The Long-term Care Economy: Five Factors for Business
Aging demographics matter to business. Consumer demands, attitudes and trends unique to the Boomer generation are well established and have become a core area of focus for executives in virtually every sector of the economy. What isn't discussed nearly as often, or at least not as prominently, is the impact the aging population will have on the broader business and economic environment in Minnesota. No matter what your industry, issues of aging will have a direct and significant impact on your business.
Everything from job growth, employee recruitment and retention, to new business opportunities, public policy and funding priorities will be driven by the dynamics of this shifting-and growing-demographic.
Consider these two facts, courtesy of Tom Gillaspy, state demographer:
By 2020, Minnesota will have more seniors older than 65 years of age than kids in K–12 school.
Experts also estimate that four out of five adults older than age 65 will need some kind of care or service as they age.
These numbers can either present a huge opportunity for Minnesota businesses and our state's economy or they can become an economic burden that imposes on virtually every other quality of life measure.
More specifically, there are five key factors that will shape whether Minnesota businesses and our state economy will flourish or flounder amid our shifting demographics.
Factor #1: The largest job growth of any sector will be direct care support for older adults, with an average rate of 70 percent (most jobs have an average growth rate of 14 percent).
Today, services for seniors represent a $6.7 billion economic impact on Minnesota, including over 112,000 jobs. Across Minnesota, the job opportunities in health care continue to grow, including direct-care jobs to care for our state's aging population, meaning positions in medicine, food and nutrition services, construction and caregiving.
There is a demographic imperative in ensuring the older adult services field is able to recruit and retain an adequate frontline workforce to meet the estimated 150 percent increase of Minnesotans over age 85 in the next 40 years who will be in need of some type of care; the population at that age goes from 90,000 to 250,000 in the same time period.
"We're beginning to look at alignment issues - that the skills and abilities employers are looking for are different than what young people are bringing in," former state demographer Tom Gillaspy said on MPR in March. "There are jobs that are going unfilled at the time when there's relatively high unemployment rate."
Aging Services of Minnesota estimates that in the state, demand for primary caregivers-nursing assistants and home health aides-is projected to grow by 65 percent from 2010 to 2030 in both home care and skilled care centers.
National research projects a 48 percent increase in all Direct Care Worker occupations, making it the largest occupation group in the United States by 2020-including a 71 percent growth in personal care attendants, 69 percent growth in home health aides and 20 percent growth in nursing assistants.
"We have a huge opportunity to tap into the next generation of talent in Minnesota," says Nathan Johnson, administrator at PioneerCare Center in Fergus Falls. "We also have a responsibility to evolve the aging services workforce by continuing to offer new career paths, expand leadership capacity and maintain competitive wages and benefits."
Add to that the demand for new construction of housing for seniors, food service, household support and other key services for this expanding market. The job growth opportunity in the senior services economy is a vital factor in growing Minnesota's future economy.
Factor #2: Your employees are juggling historic demands to care for aging parents.
On any given day, the Long-term Care Imperative estimates 679,000 Minnesotans provide care to a family member, neighbor or loved one-these are "informal" caregivers. If we had to pay for the informal care, the value would be $8.2 billion, a cost that will only increase as the aging populations grows.
Whether it's taking time off from work to bring a parent to a doctor's appointment or making phone calls to ensure medications are taken, the time away from work takes its toll. The physical and emotional demands of caring for an aging parent add to the stress and strain of these informal caregivers-your employees. Last year Minnesota businesses lost an estimated $5 billion in productivity due to workers taking care of their parents and family members; other projections suggest anywhere from $11.4 billion to $29 billion is lost annually.
A national AARP study found that almost 70 percent of caregivers reported having to adjust their work schedule to accommodate caregiving duties, including quitting work entirely in some cases. AARP estimates the value of informal caregiving is $450 billion which they note is more than the annual sales of Wal-Mart.
"This is especially dangerous to caregivers as it affects their ability to save for their own future needs, but they also can lose job security and career mobility, and employment benefits such as health insurance and retirement savings," says Susan Reinhard, senior vice president for Public Policy at AARP.
What does this mean for businesses? Recruiting and retaining top talent has long-included a focus on policies that allow employees to balance work and family responsibilities. More businesses are implementing policies similar to those that focus on childcare, giving equal consideration to the growing demands on the "sandwich generation" who find themselves in a position of raising their own children while providing care for aging parents.
Factor #3: Innovation and technology are game-changers that will continue to create new business opportunities.
Minnesota has been ground zero for med-tech innovations and a national leader in advancing quality healthcare. Long-term care is the next frontier for breakthrough advances, from individual companies to entire care systems.
Technology has fundamentally changed the way care and services can be delivered. Mendota Heights-based Healthsense is developing and deploying wireless sensor and monitoring technology throughout the country. The wireless system monitors blood sugar, blood pressure and other vital signs, notifying staff when there is an issue.
Throughout Minnesota, organizations such as Volunteers of America, Ecumen, Good Samaritan Society and Presbyterian Homes & Services are using similar sensor technology as a way to provide greater independence for the clients they serve, while still tracking safety and health indicators. WellAWARE technology, utilized by providers across the state, identifies changes in key wellness indicators such as sleep quality, activity level and bathroom visits. Identifying problems in these areas can significantly improve health-related outcomes.
Volunteers of America, which has locations across Minnesota, determined in a study that technology can save seniors and government money, while improving health outcomes. For example, sensor technology resulted in 40 percent fewer nurse phone consultations because data from sensors allowed for faster diagnosis and treatment of problems before they escalated.
The Good Samaritan Society is launching a research project called LivingWell@Home that will enhance care and service through sensor technology, telehealth and central data monitoring services. The University of Minnesota is conducting the research, WellAWARE is providing sensor technology, Honeywell HomMed is providing telehealth services and Philips is providing personal emergency response systems.
Sensor technology in long-term care has the potential to be a game-changer in the same way Medtronic and St. Jude changed the med-tech landscape with remote heart monitors. Remote technology that keeps seniors safe in their homes longer not only relieves pressure on the care system, it provides peace of mind for families and most importantly, preserves dignity and independence for older adults.
The HAIL lab consortium (Healthy Aging and Independent Living) is piloting new services, care models and technologies to support "aging in place." The consortium includes the Mayo Clinic in Rochester, Best Buy, General Mills and the Good Samaritan Society. Mayo Clinic is researching promoting independence and easing transitions, Best Buy is exploring how the retail electronic market can support seniors in their homes, and General Mills is looking at issues of nutrition and its importance to a senior's wellbeing.
These are just a few examples of emerging technology. Similar business opportunities will continue to come as much from technology and creativity as they will from a general shift in mentality as our aging population remains healthier and more vital.
Factor #4: We're in the midst of an historic shift in where, when and how aging Minnesotans receive care and support.
Today's senior care and older adult services field features a unique convergence of medical/health care needs, lifestyle demands and an underlying philosophy of service and hospitality. Look no further than the dramatic evolution of Minnesota's nursing homes. In one generation, the traditional nursing home setting has become the exception, not the rule. Today, skilled nursing facilities are cost-effective rehabilitation centers serving active older adults in the weeks following major surgery. The average stay for a nursing home resident in Minnesota today is less than one month.
"A nursing home is not just a one-stop place where you're going to spend the rest of your life," said Ryan Chies, assistant administrator at New Brighton Care Center. " People come into our center, rehab and then go home."
One of the few sectors that grew during the recession was assisted living and independent housing for seniors. It's estimated that Minnesota will need 16,000 new assisted living options by 2030. Many of those will be assisted living, which allows individuals the option to "age in place," adding services as they need them, all the way through memory care and hospice.
The current landscape for senior care in Minnesota is all about choice and customization, whether that's bringing care into your own home, renting an apartment with some extra help with meals and medication monitoring or moving into a skilled nursing center for around-the-clock care.
Factor #5: Some of the most dramatic and significant shifts in public policy will come in the long-term care arena.
As with virtually every big issue Minnesota (and the nation) faces today, there is a crucial question about the role of government and public policy when it comes to long-term care. A recent study from AARP and the SCAN Foundation confirms that the costs of long-term care are on average one to two times the median household income in our state. We also know that more than half of Minnesotans – 52 percent – have no plan at all for how they will pay for long-term care.
Without private funds to pay for care, the only alternative for Minnesotans today is to spend down all of their assets to qualify for the state's Medical Assistance programs – a path that is not only undesirable for individuals, but unsustainable for the state. The good news is there are things government can do to reflect the shift in demographics, demands and priorities of an aging population. At the top of that list are policies that will shift greater responsibility to individuals to plan and pay for their long-term care needs.
Two years ago the Minnesota Chamber of Commerce adopted its first policy position on long-term care. The Chamber supports incentivizing savings for Minnesotans who are thinking ahead and setting aside the resources for their care when they are older.
Other possibilities include state policies that would allow residents to cash-in their life insurance policies without tax consequences to pay for their long-term care needs.
While many employers offer long-term care insurance for employees, a recent estimate by the Minnesota Department of Human Services suggests that only 10 percent of Minnesotans have long-term care insurance. More creative ideas may be needed to get Minnesotans to take real steps to plan ahead. In its "Moving Beyond Medicaid" report, the Citizens League suggested prize-linked savings accounts as a way to make saving for long-term care more attractive and attainable. For every $25 accumulated in a credit union savings account, a saver would be entered in a prize drawing. The individual could then transfer their savings and rewards to a Health Savings Account when needed to pay for long-term care. Future state budgets are also likely to reflect the aging populations. Two ideas being considered for shifting the public investment in long-term care include:
Ensuring an appropriate proportion of the state budget is dedicated to meeting the growing demands of our aging population; and,
Aligning state funding to reflect consumer demands for more services at home and in their communities-an approach that also can save the state millions of dollars.
A successful business doesn't ignore opportunities and neither should state policy makers. As individuals, business leaders and collectively as a state, Minnesota has an opportunity to position ourselves yet again as a progressive and innovative leader in health care.