Navigating the Boom: Insights into Minnesota’s Growing Residential Assisted Living Market
From 2010 to 2030, Minnesota’s population of adults aged 65 and older is expected to double, rising from 680,000 in 2010 to 1.3 million in 2030. Additionally, from 2030 to 2050, the number of individuals aged 85 and above is projected to more than double. This demographic shift has spurred a growing demand for in-home residential assisted living facilities.
Transitions In Business has worked with numerous assisted living businesses, assisting them with various mergers and acquisitions services. To gain insights into the current state of the residential assisted living market in Minnesota, we engaged in a conversation with Josh Cesaro-Moxley, President of the Residential Care Providers Network and Owner/Licensed Administrator of Heart to Home Inc., operating senior care homes in Mendota Heights, MN.
Can you discuss the growth of the residential assisted living industry in the past three to five years in Minnesota?
“We have seen significant growth in the years leading up to 2021 when Minnesota passed new Assisted Living Licensure. Up until that time, the process was relatively easy to obtain licensure. Since the new licensure has gone into place, coupled with the pandemic, we have seen growth slowdown in the residential assisted living market. However, we still see growth in the 5 bed and smaller facilities, as the licensing is a bit easier to navigate. The 6-15 bed residential facilities require more extensive engineering, making the process to open new facilities a bit more difficult. Demand still outstrips supply in the smaller assisted living market; I forecast this to continue as we work through one of the largest aging demographics, the baby boomers.”
Why would someone stay at a residential assisted living facility versus a larger apartment type complex?
“Most residential assisted living facilities offer far superior care ratios than larger facilities. With more staff often comes the ability to manage more complex medical care needs. We are also seeing larger facilities putting firm restrictions as to who can continue to occupy their apartments. In other words, when they exceed a certain level of care they are asked to move or obtain 1:1 care, oftentimes too expensive for the family. Other reasons for why a family might want a smaller setting includes a more person-centered approach to care, ability to accommodate cultural needs, closer or easier access to the community and a more familiar home environment.”
As with many industries, finding employees is a challenge. Can you talk about the labor situation within your industry?
“Yes, the shortage of staff is putting a huge strain on all types of healthcare facilities in Minnesota. One competitive advantage of a smaller facility is that the workload is often much lighter than a larger facility. This allows the staff to complete their work in a safe and appropriate manner without feeling overworked by having too many residents to care for. The other thing we are seeing due to the shortage is that 24-hour homecare has become so expensive that facility-based care is oftentimes the only financially feasible option. This continues to increase the demand for assisted living facilities and especially the smaller settings. Lastly, with the shortage of staff we are seeing skilled nursing facilities restricting their bed capacity. As a result, these more complex residents are seeking care in smaller facilities which can meet their care needs.”
Are many residential assisted living facilities selling or seeking acquisitions for growth?
“Yes, since we are now in a situation where licensing has become so complex it is oftentimes much easier to expand your portfolio through mergers and acquisitions. Many of the burdensome licensing requirements can be grandfathered in through acquisition and mergers as opposed to starting from the ground up. I believe we will continue to see growth in the residential assisted living market due to demographics of our state. However, the costs of real estate and licensing may hinder the supply of residential assisted living. On a bright note, we did see one of the largest increases in state reimbursement rates to elderly waiver services; a whopping 40%! I can see this increasing the smaller facilities balance sheets and may be the capital they need to continue expanding through mergers and acquisitions.”
The landscape of residential assisted living in Minnesota reflects a dynamic interplay of regulatory changes, demographic shifts, and economic considerations. Despite challenges, the sector’s focus on smaller, more personalized care settings seems poised for continued growth, buoyed by demographic trends and financial incentives. As the industry navigates evolving dynamics, strategic approaches such as mergers and acquisitions may play a pivotal role in sustaining and expanding the availability of quality residential assisted living options for seniors in the state.
Transitions In Business specializes in facilitating the sale of privately held residential assisted living facilities. For those interested in selling or acquiring an assisted living business, contact Transitions In Business at Transitionsinbusiness@transitionsib.com or 952-405-8470.
Data sourced from seniorliving.org, American Health Care Association (AHCA)/National Center for Assisted Living (NCAL) , and Minnesota State Demographics Center.
Transitions In Business is a Minneapolis based mergers & acquisitions firm, servicing medium sized businesses and their respective buyers. We specialize in selling privately held business to business, healthcare, manufacturing, transportation, distribution and construction/trade services businesses in Minnesota and Iowa with enterprise value of $1 million or more. Our vision is to effectively navigate business owners through the many obstacles of mergers and acquisitions by offering a clear and honest partnership.