This Senior Living Business Model Doesn’t Involve Real Estate
Joseph F. Coughlin
The pandemic greatly accelerated the awareness and adoption of technology by family caregivers and older adults. It is also advancing a model of virtual assisted living that disintermediates care from place – disrupting today’s senior housing operators and causing many investors to reconsider their underlying assumptions of what constitutes senior living.
Laura’s 79 year-old mother is generally healthy, lives alone, and is fiercely independent, but she is beginning to show signs of frailty. She needs help now and then with daily activities such as grocery shopping, medication management, etc. She no longer drives, but has a few friends to help her get around. Laura is also worried about her mother’s ability to maintain the house and to regularly prepare a nutritious meal.
A mother of two, and holding a full-time job, it is impossible for Laura to regularly lend her mom a helping hand. Like many other tech-savvy Gen X and Millennial adult children during the pandemic, Laura discovered novel ways to support her mother. After all, she is part of the 'there must be an app for that generation.' Where high-touch was no longer feasible, high-tech extended Laura’s loving hand into her mother’s home.
First, she set up an account with Lyft to ensure that her mother had transportation options. She discovered that Krogers could deliver necessities to her mother’s doorstep and even offered a Home Chef meal kit service providing prepared meals that her mother could easily pop into the microwave. Being able to check in on her mom became even more important to Laura during the pandemic. As Laura describes it, “With more than a little effort, I convinced mom to put a Facebook Portal in her kitchen so that I could check in on her and have my girls (grandchildren) drop in to visit now and then.”
Laura is not an outlier. The pandemic served as a propellant pushing technology into the lives of adult children and older adults at a velocity far faster than what typical adoption rates might have been before COVID. Suddenly tablets became the new companion enabling friends and family to simply “drop in,” albeit virtually. Smart speakers became gateways to entertainment, communication, and notifications of deliveries at the door. Webcams, smart doorknobs, medication management devices, and entire monitoring systems ensured that older loved ones were safe in their homes. A tap of an app from miles away brought transportation, hot meals, medication, home care, and groceries to a loved one. Technology and tech-enabled living, once thought to be only the province of connected convenience-hungry Millennials, emerged as a lifeline for otherwise isolated older adults and for the people who care for them.
Without warning, an elevator pitch, a capital raise, or a brick mortared into place, a new type of senior living, a virtual assisted living, emerged out of the urgent need of families to hack caregiving during a pandemic. Technology and tech-enabled services provided adult children with a strategy to keep their parents’ safe, connected, and supported while staying in their own homes.
Virtual assisted living, or VAL, may be defined as the integration of the Internet-Of-Things (i.e., all those gadgets and gizmos that somehow ‘talk’ to each other), with seamless communications, along with the on-demand economy providing a multitude of services from telehealth/therapy, home care and related services, home monitoring, meals, and access to wheels only a finger tap away.
Ongoing research by my colleagues at the MIT AgeLab C3 Home Logistics Consortium are demonstrating that VAL is more than a home technology services concept. As it develops VAL will be an entirely new asset class — one that goes beyond brick and mortar — but includes entire branded ecosystems of both for-profit and non-profit organizations, technologies, and partnerships, offering services that provide convenience, connectivity, and care. These integrated virtual services will disrupt the current operating and investment theses of independent and assisted living.
The wake of the pandemic has accelerated forces that are pulling and pushing the rapid evolution of VAL. Aging-in-place, the desire to remain in your own home as you age, has always been the number one competitor to independent living and assisted living. Surveys indicate that the vast majority of older adults would prefer to stay in their own homes. The conversation of leaving the family home is one of the most loathed discussions for both adult children and aging parents.
Forged out of COVID’s crucible of fear and need, many families discovered the power of technology to provide care. Even if that technology is only a short-term band-aid extending a parent’s desire to stay in their home, it can be a way to delay both a challenging family conversation and the move from home. Likewise, cost is always a concern, whether it is the ability to afford senior living or tech-services at home. At least one exploratory study of the Boston area conducted by the MIT AgeLab’s CareHive Consortium shows the average cost of assisted living to be more expensive than using on-demand services or VAL at home.
Moreover, scores of companies have discovered the aging-in-place and caregiving segments of the longevity economy. Now discovered, firms are investing to develop products and services that will push the availability, and ultimately, the affordability of VAL. Well known consumer brands such as Philips, Samsung, Apple, Google, Stanley Black & Decker, and others now see older people, and their families, not only as a growing consumer segment, but a lucrative one as well.
Major retailers such as Amazon, Best Buy, and CVS Health, are amplifying the power of tech to support independence, health, and wellbeing with aisles and webpages filled with smart technologies aimed at family caregivers. In fact, family caregivers are now earning their own marketplace moniker – ‘caresumers.’
On-demand service providers have also discovered the evolving VAL market. Well before the pandemic, online companies, such as Honor, offered home care services by app. Lyft, Uber, GoGoGrandparent, are just a few companies that offer transportation alternatives for older people that do not drive and to caregivers that either live too far away or are far too busy. Companies such as Instacart that became lifelines to many older adults in need of groceries during COVID are now part of the caregiver’s toolbox. Similar to Laura’s discovery of Kroger’s services, other major grocery chains, such as Publix, have partnered with delivery firms like Shipt to provide home delivery services.
Many investors and senior living operators are eagerly waiting for a post-COVID ‘normal’ to return. A normal where facility census numbers rise and the memory of the pandemic recedes. However, the pandemic has served as a propellant forcing older adults and families alike to hack aging-in-place and caregiving with technology and on-demand services. As the pandemic ends, it is doubtful that broadband subscriptions will be cancelled, apps will be deleted, and countless devices will be put back into their boxes.
Rapidly evolving, competing, and branded ecosystems of companies, technologies and virtual assisted living services will emerge enabling an entirely new alternative that will be part of an evolving senior living continuum. Virtual assisted living will expand the current continuum of care model – standing in between the low-tech home we knew and the senior living options we know today. In effect, these branded ecosystems of care will become their own senior living asset class — one that does not include real estate.
Place, combined with service, has always been integral to senior housing’s value proposition as well as business model. The pandemic experience and the evolving effectiveness of technologies is disintermediating the idea that care must be linked to place. Increasingly it will be all about the the capacity to provide quality services that are effective, affordable, and excite and delight wherever the older person (and their family) decides to call home.
The implications, as well as opportunities, for caregiving, senior housing, and related investment strategies are many. What do you think? Share your thoughts in the comments and stay tuned for more thoughts here on #LongevityEconomy.