Eight things about the industry to expect in 2005.

Bigger. Better. Louder. Messier. Industry leaders looked into their crystal balls for 2005 and saw greater public exposure and closer scrutiny by the federal government. But the new year isn't going to be all gloom and doom.

To quote the rock band Black Eyed Peas, "Let's get it started." Here's what members of the industry said they see in their crystal balls for 2005:

* Long term care becomes everyday conversation. The aging Baby Boomer set will make long term care an issue people want to talk about instead of deny, particularly because the oldest of them are only a half-dozen years away from officially being seniors, predicted Jeanette Takamura, chair of the American Society on Aging in San Francisco.

"Boomers are realizing that the issues surrounding efforts to care and support parents and grandparents are far from simple," Takamura said. "They are increasingly confronted, for example, with the short supply of home and community-based services and formal caregivers, the quality of care concerns that apply to both institutional and community-based care alternatives, the cost of long term care, difficulties in navigating through the public and private service sectors, the challenges associated with trying to decipher information on support services, and the trials associated with being employed and also serving as a family caregiver."

* Medicaid reform remains a priority. More efforts will be made to reform Medicaid, which continually underfunds care providers, leading to a national shortfall of more than $4.1 billion, according to Hal Daub, president and chief executive officer of the American Health Care Association in Washington, D.C.

Medicaid reform will take two forms, according to the former congressman. "Congress and the administration will most likely seek to make cuts or at least reduce the growth of a program that they believe is consuming too many dollars," he said. "A second form is pressure to comprehensively reform Medicaid by giving the states more flexibility to manage their Medicaid program in a way that suits their needs and their state's public interest. We encourage change, but caution that some ideas are often aimed too narrowly at benefiting one interest over another or are counterproductive to our goal of maximizing consumer 'choice' regarding where eligible individuals receive their care."

* More consolidation is afoot in the assisted living industry ... There were several notable mergers in 2004--including the recently approved deal between Extendicare and Assisted Living Concepts--and there could be more in 2005, according to Bob Kramer, president of the National Investment Center for the Seniors Housing & Care Industries in Annapolis, Md. "Most of it will be in the assisted living and independent living sectors," Kramer said. "We'll also see a number of investors who now have the opportunity to cycle out or cash out of their original investments and hopefully reinvest that money in new projects in the industry."

* ... but less new construction. Don't expect to see a surge in new construction in 2005, primarily because of limited availability of new construction lending for assisted living, Kramer said. "There's still a need for more active lenders, particularly when you look at long-term debt," he said. "In terms of permanent or 10year or longer financing, there's not been much available other than Freddie Mac and Fannie Mae, and HUD for nursing."

* Continued maturation of CCRC development. Expect the size and cost of CCRC campuses to continue to grow in 2005, courtesy of private equity "seed" money, according to Dan Hermann, managing director and group head of Ziegler Capital Markets Group in Chicago. "New campus CCRC buy-in continues to increase," Hermann said. "(As a result), the size of the campuses and the financing continues to increase dramatically, to the point where $100 million to $200 million campuses are not unheard of these days."

Hermann noted that by the end of 2003, there were a handful of new projects funded by third-party sources. Another four to six were expected in 2004, and six to eight per year thereafter, he said.

* Medical challenges ahead for skilled nursing facilities. With residents living longer, long term care facilities will have more medical health issues to contend with, predicted Paul Diaz, president and CEO of Kindred Healthcare in Louisville, Ky. "The trends we've seen will continue in the skilled nursing sector, meaning we'll continue to see more medically complex patients," Diaz said.

"We've seen trends, for example, of a greater growth in admissions of patients 65 to 75 years old, as opposed to those who are 85-plus. Unfortunately, that's a by-product of diabetes and obesity, and chronic conditions that are requiring long term care. We're continuing to look at programs to understand and obtain these service needs, and we're positioning our assets as well."

Every sector--skilled nursing, assisted living, independent living and retirement community--will undergo a lot of change, Diaz added. "We'll continue to try to find better ways to care for our residents and maintain quality of life," he said. "Advances in technology will require us all to continue to look at how we're delivering care regardless of the setting."

* More federal studies on long term care. Associations such as the National Center for Assisted Living in Washington, D.C., will keep eyes on a myriad of government and private studies on long term care matters, including the U.S. Agency for Healthcare Research and Quality's reviews of state regulations and customer satisfaction toward assisted living, the Department of Health and Human Services' Office of the Inspector General study on Medicare fraud in assisted living, and national assisted living architectural guidelines by the American Institute of Architects.

"A few years ago, federal studies and initiatives that affect assisted living were few and far between. That is no longer true," said NCAL Executive Director David Kyllo. "The dramatic increase in interest by federal agencies, members of Congress and national organizations will be echoed by NCAL's increased efforts to ensure that these organizations understand the importance of keeping assisted living resident-centered and able to adapt to the changing needs and expectations of seniors and their families."

* Think reform, reform, reform. In general, 2005 is the year in which real health care reform must take place, according to Larry Minnix, president and CEO of the American Association of Homes and Services for the Aging President in Washington, D.C. "The climate we are in is the crucible for the next generation of innovative care and services for the elderly and disabled because the way the country is approaching long term care is not sustainable," Minnix said. "But there is no question that a healthy, affordable and ethical national system can be developed. (This year) is the beginning of the transformation of old to new eras."