By Khadija Cochinwala, FRANdata
The senior care industry is a large and growing market space that includes businesses and franchises offering assisted living centers, adult daycare facilities, long-term care facilities, nursing homes, hospice care and more recently, in-home care.
According to American Health Care Association (AHCA) and the National Center for Assisted Living (NCAL), there are currently more than 800,000 Americans residing in assisted living, half of whom are 85+ and female. Additionally, the number of Americans aged 65 and older is projected to nearly double from 52 million in 2018 to 95 million by 2060, and the 65-and-older age group’s share of the total population will rise from 16 percent to 23 percent, as indicated by data from the Census Bureau. The numbers speak for themselves, indicating tremendous market opportunity in the elderly caretaking business which is projected to grow from $445.58 billion in 2022 to $476.91 billion in 2023, according to the Services For the Elderly and Persons with Disabilities Global Market Report 2023.
Based on FRANdata’s research, the number of franchised senior care locations has grown at a steady CAGR of 3.1 percent from 2019, demonstrating the demand for these service offerings. The future seems promising with explosive growth slated for the industry but are the senior care franchise players ready to grow fast enough?
The incredible demand for senior care-related services also comes with real and critical challenges related to staffing. According to a New York Times article, even though the 80+ population is projected to increase by 79 percent by 2030, the caregiver demographic (ages 45-64) will increase in the same period by just 1 percent. This appalling decline in the number of family caregivers as well as the pressures that accompany the job positively impacts the demand for professional elderly care services.
However, the biggest obstacle to the industry, which was triggered by the pandemic, is the high attrition rate of employees, due to the limited flexibility of hours and low pay. Data from the Bureau of Labor and Statistics and CMS Payroll Based Journal reporting shows nursing facilities lost 14.5 percent of their employees from 2019-2021 and assisted living facilities lost 7.7 percent. By 2025, US providers will face a collective shortage of about 500,000 home health aides, 100,000 nursing assistants and 29,000 nurse practitioners according to Mercer, a global health care staffing consultancy. This intense skilled labor shortage and operational costs abetted by rising inflation and interest rates in 2023 negatively constrains profit margins and growth rate. Limited federal funding and aid post COVID continue to make operators anxious about 2023 and beyond. More nursing homes (120+ in 2022 alone, according to Centers for Medicare & Medicaid Services) have closed shop in recent years due to staff shortages domino impacting admission and acceptance rates to senior residents. Nevertheless, the loss for nursing homes is a gain for at-home care franchising models within the industry which is also observed to be one of the continuing major developments in 2023.
Hi-tech solutions can be the groundbreaking force to revolutionize the way the industry and its elderly clientele age while offering answers to its most persistent problems. Overall, AI and tech solutions can help resolve labor shortages by streamlining record taking, administrative tasks and patient communication while at the same time bringing down costs and improving care quality. With the Baby Boomers (who have elementary gadget experience unlike previous generations) entering the senior category, franchises who understand and invest in the ever-transforming digital healthcare ecosystem will be better equipped to attract and capture a larger share of the market.
Khadija Cochinwala is a Research Analyst at FRANdata. She is part of a team of analysts who measure, track, and analyze franchisor performance. Khadija is committed to producing quality franchise insights that enable strategic decision making and propelling business growth. For more information about IFA supplier member FRANdata, please visit franchise.org/suppliers/frandata.