Why Invest In Senior Living?

 

As most are aware, the Canadian population is rapidly aging. As longevity increases, seniors represent a growing demographic and market. Because of this, the demand for hospitals, health care products and services, particularly senior living facilities, continues to grow exponentially.

The Southbridge heritage, including its relationship with the Ministry of Health, allows investors the unique opportunity to participate in an otherwise closed market in order to appreciate stable funding models and a supply/demand imbalance.

Demographics

Excess Demand: The Senior population is the fastest growing segment of the population. Currently, the demand for long term care beds is so great that there are approximately 20,000 seniors on the waitlist. In addition, the average age of an LTC resident is 84. By the time the Baby Boomers need LTC, the waitlist is projected to exceed 100,000.

Insufficient Supply: In juxtaposition to the demand sits an insufficient supply. At this time, there are only 77,000 LTC beds in Ontario. Bed supply is strictly maintained by the MOHLTC (Ministry of Health) and is not anticipated to increase materially in the next decade.

Barriers To Entry

MOHLTC Approval: The Southbridge Team has over 47 years of active experience in the Long Term Care industry in Canada. As a result of this heritage, the MOHLTC has approved Southbridge as the controlling interest in the Master LP. The process to be approved is onerous and requires past proven performance in order for the MOHLTC to approve future growth.

Despite the imbalance between supply and demand, new operators are not encouraged to participate in the industry, nor are new bed licenses allowed to be generated. The industry is policy driven not market driven.

Stable Government Funding

Funding Levels: The MOHLTC currently provides 100% of the funding to perform all care giving and programming activities along with some of the costs associated with raw food costs.

The remaining expenses, those associated with accommodation, food prep/delivery, housekeeping, maintenance and administration amount to approximately $52/day. Other government programs such as CPP, OAS and various means testing top up programs are sufficient to provide for almost all of this additional expense.

Lower Cost Option

LTC vs. Assisted Living Beds: Assisted Living (Retirement Homes) are funded solely by the resident. Current costs range from $3,000 to over $5,000/month for a private room. They are not funded by the MOHLTC and are hospitality focused, not health care focused. LTC beds cost $1,600 (basic) – $2,200/month (private). All other costs are paid for by the MOHLTC.

LTC vs. Hospitals: For residents that require Health Care, a bed in the hospital costs the government >$1,000/day. The LTC beds cots the government $105/day. Given the current demand on hospital care, LTC provides an essential platform in the care of our seniors in the upcoming years.