Market Report: The Business of Aging

Senior Living: High Marks and Big Worries

Greater Madison gets high marks for its senior-friendly amenities and character, but it has something in common with other communities — it’s not yet ready to address the forthcoming onslaught of memory care.

If you’re not sensing a lot of hip-hip-hooray about Madison’s perch at the top of another “best of” list, this time for successful aging, it’s because something potentially overwhelming awaits the Capital City and virtually every other sizeable community in the United States.

The good news is that the Milken Institute recently placed Madison atop its list of the 20 best large metropolitan areas for successful aging, touting its quality health care, strong economy, cultural amenities, and opportunities for intellectual stimulation. Madison received demerits for its pricey living and for having too many fast-food restaurants, but overall it was the No. 1 city for people ages 65-79 and the third-best city for the 80-plus group.

The 50,000 senior citizens who reside in Dane County (according to the 2010 U.S. Census), comprising about 10% of the population, represent a substantial market for health care, housing, and other services. Despite business and care challenges associated with inadequate support from Medicaid, the government’s health care program for economically disadvantaged people, most of the area’s senior needs are pretty well served.

The most significant exception involves memory care, even in today’s more manageable situation. By 2030, however, Dane County’s 65-and-older population is projected to grow to approximately 113,000, which would represent 18% of the total projected population, according to the 2011 United Way of Dane County Safe and Healthy Aging Mobilization Plan. The 85-and-older group, which would be especially susceptible to dementia in its various forms (including Alzheimer’s), would increase to nearly 13,300, an 84% jump.

“It’s coming upon us like a tsunami because people are getting older and living longer, and they are going to have memory issues,” said Marje Murray, director of geriatric services for UW Health.

In this market report on senior living, IB explores the opportunities for business development that are still associated with serving people in their golden years, including housing, senior finance, physical activity, nutrition, and brain health.

Healthy brain gains

Can brain diseases associated with aging, such as Alzheimer’s and other forms of dementia, be held at bay or prevented? That’s what Dr. Sanjay Asthana and many others in the field of medicine are trying to find out.

Asthana, a professor in the UW-Madison School of Medicine & Public Health, says we already know certain inescapable facts. The first is that aging is the biggest risk factor in developing a dementia-related disease. Only 2% of those aged 60 to 65 have Alzheimer’s. At the age of 80, 25% to 30% have Alzheimer’s. After age 90, between 50% and 60% will have it. The other significant risk factor is the presence of other vascular diseases associated with aging: heart disease, high blood pressure, diabetes, and stroke.

Projections are that unless more effective treatments or prevention strategies are found, 13 to 14 million Americans will have Alzheimer’s by 2050, almost triple the 5.1 million already affected. Globally, the projections are even more alarming — 80 million on the low end and 200 million on the high end.

Funding support from the National Institutes of Health and the pharmaceutical industry has increased our understanding about the pre-symptomatic stages of Alzheimer’s. We now know the disease develops in the brain over a period of 20 or 25 years before the first symptoms appear, and that a protein called amyloid is one of the main culprits. The presence of amyloid, which can build plaque and cause nerve damage and inflammation, can be detected with positron emission tomography (PET) scans.

Asthana, who is still hopeful PET scans for amyloid will eventually be covered by all or most insurance companies, believes it will be important for people in their 40s to get the scan so they can take steps to slow the progression of Alzheimer’s. Fortunately, observational studies suggest that regular exercise (30 minutes a day, five days a week) and a diet high in antioxidants can do just that, although more clinical studies are needed to confirm those findings.

In addition, a two-year study involving the infusion of certain antibodies has proven effective in removing amyloid from the brains of Alzheimer’s patients, but none of them have showed significant improvement in their symptoms. The medical community is still hoping to see signs of improvement from this therapy when applied over longer periods of time.

UW-Madison’s Alzheimer’s Disease Research Center, funded by the NIH, is one of the first to focus on the pre-symptomatic stage of Alzheimer’s. Asthana, the center’s director, anticipates business development from some of the center’s discoveries, including those of Dr. Luigi Puglielli, whose research into how amyloid protein is processed in the brain has drawn the interest of venture investors and pharmaceutical companies.

Asthana believes entrepreneurial opportunities could be developed from any aspect of the center’s research. “The potential for entrepreneurship,” he said, “is very, very high.”

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Seeing Into the Future

Ophthalmologists foresee far more patients and collaboration.

Anticipating a rise in patients due to an aging population, Davis Duehr Dean in Madison is not alone as it weighs an increased demand for vision services against fixed resources to address those needs, according to Andrea Reis, clinical manager. Anticipating an increase in patients, particularly in the areas of age-related conditions such as cataracts, macular degeneration, and glaucoma, the clinic is constantly working to become more efficient, including by training staff in new specialties and adding new technology.

But as technology improves, the price goes up. “The cost of this equipment forces us to be very selective and plan carefully how and when we make these investments,” said Reis.

With seniors using eight-and-a-half times more medical services than people under 65, and with someone in America turning 65 every 10 seconds, it’s no wonder the medical industry is scrambling to get ahead of the curve.

In a 2008 report from the American Academy of Ophthalmology, Derek Preece, a consultant with BSM Consulting Group in Utah, anticipated a significant shortage of ophthalmologists in future years.

He also predicted a decline in Medicare reimbursements, increased patient loads, heavier capital requirements, and a need for more highly skilled staff to treat more patients, all of which appear to be happening.

But because of the Affordable Care Act, health and vision care is now focused more on quality than quantity, and “that most certainly will put a greater emphasis on the qualifications of particular providers in terms of their training and experience,” said Richard Paul, executive director at the Wisconsin Academy of Ophthalmology.

“So while lowering standards for licensure, for example, might temporarily increase the number of providers in the marketplace, it also has a potential for negatively affecting the quality standards that are being implemented.”

The Centers for Disease Control and Prevention reports that the annual economic impact of major vision problems among adults 40 and older is more than $51 billion and growing, yet Americans often take their vision for granted.

A National Eye Health Education Program 2005 Public Knowledge, Attitudes, and Practices survey found that more than 70% of respondents believe a loss of vision would have the greatest impact on their day-to-day life, but fewer than 11% knew that there are no early warning signs of glaucoma and diabetic retinopathy.

Dr. Stephen Sramek of Davis Duehr Dean says better education is key to delaying complications and reducing incidences of eye disease, but “my experience has been that the population growth and increase in treatable diseases increases demands for services.”

Will those demands lead to more eye clinics, whether standalones or group-affiliated locations? Paul says he’s seeing ophthalmologists move away from solo practices in favor of a team approach led by ophthalmologists but also including optometrists, ophthalmic technicians, and ophthalmic nurses. Technicians are also being used more frequently in the information-gathering stages of an exam, which frees up the ophthalmologists to focus on their unique competencies.

It’s a trend Sramek welcomes. “Personally, I believe in the integrated-care model for complex eye diseases. Ongoing efforts to provide better care at lower cost, in my opinion, are best managed or attempted in the group-affiliated model. There will always be a niche for the standalones, particularly for routine eye care.”

Senior Social Itinerary

Senior-living facilities refer to it as life enrichment, but whatever the term, seniors must avoid isolation in order to stay healthy and remain in their own homes.

Fortunately, Madison’s menu of culture and entertainment is largely accessible to them, thanks to the efforts of government-sponsored senior centers, civic organizations, and the business sector. However, there is still room for improvement, explains Ann Albert, executive director of Supporting Active Independent Lives.

SAIL vets local businesses before partnering with them to serve its membership, and 70 vendors have made the cut. But if there is one service that’s lacking for seniors living at home, it’s night-time transportation options, Albert says. While there are ample transportation options available to residents of senior-living facilities, and for seniors who have medical or other appointments during the day, Albert would like to see more transportation options made available for the fun stuff.

“If somebody has a lot of appointments and they don’t drive, we can help them, but as far as volunteer transportation or safe, low-cost options for social interaction, that’s usually put on the back burner,” she said. “With most older adults, you will hear them say, ‘I wish I was getting out more, other than going to the doctor.’ There’s more to life than that, and if they have that maybe they go to the doctor less.”

If they want to compete for business, senior-living centers cannot ignore life enrichment, and organizations like BrightStar offer individualized care plans that focus on interests of the client. Rita Giovannoni, CEO of Independent Living, had neighboring seniors serve as a focus group when planning the common space of the organization’s Tennyson facility. “One of the things we heard from the various audiences is the notion of opening our community space to the broader community,” Giovannoni said. “Someone might be living in our building but have three other friends still living in the neighborhood.”

The State of Wisconsin’s dementia-friendly community initiative is another area where businesses can help promote successful aging. Memory cafes are emerging as places caregivers can go for a respite, and 250 skilled-nursing facilities have been certified to participate in the state’s music and memory program, in which residents are reintroduced to their favorite music to reconnect them with the past.

Meanwhile, an effort has been launched to raise public awareness about relating to dementia patients with compassion and understanding, according to Julia Hyland of the Wisconsin Department of Health Services. “What businesses do is identify the need to assist individuals with dementia and their caregivers, so they actively train on how to interact with an individual who has dementia,” Hyland explained. “While going through this process, the business is identified as being dementia-friendly with a logo.”

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Seniors Affect Foodie Culture

Demographic changes will likely reinforce Madison’s fondness for healthy food.

Everyone has to eat, but our dining habits evolve tremendously as we age. (There’s a reason Doritos isn’t a major contributor to the PBS Foundation, after all.) Food is a necessity, but restaurant and grocery store offerings constantly change in response to demographic shifts.

As the population ages, we’re seeing a greater demand for healthier fare, and that trend dovetails with some well-established consumer preferences in the Madison area.

Older consumers tend to avoid fat, sodium, and sugar more than other consumers do, and many are gravitating toward small plates at restaurants as well as specialty items that are gluten free, low in cholesterol, high in fiber, vitamin enhanced, or friendly to diabetics.

Other emerging trends — like a preference for locally sourced food — are being seen among senior populations as well.

“Some restaurants are promoting menu items as ‘fresh’ and ‘local’ instead of ‘healthy,’” said Susan Quam, executive vice president of the Wisconsin Restaurant Association. “Because some commodities, such as beef and dairy, are at an all-time high price-wise, menu items that have large portions of high-priced foods are being swapped out for smaller portions. Also, eating and spending habits of older generations are changing. The days of three strictly observed standard meals are fading away in favor of snacking and off-peak meal times.”

Baby boomers’ preference for fresh and locally produced foods is particularly pronounced in Dane County, judging by the ever-increasing popularity of farmers’ markets and farm-to-table restaurants.

“These baby boomer trends are amplified in Madison, where people pride themselves on living and eating healthy,” said Michelle Kussow, vice president of government affairs and communication for the Wisconsin Grocers Association. “In addition, as an intellectual city, we make educated decisions on the foods we choose while paying particular attention to labels and buying local products.”

Of course, as the population ages, the opportunities for local restaurants and grocers that source their food locally may expand even further.

“Buying local has become a way of life for Madisonians and retailers, and it’s benefited Wisconsin’s small local producers,” said Kussow. “In the past, it was difficult for these small producers and manufacturers to get a start and market their products to the public. Now, everyone from the customer and retailer to the food brokers, suppliers, and state and local governments are focused on promoting local products and producers.”

Making House Calls

One aspect of health care that could attract more medical professionals dates back to the practice of doctors making house calls. Visiting Physicians Association, a 22-year-old national organization employing physicians who only take care of (qualifying) people in their homes, provides services to patients of any age who are homebound and have difficulty leaving their homes to visit doctors. VPA physicians become the patient’s primary doctor and visit once every four to six weeks, or when the need arises.

The physicians, accompanied by a medical assistant, travel to a patient’s home where they can do weight checks and blood draws, take X-rays, conduct urine tests, or refill prescriptions. The service is covered by most health insurance companies, according to Jasmine Vlassek, associate practice manager at VPA, which opened in the Madison area in 2012 and currently has two physicians who care for about 300 patients.

Vlassek said the company gets between 30 and 40 referrals each month. “We’re seeing a lot of need with mental and physical disabilities, but aging is probably 85% of those we see.” The program is growing rapidly, she says, because of the aging population, and there’s a huge need for it in assisted-living facilities. “Insurance companies are looking at us because we’re saving them money and keeping patients out of hospitals and urgent cares.”

So how will the medical field accommodate the onslaught of boomers? “We won’t be able to,” Vlassek states. “There won’t be enough buildings for the people who will need services, so keeping them in their homes is key.”

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Help Wanted

Can local colleges meet the growing demand for health care professionals?

Clearly, demographics are not on our side when it comes to meeting boomers’ health care needs as they enter their golden years.

According to the American Association of Colleges of Nursing (AACN), our country faces a shortage of registered nurses that will only get worse as the population continues to age, and our institutes of higher learning are having trouble meeting the demand for enrollment. A recent AACN report on enrollments and graduations in nursing programs noted that U.S. nursing schools rejected more than 79,000 qualified nursing school applicants in 2012 “due to insufficient number of faculty, clinical sites, classroom space … and budget constraints.”

In addition, plenty of nurses who are currently providing elders with care will be ready to retire in the next several years. A 2013 survey by the National Council of State Boards of Nursing and the Forum of State Nursing Workforce Centers found that 55% of registered nurses were 50 or older.

That predicts a demographic vise grip that could put an even bigger squeeze on college nursing and elder care programs. So what challenges and opportunities do educators face in light of the looming demand for health care services?

In Wisconsin, the online UW Flexible Option, which currently offers a B.S. in nursing, is meeting part of this demand, and other colleges and universities have been gearing up as well. Five years ago, Edgewood College’s school of nursing began an accelerated post-baccalaureate for individuals with previous bachelor’s degrees. Students can complete the program in 12 months, which has added to the population of graduate RNs with bachelor’s degrees.

According to Colleen Gullickson, professor and associate dean for undergraduate programs at Edgewood’s Henry Predolin School of Nursing, the college is fortunate to have several faculty members with geriatric experience, which enriches its offerings.

“Geriatric content was already being addressed in the curriculum,” said Gullickson. “However, more recently an integrated approach has been developed where geriatric content is discussed in every course throughout the nursing curriculum.”

Madison College has responded to these demographic pressures in several ways, including requiring students in associate degree nursing programs to have one year of clinical experience in a long-term-care setting and expanding the college’s associate degree nursing program and nursing assistant offerings.

According to Mark Lausch, dean of the School of Health Education at Madison College, the challenges are not just demographic but financial as well.

“We need to find ways to continue to fund the nursing program in an era when budgets are being reduced,” said Lausch. “These jobs are essential if we are going to maintain the quality of care the residents of our district have come to expect.”

Meanwhile, the demand for senior care services is opening up new opportunities for local colleges.

“We expect that the demand will grow beyond what health care providers can handle,” said Lausch. “As a result, we are currently researching a number of new educational offerings at Madison College that will address these needs. Programs such as advanced nursing assistant, gerontology, adult/elder care, telemedicine, and more are being researched to determine need and timing.”

Boomers Take Stock

How will financial markets respond to a wave of retirements in the next two decades?

With older baby boomers beginning to enter their retirement years and younger members of that generation keenly aware of the financial challenges that lie ahead for them, investors’ and wealth managers’ focus is not just on retirees’ portfolios but on the investment landscape as a whole.

Seismic cultural and economic changes have resulted from the boomers’ Brobdingnagian footprint every step of the way, and so some are worried that the historic stock market gains we’ve seen of late could evaporate as new retirees seek safer investments and liquidate equities to meet living expenses.

In fact, it would be surprising if this coming demographic shift had no effect on the markets; according to local financial advisors, it almost certainly will.

“I believe the obvious baby boom retirement demographic issues are going to have major impacts on the investment landscape in the form of ‘chase for yield’ or ‘hunger for income replacement,’” said Michael Dubis, a Madison-based financial planner. “There’s evidence you’re already seeing this play out with transitions of capital from equities to fixed-income and hybrid fixed-income products. … I don’t envision an abandonment of stocks because many investors don’t want to be completely risk-intolerant, while millennials and younger families continue to place some or a lot of faith in long-term capital investment.”

Given the market volatility of the past decade, seniors may be taking an even longer look at safe-haven investments, potentially accelerating a retreat from equities. “As we age, the fear of being caught in a bear market may be a reason to become overly cautious, making investors plan to fund their lifetime income needs solely with instruments that tend to be very conservative,” said Matt Ruppe, Investment Services program manager at UW Credit Union. “This strategy can have an adverse effect on long-term financial well-being as it eliminates the upside potential and inflation hedge that other investments may offer.”

That said, the current interest rate environment could keep seniors invested in stocks for the time being, given the paltry returns that many interest-bearing investments currently offer.

“In most cases, [seniors] can’t generate enough income anymore from CDs, so they have gone to higher-risk bonds and dividend-paying stocks,” said Lauri Droster, senior vice president for The Droster Team, RBC Wealth Management. “They are taking on more risk in order to generate the income they need.”

So is Madison any different than the rest of the country? Possibly. For one thing, we’re strong in biotech and other health care-related fields that stand to benefit financially from an aging population. Not only will that likely buoy the local economy in the long run, it could significantly enrich local investors who made early bets in promising companies like Exact Sciences.

Also, Madison-area seniors are probably in a better position than most as they plan for retirement.

“The economy in Madison held up better in the Great Recession than the country’s average and didn’t have as much job loss and loss in real estate value,” said Droster.

So is a 21st century stock market panic inevitable as boomers increasingly head for the exits? Not necessarily. While markets are almost certain to shift in both predictable and unpredictable ways, there are reasons to believe stocks will continue to prove their mettle.

In a recent white paper, The Vanguard Group gave five reasons for remaining calm about future equity returns: 1) boomers won’t retire all at once, so any downward pressure on the markets will be distributed over many years; 2) boomers’ share of the stock market is similar to that of prior generations, and no downturn has resulted from previous retirement transitions; 3) most equities are held by the wealthiest 10%, who don’t need to sell off stocks to fund day-to-day needs; 4) the growth in foreign investment is likely to offset any divestment by boomers; and 5) historically, there has been no significant correlation between aging populations and long-term returns.

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Fit to Be Old

According to AARP, over the next 18 years, baby boomers will turn 65 at a rate of 8,000 per day. How are service providers preparing for the onslaught?

The statistics are staggering: According to babyboomermagazine.com, by age 65, two-thirds of all baby boomers have at least one chronic disease, and beyond 65, two-thirds will likely have five or more chronic diseases, see 15 physicians, and average more than 40 doctor’s visits a year.

The medical field is ramping up as best it can. The American Medical Association now has policies in place calling for all physicians with older patients to be competent in geriatrics, and at the American Association of Medical Colleges, programs have been developed for medical students that focus on 26 geriatric competencies, including being able to explain the impact of age-related changes on drug selection and dosage, diagnose dementia, and talk with patients and families about palliative care.

Locally, at Meriter-UnityPoint, Dr. Robert Turngren, president of Meriter Medical Group, predicts primary care will increase to maintain easy access that is close to home. In anticipation of rising patient numbers, the medical group has been adding or expanding specialties catering to the aging population, such as rheumatology, urology, mammography, heart and vascular care, and orthopedics — particularly spine, hip, and knee care.

From the insurance perspective, Scott Shoemaker, director of communications and community relations at Physicians Plus Insurance Corp., said the industry is creating better member engagement and health risk assessment programs, ensuring that higher-risk seniors have care coordination support available, and partnering with home care organizations to shift appropriate care to the home setting. All will require additional staff. But the main savings, he noted, will come from preventing hospitalizations and visits to the emergency room.

And boomers and seniors can play a large hand in that if they take care of themselves. More and more, fitness clubs are adding programming for older adults, some of it conducted by aging fitness instructors.

“We’ve seen seniors looking for personal training to meet their needs,” said Sharon Baldwin, senior director for mission advancement at the YMCA of Dane County. Baldwin added that the aging of the baby boomers will create new jobs, and she notes that specialty fitness certifications relating directly to chronic disease prevention are becoming more numerous.

The American Council on Exercise provides programs for fitness experts in how to better communicate with seniors and tailor exercise programs for them. The programs also provide training in how to conduct assessments, motivate aging individuals, and modify fitness routines.

Last year, the Minneapolis/St. Paul Business Journal reported on a growing number of fitness centers targeted to baby boomers, including Edina, Minn.-based Welcyon, where the average age of members is 62 and music from the ’40s, ’50s, and ’60s plays at much lower volumes compared to more typical health clubs. Cardio machines are lower-impact, resistance training is mainly air-powered, and some classes are conducted while sitting down. Treadmills and free weights are nowhere to be found, and smart cards are used to set repetitions and improve workouts.

The trend isn’t lost on the YMCA, which has been focusing on the rising number of boomers. “We are changing constantly to meet the needs, and we want to be relevant,” Baldwin noted. “They are absolutely benefiting from what we offer.” In fact, adults 50 and older make up the organization’s fastest-growing segment, and many older adults are seeking out personal trainers.

Perhaps that’s because, on average, people can lose 10% of their muscle mass by the time they reach 50, according to the American College of Sports Medicine. After that, strength declines quickly with age, increasing the risk of falls and broken hips or immobility.

 “The aging population wants to do things they couldn’t do before,” Baldwin noted. “They want to stay active with their grandchildren. It’s a quality-of-life issue.”

Hospice in Demand

Hospice industry braces for boomer-led changes, and growth.

For the first time ever, more Americans are 65 or older than 20 or younger, and that’s creating a crisis in health care, according to Melanie Ramey, CEO of The HOPE of Wisconsin, the state organization that represents all Wisconsin hospice and palliative care programs.

People are living longer with more illnesses, she noted, and with Dane County’s senior population expected to more than double over the next 15 years, the demands facing the end-of-life market are enormous.

Given the way care is delivered, much of the stress will involve the staffing of hospice facilities. Hospice teams usually include a nurse, a medical director, and counselors or bereavement staff. Ramey said five hospice organizations are currently operating in the Madison area: Agrace Hospice and Palliative Care, Home Health United, Heartland Hospice Services of Madison, Saint Jude Hospice, and Southern Care.

In Dane County alone, they employ 514 full-time and 192 part-time workers but are actively recruiting to continue to provide what is considered the “gold” standard of end-of-life care.

Additional professional caregivers will also be needed for palliative care, which is specialized medical care for people with serious illnesses. Palliative care is similar to hospice in that a team of doctors and specialists can be involved with one client, but palliative care is appropriate at any age and for any stage of a serious illness. It can also be provided alongside curative treatment.

Ramey says some private insurance companies are beginning to cover palliative care, which can begin without a terminal diagnosis.

The key to a successful program is its ability to attract workers. “Wages are always competitive, and benefits, too,” Ramey said. “One of the things people like about working in hospice is that they do get to spend a lot of time with a patient, which is very attractive to a lot of people.”

More than half of hospices in the state are affiliated with hospital systems, where hospice workers are entitled to the same benefits as hospital employees. In this area, hospices are independently run, and for that reason especially they must be competitive when it comes to attracting workers.

Hospice care is an all-inclusive service and a Medicare benefit, but medications, durable medical equipment, or pain control medicine can be extremely costly for the industry. “It’s a real challenge for a hospice to manage some of that,” Ramey admitted, citing one instance where hospice staff administered, with authorization, a new medication to stop a patient’s constant vomiting. It cost $4,000 per shot, and the recommended dosage was three shots. Luckily, one alleviated the problem, “but it still cost $4,000,” she said.

Currently, hospice patients cannot seek curative treatment while receiving benefits, but baby boomers have been pressuring the industry for the right to do just that, and they’ve rattled the government’s cage enough for the Centers for Medicare & Medicaid Services to fund some demonstration projects exploring the concept.

In general, Ramey says baby boomers, the 76 million strong generation born between 1946 and 1964, are demanding an active voice in their health care choices and seeking more communication with physicians. In doing so, they are quickly changing the face of hospice and health care.

The demand for services could also move end-of-life care outside of traditional hospice facilities. Craig Hungerford, president-owner of the Madison-based Real Estate Dynamics, believes the need for end-of-life care is so great that soon facilities catering to senior living will likely add hospice to their programs. “I think you’re going to see more and more facilities that provide support for people at the end stages of life. Whether it’s assisted living or memory care, you’re going to see the introduction of on-site, end-of-life care programs, hospice style. I think it’s inevitable, bringing people into your facility.”

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