Market Needs and the Economic Impact of Leadingage Virginia Members
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Market Needs and the Economic Impact of LeadingAge Virginia Members Steven J. Appold, Ph.D. Kenan Institute of Private Enterprise, University of North Carolina at Chapel Hill Allan M. Parnell, Ph.D. Cedar Grove Institute for Sustainable Communities James H. Johnson, Jr. Ph.D. Kenan Institute of Private Enterprise, University of North Carolina at Chapel Hill September 13, 2018 Study Contributions Special thanks to the organizations who gave beyond their annual dues to make this project a reality: Goodwin House; LifeSpire of Virginia; Pinnacle Living; Shenandoah Valley Westminster-Canterbury; United Church Homes & Services; Village at Orchard Ridge; Westminster-Canterbury on Chesapeake Bay; Westminster Canterbury Lynchburg; Westminster Canterbury of the Blue Ridge; and Westminster Canterbury Richmond. 2 — Market Needs and the Economic Impact of LeadingAge Virginia Members Executive Summary tinuum of care, CCRC residents need not leave the community as their health and functional abilities Over the next two decades, Virginia’s senior popu- decline. CCRCs therefore are a type of serviced lation (aged 65 and above) is projected to increase real estate – that is, real estate bundled with a set by 51.4 percent – from 1.3 million in 2017 to 1.9 of guaranteed services which are partially pre- million in 2040. During this period, Virginia’s to- paid. However, given shifting economic and de- tal population is only expected to increase by 20.4 mographic trends in the marketplace, a number of percent – from 8.5 million in 2017 to 10.2 million CCRCs are beginning to expand services beyond in 2040. LeadingAge Virginia works with a range their campuses. CCRCs are now increasingly po- of member organizations to help meet the needs sitioning themselves as Life Plan Communities in of the aging Virginia population. LeadingAge Vir- order to emphasize that the majority of their resi- ginia is the professional association representing dents do not need intensive medical care. the not-for-profit continuum of aging services throughout Virginia, including nursing homes, Licensed through the Virginia State Corporation adult day, assisted livings, home and community Commission, there are 53 CCRCs in Virginia; 42 based services, life plan/continuing care retire- are LeadingAge Virginia members. The member ment communities, and senior housing. organizations are led by volunteer, unpaid board members that are business leaders in the broader The central focus of this report is the economic community. Almost all (51) provide independent impact of LeadingAge Virginia members. In 2016 living, 45 offer assisted living, 33 operate nursing (the latest year for which data are available), care (another 11 operate assisted living), and 6 LeadingAge Virginia’s 133 not-for-profit member have dementia care. Occupancy rates are nearly organizations served a total of 18,000 seniors: 90 percent for the independent and assisted liv- 13,000 in CCRCs, 3,600 in other types of residen- ing units with a degree of variation among the 53 tial settings, and 1,300 in day programs. They communities. employed an estimated 18,000 mission-oriented staff across all skill levels in 108 client-serving CCRCs are concentrated in or near major met- locations (for which we could estimate informa- ropolitan areas and in selected retirement areas tion out of a total of 121). Members’ total ongoing within the state. The annual cost of living/care in purchases ($1.1 billion), including payroll ($595 a CCRC is determined in part by land costs. As a million), generated an estimated total economic consequence, to balance demand and cost, CCRCs impact of $1.9 billion. This included $44 million may increasingly locate near the suburban fron- in direct and indirect state and county taxes and tier of the largest, rapidly-growing metropolitan $166 million in federal taxes. LeadingAge Virgin- areas – in Northern Virginia, Norfolk, and Rich- ia CCRC communities alone provided services to mond – over the next few decades. 13,000 residents with an economic impact of $1.4 billion based on $828 million in direct expendi- Two decades from now, in 2040, CCRCs are pro- tures, employing 12,000 directly with a total of jected to house 24,840 residents and employ 16,000 jobs in the state linked to CCRCs. 22,149 workers. CCRCs’ total ongoing purchases ($[1.5 billion), including payroll ($798 million), CCRCs account for 75% of LeadingAge Virginia’s will generate an estimated total economic impact economic impact. Necessarily, much of this re- of $2.6 billion, including $61 million in direct and port focuses on them. CCRCs are both central indirect state and county taxes and $229 million in LeadingAge Virginia membership and are im- in federal taxes. portant residential and care options for Virginia’s rapidly growing population of seniors. CCRCs Beyond our projection horizon, insufficient are institutional entities that meet the health and wealth accumulation may constrain or prevent lifestyle needs of older adults as they age. CCRCs subsequent cohorts of seniors from considering typically include independent living units, assist- CCRCs as realistic residential and care options in ed living units, and nursing care. With this con- their maturing years. Recently, in anticipation of Market Needs and the Economic Impact of LeadingAge Virginia Members — 3 this potentiality, CCRCs have extended their cir- death.2 Unfortunately, we are not there yet. The cles of care beyond their core clientele to include present is still characterized by a significant in- individuals with a net worth below their normal cidence of chronic diseases which decrease the requirements and to seniors in the local commu- quality of life and increase the burden of care. nity opting to age in place. As they continue to The pace of this transition from chronic-disease- do so, they will increasingly need to deal with the induced to senescence-induced death will impact effects of growing income inequality and with the the future need for and burden of care. impacts of rising health threats, such as obesity and its consequences, on aging cohorts. Second, the growth of income inequality combined with hyper-residential segregation along race and Above and beyond their economic impact, Lead- ethnic lines create a situation wherein means and ingAge Virginia member organizations contrib- needs do not necessarily coincide. Growing num- ute significantly to their communities through bers of seniors are aging in place in households benevolent and charitable contributions and ac- with few (if any) financial assets and in commu- tivities. The breadth of these contributions is nities characterized by regional economic decline difficult to quantify with existing data, but both and/or concentrated poverty. financial contributions and community support are identified in this report. Developing standard Third, as a retiree migration destination, uncer- methods for documenting contributions to their tainty regarding whether future migration to Vir- communities will allow greater specificity of their ginia will continue unabated, accelerate, or pla- impact. In addition, a strategy for simultaneously teau raises questions about the future volume of broadening economic impact and strengthening demand for senior services. commitment to diversity through the adoption of inclusive sourcing policies, procedures, and prac- Fourth, an array of service delivery alternatives tices is outlined. increases the business risks of any individual model. 1.0 Introduction and Purpose The first and second factors have been working in Population aging creates a service need and con- tandem to create a situation which could be char- stitutes a major opportunity for business develop- acterized as fragmenting aging wherein one set of ment and job growth in Virginia. Virginia’s sen- seniors can look forward to a lengthening, increas- ior population (aged 65 and above) is large and ingly healthy and financially secure aging process growing.1 Several forces contribute to this state while for another set aging will begin earlier, be of affairs: a century-long secular decline in fertil- plagued by chronic disease, and be haunted with ity; increased longevity among a subset of those financial worry. In its principle outline, fragment- reaching maturity; the aging of the post WWII ing aging is a direct and indirect consequence of baby boom cohort; and the continuing attractive- increasing inequality and the precarious state of ness of the state as a migration destination for re- those in, especially, the lower half of the income tirees. distribution. The third and fourth factors serve to heighten risk in this segmented market. Four factors introduce uncertainty into business and employment opportunities for serving the LeadingAge Virginia is the professional associa- growing senior population. tion representing the not-for-profit continuum of aging services throughout Virginia, including First, we are in the midst of a major transition nursing homes, adult day, assisted livings, home where senescence – organ system frailty without and community based services, life plan/continu- any discernible external cause (old age) – may ing care retirement communities, and senior hous- replace chronic illnesses as the primary cause of 2 James F. Fried (2000) “Compression of morbidity in the elderly,” Vac- cine 18: 1584-1589; James F. Fried (1980) “Aging, natural death, and 1 The choice of age 65 as a demarcation is based on traditional usage the compression of morbidity,” New England Journal of Medicine 303: