Senior Living and Care: Four Key Drivers of Activity in 2025

The senior living and care (SLC) industry is entering 2025 with strong momentum but evolving challenges. Market forces such as demographic shifts, regulatory changes, financial pressures, and technology adoption are shaping the sector’s future. As occupancy levels continue to rise and demand surges, providers must operate in an increasingly complex environment.

Below are four key drivers of activity defining senior living and care in 2025, which were discussed more broadly in an earlier article.

1. New players in executive and legislative branches will spur changes

A new administration and Congress bring an evolving policy environment that will directly impact SLC. The federal government’s dual priorities—access to care while controlling costs — are at odds with a $36 trillion national debt and a federal budget deficit nearing $2 trillion.

One of the means for cost containment has been through increased regulatory oversight, which paradoxically raises costs and complexity for operators.

Several critical regulatory trends may unfold in 2025:

• Skilled nursing facility (SNF) staffing mandate — President Donald Trump’s administration may lead to a rollback of the minimum staffing mandate for SNFs. However, state-level regulations are expanding, forcing providers to stay agile.
• Assisted living regulation — Once lightly regulated, assisted living (AL) continues to draw increased attention. While AL is primarily private-pay and lacks extensive government funding, growing national attention and congressional interest could result in increased regulatory oversight.
• Medicare Advantage (MA) expansion — With MA covering over 50% of Medicare beneficiaries, providers must continue adapting to evolving reimbursement structures and care coordination models.
• Tax policy changes — The expiration of key provisions of the Tax Cuts and Jobs Act could introduce new financial considerations for providers.
• Managed care and cost containment — Some policymakers may look to more managed care models to limit government exposure to health care costs. This may impact how providers contract with payors and structure their service models.

Regulatory shifts may be among the most influential factors affecting SLC in 2025. Organizations that can anticipate and respond strategically may be well-positioned to capture opportunities.

Equally influential, though yet to be determined, will be whether Congress will address cost containment to Medicaid via eligibility changes, such as work requirements, and federal funding mechanism changes, such as per capita caps or lower federal matching rates. Whether these policies move forward will likely be subject to significant debate but may have impacts that flow down to the states, potentially impacting SNFs themselves.

2. Growth strategies are influencing transaction activity

The senior living industry is experiencing sustained occupancy recovery with 12 consecutive quarters of growth. Today, all major markets report occupancy above 80%. However, growth strategies are shifting due to financial constraints, demographic changes, and the need for scale.

Several forces are driving transaction activity:

• Ownership transitions — Many senior living owners, particularly in the private sector, are reaching retirement age. With $10 billion in senior living loans maturing in 2025 pressuring recapitalization needs, and a historic generational wealth transfer underway, there are numerous macro drivers making the industry ripe for mergers and acquisitions.
• Regional density and local market specialization — Instead of pursuing national expansion, operators are increasingly focused on building regional density. Local market knowledge is critical for success, leading to strategic divestitures of non-core assets and acquisitions that strengthen market positioning.
• Capital constraints limiting new construction — Despite strong demand, new construction remains low due to financing challenges. This has led to increased capital investment in renovating and repositioning existing properties. Repositioning older buildings is an emerging strategy to address supply shortages.
• Middle-market remedies — The “forgotten middle” remains one of the largest untapped opportunities in senior living. Millions of older adults do not qualify for subsidized housing but cannot afford luxury options. Solving this challenge requires innovative models, such as:
  • Integrating value-based care within senior living settings, including PACE programs and managed care partnerships.
  • Public-private partnerships to create affordable options without sacrificing quality.
  • Co-located communities blending active adult living with preventative health care services.

The strategic focus in 2025 is on optimizing existing assets, increasing efficiencies, and creating sustainable business models aligning with residents’ evolving needs.

3. Providers are prioritizing financial stability

While industry growth is strong, financial pressures remain a defining challenge for SLC providers. Continued rising costs, increased capital expenditures, and elevated debt-servicing requirements are reshaping strategic decision-making.

Key financial trends to watch:

• Debt and capital planning — With higher interest rates and debt maturities, financial discipline is paramount. Operators must carefully assess their balance sheets, evaluate refinancing opportunities, and pursue sustainable capital structures.
• Occupancy and pricing balance — Providers continue enhancing pricing strategies amid rising costs. While occupancy growth is positive, balancing revenue optimization with affordability remains an industry-wide challenge, particularly for mid-tier and value-focused communities.
• Changing resident profiles — New residents are entering senior living with higher care needs, leading to shorter lengths of stay. This necessitates more frequent move-ins to maintain occupancy, requiring operational flexibility and strong lead generation.
• Medicaid and Medicare dependence — Skilled nursing providers are facing increasing pressure on reimbursement rates. While government payor sources are critical, organizations must become proficient in navigating these funding streams or work with trusted advisors. The ability to enhance Medicare and Medicaid reimbursement is a competitive differentiator.
• Consumer preferences shaping future investments — As baby boomers enter the senior living market, they bring significantly higher expectations. They prioritize technology integration, wellness programming, and independence while seeking assurance care will be available when needed. Operators must align their facility master-planning efforts with long-term consumer demands.

Strategic decision-making in 2025 will likely be driven by financial resilience. Organizations proactively managing costs, enhancing revenue streams, and aligning investments with consumer preferences may be better positioned for long-term success.

4. Improving operations with digital innovation

Technology adoption is no longer a luxury — it’s a necessity. As margins tighten and labor shortages persist, SLC operators are turning to digital solutions to create leverage and improve efficiency and effectiveness.

Key technology trends in 2025:

• Artificial intelligence (AI) and predictive analytics — Advanced AI can drive improved scheduling, staffing optimization, and predictive care planning to help providers enhance operational efficiency.
• Remote monitoring — Online platforms, mobile apps, and remote health monitoring tools are becoming standard features in modern senior living communities.
• Cybersecurity and data integration — With senior living increasingly relying on digital tools, data security has become a major priority. Eliminating siloed systems and creating data interoperability is essential.
• Automating the business of the business — Many providers are prioritizing technology investments that modernize back-office operations, financial workflows, and compliance tracking. Reducing manual processes can free staff to focus on care and enhance decision-making.
• Modernizing the business of the business — The biggest opportunity and highest potential for ROI (return on investment) is in “modernizing the business of the business” — focusing first on eliminating inefficiencies before pursuing cutting-edge innovations. Organizations effectively implementing digital transformation will likely see improved financial performance and be better positioned to scale.

Technology alone will not solve industry challenges, but those effectively integrating digital solutions into their business strategy may gain a competitive edge. Organizations must evaluate whether to own, develop, or rent technology solutions based on their specific needs and strategic priorities.

The path forward for senior living

As the senior living and care industry navigates 2025, the outlook remains positive — yet complex. With market size projected to grow by many billions of dollars between 2025 and 2029, demand is strong. However, financial constraints, regulatory shifts, and evolving resident expectations require a strategic approach.

Successful operators should focus on regulatory agility, strategic growth, financial resilience, and technology-driven efficiency. Those embracing these drivers, aligning with consumer needs, and building sustainable business models can be better positioned to lead the next era of senior living and care.

How CLA can help you leverage industry trends

At CLA, we are deeply engaged in helping senior living and care organizations through an aligned team-of-teams approach leveraging our core services of digital, audit, tax, consulting and outsourcing, and wealth advisory.

Work with trusted advisors who really understand your business and are committed to helping shape the future of health care.

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