Top 5 Trends Shaping the Senior Living and Care Industry in 2024

  • Industry trends
  • 2/13/2024
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Key insights

  • Senior living occupancy is expected to continue its positive trajectory in 2024, though economics and regulations in the SNF space create differences when comparing states and national trends.
  • The industry is working to strengthen bottom lines by driving top-line volume, enhancing rates, and recalibrating operating costs where feasible.
  • There’s optimism for a rebound in M&A activity in 2024, anticipating increased acquisitions, consolidation, and partnerships.
  • Senior living organizations are diversifying their revenue streams to reduce reliance on traditional revenue sources and create new revenue streams to withstand market shocks.

Develop a strategic financial model for 2024 and beyond.

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With nearly 130 offices nationwide, a deep commitment to industry specialization, and a collaborative team approach, we leverage our extensive experience serving thousands of senior living and care clients. Our ongoing commitment to this sector keeps us well informed and enables us to offer the following insightful perspectives.

Senior living and care operators and owners are shifting from pandemic response to strategic rebalancing for future growth. Their focus is moving beyond overcoming challenges to architecting substantial gains through resilience, innovation, and foresight. Explore the top five trends shaping the senior living and care industry in 2024.

1. Positive occupancy momentum and demand

In 2023, the senior living and care industry witnessed positive occupancy gains across all settings, and this upward trend is anticipated to persist in 2024.

Senior living

Traditional senior living — independent living (IL), assisted living (AL), and memory care — experienced consistent quarterly occupancy increases throughout 2022 and 2023. Many anticipate reaching pre-COVID occupancy levels in 2024, with the higher acuity setting of assisted living and memory care outpacing independent living in occupancy gains.

The positive trajectory in senior living occupancy is primarily attributed to a lack of new construction over the past three years, driven by challenges in the supply chain, labor, capital markets, and interest rates. The slowdown in new construction since 2021, coupled with increased demand and limited new supply, is expected to support continued positive absorption of inventory.

Skilled nursing facilities (SNF)

Occupancy gains in SNFs persisted throughout 2023, but economics and regulations in the SNF space create differences when comparing states and national trends. There is also a continued trend of reduced SNF beds (supply) across the country. Understanding local market trends is critical.

Home health

Home health continues to exhibit an impressive growth rate, propelled by consumer demand and technological support. Many organizations are expanding their focus on home health, and existing home-based care companies are maturing as they transition between home health care and home care.


According to the U.S. Census Bureau, the population aged 85 and over is projected to more than double from 6.7 million in 2020 to 14.4 million by 2040, and 18.6 million by 2050. For seniors aged 85 and older, the national median increase per year from 2022 to 2028 is 1.5%, resulting in an estimated 622,000 more seniors aged 85 and older across the country by 2028.

The demand is not solely acuity-driven, as many seniors are actively pursuing physical, mental, and social wellness — presenting a broader range of opportunities in the industry. The compounding effect of slowdowns and reductions of inventory further highlight the transformative need for future senior care and wellness.

2. Dynamic economic environment


In 2024, senior living and care operators are focusing on enhancing margins. This involves a meticulous balance between right-sizing rates and boosting census across portfolios. The industry is diligently working to strengthen bottom lines by driving top-line volume, optimizing rates, and recalibrating operating costs where feasible. Strategic redesign options are also being explored to improve margins.

  • Expenses: Ongoing pressure on expenses is anticipated in 2024. Inflationary pressures, particularly in staffing-related expenses, are expected to persist, which impacts margins and overall financial performance. Challenges related to interest rates, inflation, and capital market impacts will remain a pressure point. Complexities tied to labor, technology, and operational innovation will necessitate ongoing investment and adaptation.
  • Revenues:
    • Senior living: Rental rates for independent living, assisted living, and memory care have maintained near record-high rate increases since the beginning of 2023. Memory care experienced the largest rate increase. Senior living is poised to continue with higher rate increases to offset continued pressures from rising labor costs and the troublesome inflationary environment.
    • Skilled nursing: The state in which a SNF operates significantly influences revenues with variations in state Medicaid payments and Medicare Advantage plans. Nationally, SNF payer mix consists of approximately 62% Medicaid and 10% traditional fee-for-service Medicare. Medicare Advantage continues to grow, presenting state- and county-level variations. State Medicaid payment systems are evolving around the country in response to volatility in operating expenses and regulatory demands.
    • Home health: Like SNFs, falling reimbursements pose challenges, despite a 3% Medicare rate increase in in the 2024 payment rule. Under that same rule, a 2.89% decrease in the national standardized 30-day payment rate offsets gains, resulting in only a 0.8% increase in estimated payments compared to 2023. This slight increase, amid inflation and rising labor costs, will impact many home health agencies.

Capital markets

The current Federal Reserve tightening cycle (February 2022 to present) has been the most aggressive in the last 40 years. During this tightening cycle, the Fed has increased the Federal Funds Rate by 525 basis points over 17 months, whereas in 1988 – 89, they increased it by 325 basis points over 13 months and in 2004 – 06, they increased it by 425 basis points over 25 months. With December 2023 inflation data coming in slightly above expectations and showing a slight uptick, 2024 interest rate moves remain uncertain.

The looming debt maturity wall is expected to impact the senior living and care industry in 2024. With billions of loans maturing in the coming two years, the need for recapitalization finance is formidable. Borrowers with adjustable-rate debt are often facing insurmountable debt service costs, and the need for recapitalization finance could present a challenge and, inversely, an opportunity for those that are well capitalized and seeking acquisition opportunities.

Due diligence, risk testing and strategic capital allocation will be key for those looking to execute transactions in 2024. Debt service coverage will continue to be a potential pressure point for many. Be proactive, and keep your lenders and investors in the know.

3. Increased M&A activity ahead

The decline in senior living and care transactions in 2023 is attributed to economic turmoil, uncertainty, high interest rates, inflation, and capital market challenges, coupled with a selective approach to deals. Despite the challenges, there's optimism for a rebound in merger and acquisition (M&A) activity in 2024, anticipating increased acquisitions, consolidation, and partnerships.

The industry is adapting to the evolving economic landscape with a focus on regional density, strategic capital reallocation, resident-centric models, technological integration, and holistic wellness. These shifts are reshaping senior living communities, defining the market in 2024.

Expectations for consolidation in 2024 stem from the increased regulatory environment, revenue cycle complexity, and the need for investment in technology and workforce. Home care anticipates a more active M&A year as well, with notable names entering the market and private equity becoming more engaged.

4. Workforce: a continued pressure point

Workforce-related issues are expected to persist as prevailing headwinds for the senior living and care industry in 2024. The challenges — including staffing shortages, wage growth, and the need to pass along staffing-related expenses to consumers — have been ongoing and are anticipated to continue throughout the year.

These workforce issues have been a primary concern for senior living and care providers, and the industry is focused on addressing them by reducing turnover and improving the overall experience of the workforce, which is seen as an investment that will ultimately pay dividends.

There is also the ongoing challenge of reducing or eliminating expensive and highly used nursing contract labor. While contract labor use peaked in Q4 2022 and slowly declined in 2023, contract nursing use is still above pre-pandemic (2020) levels.

Additionally, the proposed federal staffing mandate for nursing homes is predicted to be a top challenge to navigate if/when finalized, as the SNF industry would need to hire approximately 102,000 additional full-time equivalents at an estimated annual cost of $6.8 billion.

5. Maturing vertical growth, health and wellness offerings

In the evolving landscape of the senior living and care industry, the focus on wellness and solutions takes center stage as consumers prioritize health and lifestyle improvements. This shift presents a strategic opportunity for organizations to enhance their value proposition within the health care and wellness landscape. The economic environment provided a catalyst for some organizations to embrace innovative approaches for revenue growth and market impact, emphasizing greater involvement in the health and wellness ecosystem surrounding their communities.

As the costs of expanding through physical locations intensify, there is a shift towards vertical growth by actively engaging in the health and wellness ecosystem. This approach is gaining prominence due to ongoing pressures from capital markets and evolving business economics, challenging the conventional methods of growth.

Senior living organizations are increasingly diversifying their revenue streams to adapt to the changing landscape and meet the evolving needs of consumers. This diversification is driven by several factors, including the need to reduce reliance on traditional revenue sources such as occupancy and rate, and to create new revenue streams that can withstand market shocks. The trend of diversification was already underway before the pandemic, but COVID-19 further highlighted the risks of tying revenue almost entirely to census.

As a result, providers are recognizing the importance of investing in new service lines and ancillary services to position themselves for the future and serve future consumers. This shift is also a response to the changing preferences of consumers who are increasingly seeking more integrated and diverse wellness, lifestyle, and care options.

The industry is focusing more on the next generation of consumers, and providers are strategizing about how compete and command market share coming out of the pandemic. This includes becoming more sophisticated in how they handle data, information, and systems, and participating in payment models supporting value-based reimbursement frameworks.

The move towards revenue diversification is also a response to the rise of active adult/age-in-place hybrids, and the fact that senior living is becoming more of a wellness, lifestyle, and proactive care industry. Therefore, revenue diversification is a top trend and priority for senior living organizations in 2024, as they seek to build a more resilient and sustainable business model.

Value-based care is also at the forefront of the Centers for Medicare & Medicaid Services’ agenda with a target to enroll all Medicare beneficiaries in an accountable care relationship by 2023, and to enroll 50% of Medicare Advantage beneficiaries by 2025, a goal surpassed in 2023. The entire senior living and care industry is aligning with this focus, integrating physicians, and adopting risk-based payment plans.

Physicians are transitioning to payment systems tied to managing health care expenses within a budgeted allowance, marking a departure from traditional fee-for-service models. This trend not only influences operational strategies but also shapes the financial landscape of senior living and care companies in 2024 and beyond.

What to focus on

The business landscape is growing increasingly complex, presenting both challenges and opportunities requiring a sophisticated problem-solving type of mindset. Here are a few options to consider:

Apply digital

In the senior living and care industry, a wealth of valuable data awaits exploration. Yet, historical underinvestment in leveraging data persists. Operators and owners must prioritize investments in data, unlocking the potential to enhance workforce efficiency, influence decisions, and empower autonomy. There’s significant opportunity for automating routine tasks.

Emphasizing the utmost importance of information security through routine third-party reviews, testing, and support is paramount. In an era where social engineering, data breaches, and bad actors dominate headlines, safeguarding your organization is crucial, especially as you continually embrace new technologies.

Enhance existing value creation opportunities

Maintain timely financial information

In times of dynamic economic and financial environments, timely and accurate financial information is critical for strategic decision making and keeping internal team and external stakeholders informed.

Close month-end financials within eight days and promote transparency by sharing financial information. If these tasks prove challenging, consider outsourcing or automating manual processes to streamline operations.

CLA Intuition® Financial Strategic Planning for Health Care Providers

CLA Intuition is an integrated process that facilitates long-range financial planning and decision making through a series of interactive modeling dashboards. It is made up of a variety of tools that can be customized to provide insight into an organization’s financial performance.

Reach out today to get started.

How we can help

Whether diversifying service offerings and revenue streams, prioritizing particular regions to create density and scale, reevaluating your portfolio, or embracing a more proactive approach to participating in value-based care — these strategies take resources.

CLA offers industry-specific support to help your organization use a balanced approach to prioritize and risk-test, evaluate long-term impacts, and measure the compounding effects of initiatives. By running scenarios, stress-testing assumptions, and communicating concisely across your team, you can gauge success and make informed decisions.

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