The market for private independent and assisted-living seniors residences continues to struggle with a surplus of facilities after years of development prior to the global financial crisis. (See "Market glut dampens retirement development sector" – BIV issue 1056; January 19-25, 2010.)
While some in the industry hope demographic trends will strengthen demand, some suggest changes to B.C.'s subsidized seniors housing program would help balance the market and help solve the government's future funding challenges.
Business in Vancouver recently spoke with Azim Jamal, president and CEO of Vancouver-based Retirement Concepts, the largest operator of seniors housing communities in B.C., on the issues facing the industry.
Is the market for private seniors retirement homes still over-supplied?
Yes, most of the markets in B.C. are over-built for private-pay, independent and assisted living [units] right now. There were developers that didn't do their homework and thought demographics were going to cure all their ills, and it really doesn't for many, many years.
That appears to contrast with the lack of supply in subsidized seniors housing
On the subsidized housing side, it's going to continue to be a challenged marketplace where demand is going to outstrip supply. The government can only afford to subsidize so many units, but when you look at the projections for growth in the seniors housing population, demand is a question that needs to be addressed. The cost for provision for subsidized units is very substantive, and I don't know how we as a society are going to manage it unless there is some rationalization of the cost and the user-pay component.
What are some ways to deal with the cost?
I'm on the board of the BC Care Providers Association, and we have many ideas about how those costs can be rationalized. One issue that we have advocated for is to change the standard accommodation in subsidized residential care. In Alberta and Ontario, for example, the standard is semi-private accommodation. In B.C., the standard is a private room. The cost of building and servicing a private room is substantially higher than for a semi-private room. It costs in excess of $200,000 per bed to build a private room and about $140,000 for a semi-private room. So there is a $60,000 capital saving per bed. That's a big burden for taxpayers to pay to make sure that everyone that wants subsidized housing [gets] a private room.
Does this affect the private-pay seniors housing market?
Yes. When you look at the fact that the standard for a government-subsidized unit is a private room, there really isn't an appetite or desire to pay privately for accommodation. As far as the demand for private-pay accommodation on the skilled nursing side, it's very shallow because of that. There's a certain entitlement mentality for residential care.
Are there any benefits to clients for having semi-private rooms?
There are all kinds of benefits. My grandmother lived in a residential care facility and she requested a semi-private room so she could be with her friend. For her, the benefit was companionship. Many seniors would prefer a semi-private room, but they just aren't being built anymore. The licensing guidelines are now that 95% of your beds need to be private rooms, even if you aren't subsidized.
What's preventing changes to reduce the costs associated with subsidized seniors housing?
To change the requirement to semi-private accommodation might be unpopular. In other provinces, to get a private room, there's an extra fee, just like if you go to a hospital. But [in B.C.], if you want a private room in a residential care facility, you don't pay extra. •
Retirement Concepts
HQ: Vancouver
CEO: Azim Jamal
Founded: 1988
Employees: 2,433
Facilities: 19
