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Investors Find Profit in Oregon’s Increasing Senior Population

Though today’s market is saturated with advertising and housing geared toward the millennial consumer, it is the Baby Boomer generation who is garnering notice in Oregon for both local and foreign investors, due to its 93% senior-housing occupancy rate.

Senior care living facilities, designed to resemble more of a residential versus institutional environment, are not a common concept across the states. In fact, they only gained traction in Oregon in the 1980s, 1981 being the year that Oregon became the first state to request of Medicaid and Medicare a waiver that would allow one to use Medicaid dollars to pay for long-term care in settings other than nursing homes. If you cast your gaze across the nation, it is much more common for seniors to live out their days in a condo or apartment.

From 2013 to 2017 alone, there has been a 26% increase in the amount of dollars spent by the State for long-term care for Oregon Medicaid citizens, rising from $575 million to $730 million. In 2016, Oregon was home to about 670,000 citizens aged 65 and older, with 85,000 of those being aged 85 and older. Forecasters at the Oregon Office of Economic Analysis project that by 2026 the number of citizens aged 85 and older will grow to be closer to 100,000, a significant increase.

For investors, these numbers make Oregon a prime destination for investing in senior long-term care living facilities, due to the high occupancy rate, the continuing demand for and construction of these facilities, and the profit margins they bring with them. Out of all the subcategories of assisted living facilities, the independent living homes have the largest profit margin, mostly because they do not require the higher amount of caregivers or extra costs that you will find elsewhere. Following independent living, memory care facilities follow in profit as their rooms are higher priced due to the amount of care patients with diseases such as dementia or alzheimer’s require. Most facilities accept Medicaid patients, which one would think effects the bottom line in regards to profit, but to an investor, this is balanced by the fact that serving Medicaid patients helps keep facilities full. More and more private equity firms and institutional investors are moving their money into senior housing. Even investors from overseas, such as China are increasingly interested in how Oregon serves their senior population.

An example of a local senior care facility.

What I found disheartening about what I have learned regarding Oregon’s long-term senior care is that most Oregonians aren’t fiscally prepared to enter into these facilities. In fact, a study conducted by financial firm, PricewaterhouseCoopers, who based their study around long-term care insurance claims, show that long-term care bills for those who live long with chronic illnesses can reach up to $1 million. The average for those who require care later on in life being $150,000-$172,000. A scarier fact is that only a small percentage of people have long-term care insurance. The financial impact on a senior and their loved ones, who often are the ones arranging the care can be staggering. From an employment perspective, there currently are not enough caregivers in the field, and with the amount of Oregonians expected to require these services, the demand for caregivers will also increase. This can be great for creating jobs, but to find employees that are truly invested in who they are caring for can be harder to find. So while this is an opportunity for investors to increase their profit, it is an opportunity for Oregonians to assess how prepared they are for the future, and how we may serve those currently who did not expect their situations.

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