Contents of an Assisted Living Market Analysis

Assisted Living Market Analysis_hands on table_meeting

Assisted living facilities are one of the fastest-growing segments of the long-term care market in the U.S. An assisted living market analysis is just what you need to get into that sector. There are an estimated 28,900 assisted living and other residential care facilities in the U.S. in 2020. These communities have almost 1 million beds. This compares to the 733,000 occupants of residential care communities in 2010. So if you are considering investing in, or constructing an assisted living facility, you are looking at a growing market segment.  That said, what type of assisted living market analysis should you do?


Assisted Living Market Analysis Components

There are several potential components to an assisted living market analysis. The type of services you may want to offer influences the market analysis. In addition, it is also influenced by the comprehensiveness you are seeking.

Assisted living facilities can offer various levels of assistance to residents.  Some may cater primarily to active adults with few health concerns.  Others may include services such as memory care. Some may specialize in residents with Parkinsonism or developmental disabilities.

A very comprehensive market analysis would include components such as:

  • Target community demographic data (age, education, etc.)
  • Income distribution
  • Senior housing market analysis
  • Unmet demand

Let’s take a closer look at each component.


Assisted Living Demographics

The most compelling evidence for the continued expansion of this market is the rate of growth in the U.S. population 65 and older. The U.S. Department of Health and Human Services estimates the percentage of the U.S population 65+ will increase from 16% in 2019 to 21.6% in 2040. In absolute numbers, this is an increase from 54 million to 82 million. Accordingly, the number of people seeking to live in an assisted living facility could swell from 1 million now to 1.5 million in just 18 years.

Other health conditions of the population should be analyzed in case you are considering specialty units such as memory care or Alzheimer’s services.


Population Income Distribution

An assisted living market analysis has to take into account the income and wealth profile of the target community. Fees for assisted living range from $3000 to $7000 per month. This means the target demographic are people who already can afford independent living at home which costs about the same amount.


Senior Housing Market Analysis

Aspects of a senior housing market analysis include:

  • Current number of licensed assisted living or other residential care beds;
  • Age of assisted living facilities in the target community primary and secondary market area;
  • Competitive indicators in the marketplace, such as cost and reputation of competitive facilities.


Unmet Demand in an Assisted Living Market Analysis

Arguably the most important component of an assisted living market analysis is the estimated unmet demand. The unmet demand is the difference between current capabilities and the demand based on income/wealth and the estimated number of people who will need assisted living facility services as they age. There are many components and methodologies that can go into calculating the metrics that will help to answer that all-important question. Some of these factors include penetration rates, overall occupancy, bed capacity, and utilization rates.


Where to go from here?

So where do you go from here? An assisted living market analysis is just the first step in deciding on investing in or building an assisted living facility. A market assessment can be just part of a full market assessment and financial feasibility study.  They can also be components of a complete business plan for an assisted living facility.  Moreover, you can find here a sample of consulting engagements in Nursing Homes and Assisted Living.

When you need proven expertise and performance

Jim Hook, MPH

Mr. James D. Hook has over 30 years of healthcare executive management and consulting experience in medical groups, hospitals, IPA’s, MSO’s, and other healthcare organizations.