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AI Technologies May Drive Down Demand for Seniors Housing in the Short Run

By allowing seniors to stay in their homes longer, new technologies, including AI, may postpone their move to seniors housing.

As seniors housing providers face challenges retaining staff and pressure from the government to curb healthcare costs, AI technologies could help reduce excess administrative duties that burden care staff at these facilities, according to a recent study by the BDO Center for Healthcare Excellence & Innovation “Candid Conversation on Elder Care.” AI might also make facilities that incorporate the latest technological advances more in demand among potential residents.

The study pointed to increasing demand for AI innovation as a necessity for seniors housing providers in the near future. It revealed that 71 percent of surveyed U.S. executives, clinical leaders and clinicians at nearly 500 healthcare organizations, believe that AI will have a net impact by on improving the quality and safety of senior care by 2020. Twenty-one percent of survey respondents said that impact will be moderate, 49 percent said it will be significant and 21 percent said it will have no impact.

At the same time, new technologies will most likely allow more seniors to remain in their homes for longer, which could result in decreased demand for seniors housing in the short run, says Managing Director and Co-Founder of the BDO Center for Healthcare Innovation and Excellence David Friend. “More AI and advanced technology, such as telemedicine, will allow increased elder care to occur in the home as opposed to the option of staying longer in hospitals,” Friend notes. “Additionally, Uber and Lyft are allowing seniors who can’t drive to stay in their homes longer because they have more accessibility, which will decrease demand for senior housing. My father is almost 92, and my mother is almost 86. They can’t drive, but they are still in their [home] because they can order Uber and Lyft and get to where they need to go.”

NREI spoke with Friend about the outlook for AI’s impact on the seniors housing sector.

NREI: How will the availability of in-home care and in-home technology affect the seniors housing sector?

David Friend: More seniors are living at home longer based on technological advances in healthcare, and these improvements will delay the entry of people into the next level of care. A senior will stay in independent living and assisted living longer, and there may be less demand in the skilled nursing sector. Studies show that if people have a choice, they’d rather stay in their home, which means they will also delay moving into assisted living, which could decrease demand for seniors housing in the short run. However, there are about 10,000 individuals a day turning 65, which is a very increased senior population. At the same time, the age they are going into these facilities is increasing. The average profile of someone going into independent living is 87 right now. Ten years ago, you would have had a younger person going into the same facility.

NREI: What other factors could affect demand for seniors housing?

David Friend: The demand for seniors housing is market-specific. Some markets are overbuilt, while others are underbuilt. Affordability is also a major segment of the market, and only 10 percent of seniors can afford high-priced housing, and most people need to sell their homes to afford to move, so if a senior can’t afford to move and the market lacks affordability, it could have a negative impact for this product. The wearable technologies, such as the Apple Watch to detect falls and iPhones that allow seniors to see their physicians, as well as telemedicine opportunities in general, will affect where seniors choose to live.

NREI: How can AI assist with staffing pressures? Is there a possibility that AI will reduce the need for more on-site staff?

David Friend: Staff is still essential to help seniors with daily living activities, such as washing, dressing, and toileting—tasks that require human beings. But AI can do paperwork, schedule appointments, deal with medical records and billing, get people from point A to point B, and order supplies. It’s a huge opportunity to use technology and make it more efficient. There is still an increased demand for caregivers, however, but there will also be a decreased demand for clerical workers. At the same time, operators will need to ensure more staff are able to manage the new technologies.

NREI: How can operators remain competitive in a changing market that will include AI support?

David Friend: What people want in seniors housing is changing. Structures built 20 to 40 years ago may not be as appealing as [more modern] buildings with community centers and access to technology in geographies that are less isolated. In the past, seniors accepted that isolation was the norm, but not now. Also, seniors housing with the updated technologies can save money by avoiding falls and preventing other health problems, such as heart attacks. Before you would treat the heart attack, but now, operators can avoid spending money on care that could be averted with technology that can detect warning signs.

NREI: What is the timetable for AI and in what settings?

David Friend: Technology will come in different waves in various markets, but it will pop up here and there, and without an organized master plan. For example, [Amazon’s Alexa is now] able to schedule appointments, check health insurance benefits, measure blood sugar, and ship drugs to individuals.

NREI: How can providers make AI an attractive asset?

David Friend: If I was trying to create a new building, I might provide AI options as the owner, but it could come from a lot of different sources. There is no set way in the market to use AI. Innovators will see what people like, and then they’ll use more of it. For example, Rudy the Robot offers overnight care at $100 a day, checking on medicines and asking the senior if he/she has walked [that] day, which reduces the stressors on staff and is cheaper than hiring a human overnight.

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