In 2025, a new federal executive administration starts. It is also a year of new (and renewed) challenges for the assisted living facility (ALF) industry. Small ALFs (under 50 beds) face unique challenges in the new year. Below we list the top challenges facing small ALF in the new year.
Workforce Shortages and High Turnover Rates. The industry competes for the same workers that are employed by fast food chains, retail stores, and other low-to-moderate paying industries. Job stress and burn-out remain primary challenges to reducing high turnover. Small ALFs must distinguish itself by improving the work-life balance for caregivers.
Expansion of Home Care Services. Home care services has grown substantially since the COVID-19 pandemic. It is forecasted to continue to grow due to its popularity among seniors, the relatively lower cost of care verses alternative care models, and federal and state preferences for seniors to age in place. Small ALFs must enhance their brand and reputation in the community. They must define, perfect, and maintain their competitive advantage verses alternative care models (e.g., enhanced dementia care, full service solutions, continuing care solutions).
Rising Costs and Funding Challenges. Residential real estate prices continue their double-digit increases. This, in turn, increases the ownership cost of a care home. In addition, inflation is increasing the cost for utilities, insurance, taxes, and wages. As providers reducing their payout rates, it is getting more difficult for small ALF owners to fund their growth.
Consolidation and Partnerships within the Industry. The senior care industry is attracting many private equity investors. ALFs are attractive investments because they usually contain a real estate component and enjoy strong profit growth potential. Many industry participants are pursuing a "whole person" approach to their service offerings. They are combining traditional ALF duties with other personal care services (e.g., home care, home healthcare, wellness programs).
Keeping Up with Technology. Artificial intelligence (AI) promises to streamline business processes and offer customized patient care solutions. Clients expect ALFs to incorporate these technology solutions to their service offers. AI integration can be expensive and will take time to implement.
Baby Boomer Expansion. According to the U.S. Census Bureau, citizens age 85 and over are projected to more than double from under 7 million persons in 2020 to over 14 million by 2040. Demand for services is broad and includes not only acuity-driven services but physical, mental, and social wellness as well.
Wellness and Preventive Health. Client care will continue to emphasis wellness and preventive health. Small ALF owners must go beyond the traditional activities of daily living services. The focus should be on the whole person not just routine caregiver tasks.
Securing Data. Protecting personal health information remains top priority in 2025. Personal health data has become a primary target of hackers and identity thieves. Small ALF owner must invest in up-to-date cyber security tools and practices.
Regulatory and Compliance Pressure. The Centers for Medicare and Medicaid (CMS) issued rules to establish nurse staffing requirements and transparency reporting for long-term care facilities. It is uncertain how these requirement affect small ALFs, but CMS's intent is clear. CMS is focus on minimum staffing standards and will begin tying Medicaid payments to meeting these requirements.
Adaptation to COVID-19 Operational Standards. The COVID-19 pandemic ushered in new and aggressive standards of how long-term care facilities must operate. CMS made funding available to assist organization to modernize. The funding has ended but ALFs must still conform to these new operational standards.
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