobile, along with those in the assisted living sections, generally take congregate meals in central dining areas at set meal times.

"Meals are ways to build community, and they become as important as the healthcare aspect when potential residents evaluate the different communities," says Doug Tweddale,CEO of Foulkeways Retirement Community, one of the country's oldest CCRCs (it opened in 1967).

Meanwhile, independent living residents generally are required to eat only a certain number of meals in the community dining rooms each month, but food must be available at each daypart nevertheless.

In an effort to offer differentiation and attract new residents, CCRC dining operations are experimenting with a variety of food-related services ranging from special events like high teas and cooking classes to the incorporation of branded concepts, cafès and bistros on site.

"Special events and catering are huge aspects of our operations," notes Mary Ann Miller, director of business development for Aramark Senior Dining. "Choice, fresh food, lots of options, grab-and-go—these are all things that we increasingly are looked on to provide in order to meet customer expectations. At one of our sites, we're even looking at putting in a Starbucks."

In addition, like the college market, the senior living market is moving away from set mealtimes toward a more fluid approach that requires service points with expanded hours.

There is also increasing pressure to offer more flexibility in the pre-paid meal plans. "In the past they may have been happy with the 30-meals-a-month plan, but today residents don't want to be restricted that much," says Miller. "They want to use their meals when they want, not when they have to."

Menus, while retaining a significant component of the traditional "comfort food" choices favored by earlier generations of seniors, are increasingly making room for the more adventurous fare—ethnic options, unusual ingredients and exotic cooking styles— favored by younger seniors.

"As we look down the road, demographics will change and that will change the expectations," says Wayne Knowles, CEC, corporate executive chef for Erickson Retirement Communities, a major operator of CCRCs. "For instance, we used to concentrate on batch cooking through traditional means, but that's no good any more. As we go forward, batch cooking will increasingly be done with flash cooking techniques-like woks and fast steamers."

Like the eldercare segment in general, foodservice in CCRCs remains primarily self-operated. That perhaps is the legacy of the nursing home tradition—after all, many CCRC operators started out managing nursing homes—but the potential held by communities of as many as a thousand or more residents has some management companies taking another look. All three of the "Big Three" national contractors now maintain senior services units, and all three say they emphasize CCRC business.

"CCRCs dominate our business," says Pat Connolly, executive vice president of Sodexho's Senior Services division, which manages dining operations at some 200 CCRCs. "That's the market we've gone after-because it matches well with our core competencies. These communities are also generally big enough to provide the economies we need to offer a range of services efficiently."

Between Generations?
The customer base for which CCRCs compete is changing, but not necessarily growing, at least in the short term. While it is true that America is getting older, the proportion of its population that is the prime market for eldercare services will not grow significantly until the Baby Boom gets a lot longer in the tooth. The first boomers will turn 60 next year, but they probably won't have much of an impact on the CCRC industry for several decades.

"We find that most people don't start dealing with moving into a CCRC or an assisted living facility until their late 70s or early 80s," says Jerry Underhill, president of Morrison Senior Dining, a unit of Compass Group North America. "And boomers won't reach that point until around 2025 at the earliest."

If Underhill is right, then the prime market for CCRC customers for the next decade or so will have to come mostly from those born in the later 1920s, the 1930s and early 1940s. It is a generation much smaller than the Baby Boom.

"The Depression era and the war years saw a fairly low birthrate," notes Tweddale. "That will put additional pressure on CCRCs to position themselves in order to keep their facilities filled."

Making that job even harder is the fact that these "new seniors" will have significantly different expectations than the previous generation, the so-called "Greatest Generation" who weathered the Great Depression and World War II as young adults (see table).

"Many of the current residents were exposed to the Depression and that made them very frugal," offers Knowles. "Younger residents are much more apt to demand luxuries that allow them to enjoy life."

That divide can manifest in something as simple as attitudes toward special event and theme days. Older residents can be offended at what they see as extravagance while younger ones expect them and want more of them, notes Gloria Morgan, director of dining & nutrition services at the Kendal at Oberlin CCRC in Oberlin, OH.

"The newer generation is much more concerned about aesthetics, living space and options," agrees Tweddale. "When our community first opened, it took a while to fill the two-bedroom apartments because frugal seniors saw them as extravagent. But the new generation not only has the money to spend on more space and services, but the willingness. In fact, we've had to reconfigure our community, combining smaller units to produce larger residences because that is what the market is demanding."

Tweddale adds that at least in the Philadelphia area, the market for high-priced CCRC residences has yet to saturate despite one of the country's highest concentrations of such communities (he says about 35 percent of the area's seniors live in senior communities, a significantly higher ratio than is typical nationwide).

Wealthy seniors with money to spend are obviously attractive for CCRC operators, but many also feel the call of their core social service missions. After all, the preponderance of CCRC operators are non-profit organizations that are often affiliated with various religious denominations.

"We want to remain available to retired schoolteachers and affordable to moderate income seniors," notes Knowles. "We don't want to become a luxury that only the welloffare able to afford. That means keeping an eye on costs while still delivering the kind of service residents expect."

Competition for Seniors
While high-priced CCRC communities may be proliferating in Eastern Pennsylvania, elsewhere, CCRC operators are finding themselves under the gun to compete with so-called "active adult communities" (AACs), which typically market to younger seniors—those in their late 50s and 60s who no longer have children in the home.

"CCRC operators are concerned that by the time they get the seniors who first moved into these places, they will be going straight into assisted living or skilled nursing," explains Underhill. "That's not what they want. They want the majority of their residents in independent living. They don't want to wind up as nursing homes."

To head off the threat as well as to make themselves more attractive to the more demanding, sophisticated and affluent seniors now entering the pipeline, CCRCs are tinkering with their business model. In some cases, rigid policies governing entry fees, monthly maintenance fees, mandatory meal plans and residence requirements are giving way to more flexibility where residents can choose which services they wish to have and which to decline.

"I can see the model changing as CCRCs try to attract younger residents by removing the institutional aspect," offers industry consultant Dan Look of Marietta, GAbased Dining Management Resources, Inc. "For instance, they might 'extend their front porch,' so to speak, by creating services— maintenance, housekeeping, meals on wheels— for seniors who continue to live in their own homes rather moving into the community. The technology already exists to do this, and financially, it makes perfect sense because you are leveraging existing resources without creating or maintaining expensive infrastructure."

"In this market over the past 20 years, we've seen a transition from a healthcare model to a hospitality model to what I think will now be a wellness model," says Possinger. "The hospitality model worked well for its time, but now our clients are coming to realize that they're not really in the hotel business because people don't live in hotels for 15 or 20 years. Instead, it's about satisfying a much broader range of needs— vocational, social, educational, even spiritual— that all contribute to overall wellness. That is the challenge they must meet."