Technologies Seniors Want and What Senior Housing Offers
- May 24, 2018
For people making the transition from a private home to senior housing, the move can be daunting. The minimal goal of any move for seniors is to maintain as much freedom as possible and have the same features and services they enjoy in their current home. When it comes to technology, the expectations of a “senior” in 2018 are not the same as five or 10 years ago. According to a Pew Research Center survey, 75 percent of older adults say they go online daily, and 60 percent have smartphones. In fact, the senior market is the fastest growing segment of internet users.
With this rise in older internet users, technology plays a more important role than ever in the housing industry. In today’s market, a property must not only provide technological amenities such as cable TV but also Internet and community-wide Wi-Fi. Even the strength of a prospective resident’s mobile carrier’s signal can impact their buying decision—the ability to stay connected is their lifeline to friends and family. It’s also important for their guests to be connected, particularly when they may be younger and are used to being online all the time.
Most importantly, residents want value/savings and a seamless, hassle-free technology experience to enhance their lives and lifestyle. Any technologies need to be as simple as possible—residents like the features but they don’t want to think about the internet or wireless access, they just want it to work.
For the past 25 years, it’s been relatively common for senior housing owners and operators to provide TV within the rent, yet, in 2018, most residents are subscribing to internet services on their own on a retail basis, paying full market rates. At the same time, the operators of properties are dealing with a variety of devices and systems as part of their day to day operations. Staples such as door locks, cameras and Wi-Fi are installed at most properties, while just around the corner awaits the “internet of things,” offering to connect thermostats, lighting, appliances, activity sensors, medicine dispensers and more. As each one of these devices and systems function via the internet and wireless connectivity, an opportunity exists not only to reduce operating costs and add amenities and resident services, but also to create significant new sources of revenue while providing value to the residents.
Technological amenities and features can be the differentiating feature for a senior property, while allowing the property to provide superior care and maximize net operating income. Portfolio owners want to use their buying power to offer residents more value, create efficiencies by reducing redundancy and generate additional income where possible. Additionally, connectivity can allow for more care with less staff, and the reach of the staff may be much broader with some features automated.
Experience shows that deploying various technologies at a property can create more challenges than it solves. This happens most often because of the competing motivations of different departments making isolated decisions for their own initiatives. The net results are overlapping systems and expenses and lost opportunities for efficiencies and complimentary features.
The challenge for senior property owners and operators is that many own properties across a wide footprint with different providers by region, resulting in inconsistent business terms, expiration dates and services. Leverage is lost when negotiating one-off agreements versus leveraging the full buying power of the portfolio. In the end, business terms cannot be optimized and owners and operators spend too much time managing the process. Moreover, residents may be paying premium rates when operators could step in and lower costs by utilizing their buying power.
All technologies deployed at a property must be viewed with the three core missions in mind: resident care, resident satisfaction and NOI. Lack of consistent visibility to these goals results in complexity, inefficiency and a less than optimal resident experience.
Where to begin? Step one is to look at the services currently provided across the portfolio to determine the current providers and agreements in place per property. Next is to assess the current subscription rates of services subscribed by the residents directly with the providers on a retail basis. When completed and mapped against the goals of the owner or operator a strategy will begin to present itself; which providers cover which properties with what services, what do the residents want based on their current use, what features do the operators want, what will benefit the owner’s marketing teams and what services can the current provider offer to facilitate the majority of these items. The final step is to begin the RFP and negotiation process with the viable providers of services to each property and groupings of properties to secure optimal terms. The net result is visibility of the options, maximum efficiency and maximum NOI all while ensuring the core goals remain in clear focus.
For companies with sufficient resources, it is ideal to have the internal capabilities—including expertise and relevant contacts—to optimize agreements as highlighted in the case study above. For most smaller companies, however, this is not an option. For companies without the time or resources, third-party consultants are the most viable option. These consultants will have the expertise and industry contacts to be effective. Some provide their analysis and services for an hourly rate, while others provide their services on a performance basis (a percentage of the savings or income created). Whichever consultant option is selected, economies of scale and references are key to making the right choice
A Case Study for Success
A large REIT with more than 400 senior housing properties across the U.S. sought to optimize their telecom assets. A performance-based consultant was engaged to manage the process. Across the portfolio, 65 percent were served by one national cable/internet provider. In the past, each property had done their own agreements with wildly different terms and features. At the same time, at each property, most residents (75 percent) were paying retail rates for the internet while the management staff paid retail for non-HIPAA services such as WiFi, cable and Internet. When viewed in whole, the REIT’s leverage and buying power exposed itself. After careful negotiations, all existing agreements were renegotiated to the same terms and services. At the same time, each property was marketed to the cell carriers, resulting in discrete cell antenna placements at a large grouping of properties. The residents saw enhanced amenities (community-wide Wi-Fi, improved cell coverage, etc.) and reduced costs. The management staff reduced op-ex and created an Internet/wireless platform from which they could begin to build new amenities. In the end, the owner realized a signing bonus of several million dollars and an ongoing monthly revenue stream of hundreds of thousands of dollars.
When technology is handled properly at independent and assisted living facilities, everyone wins. The residents win because they get the services and features they desire for a fair price. The owners and operators win because they can increase amenities and net operating income both in the short and long-term. Most importantly, tech aware and increasingly tech savvy residents enjoy a long term, connected, value-added lifestyle.
Jason Scutt is president of Worth Telecom Advisors.