Two months ago, I penned a column called “The Future Is Now.” In it, I painted a challenging environment for nursing homes, one that would clearly tax their ability to accommodate, innovate and, ultimately, survive. Indeed, I suggested that the future for nursing facilities “doesn’t look all that auspicious.” In sharing that column with colleagues, both past and present, I’ve been taken with the sigh of relief emanating from those who choose to throw their lot in with assisted living. Not that they didn’t see themselves as long-term care leaders more than capable of meeting the challenges confronting nursing homes. Only that they had chosen to confront those challenges, not by grappling with them, but by redirecting their energies to the “new paradigm” of facility-based long-term care—assisted living. Well, my friends, this column is for you.

And yes, it is true that assisted living has enjoyed an almost meteoric rise in public acceptance and utilization. Almost too much so. Its popularity in the long-term care marketplace was such that, for a brief period just a few years ago, product supply clearly exceeded demand. Occupancy levels dropped precipitously. And many companies and individual facilities were tossed onto the dustbin of economic history. But the beauty of free enterprise is that markets do self-correct. Indeed, bankruptcy is very therapeutic (except, of course, for those actually immersed in Chapter 11). It adjusts price, supply, and demand almost painlessly (again, other than for those actually experiencing the pain).

Assisted living occupancies are, again, approaching historic highs. As pointed out recently by the board chair of the National Investment Center for the Seniors Housing & Care Industries (NIC), “Seniors housing is producing very attractive returns. Investors in Emeritus Assisted Living [for example] enjoyed a 403 percent return in a year.” Industry-wide, mean occupancy is again pushing 90% (compared with 88% in nursing facilities). Indeed, enthused an NIC flyer, “The seniors housing and care industry has never been hotter.”

So, why worry? Well, to understand why you should worry, you have to delve just a bit into the history of assisted living. You have to understand the genesis of its popularity. Yes, assisted living did attract a following among those looking for a more palatable long-term care service. But were we really seeing increasing acceptance on the part of seniors (and their families) of assisted living as their product of choice? Or is it more likely that assisted living was seen simply as the lesser of two evils when compared with nursing homes? Not a question we might wish to confront. But one that has to be grappled with if we are to effectively address (and successfully accommodate to) the future of assisted living.

I mean, if there’s something inherently attractive about assisted living, not just that it’s relatively more palatable when compared with nursing facilities, then one course of action might be the most appropriate. But, heaven forbid, if assisted living is desirable simply as an alternative to nursing homes, then an entirely different path might be called for. You might not like the question, but failure to address it will pretty much doom to futility your strategic choices.

Again, like it or not, what we might really be talking about here is an overwhelming popular aversion to facility-based care, no matter what the setting. If the countless focus groups I’ve conducted have taught me anything, it’s that seniors recognize—but don’t wish to be confronted with images of—their impending frailty. Say what you will about public perceptions of nursing homes, I have always argued that the average senior’s aversion to them stems less from the issue of facility quality than from an unwillingness to confront the realities of aging. A facility whose primary purpose is to deal with the frailties and illnesses accompanying aging is not likely to be embraced by its customers. Forget what it’s called. I would emphasize that I include assisted living in this analysis. Assisted living facilities are, after all, not all that different from nursing homes in terms of their customers’ frailty.

I’ve taken my share of brickbats for having offered some years ago a definition of assisted living as “a nursing home with a chandelier.” But the phrase was never meant to belittle assisted living. Rather, it is simple shorthand for the reality that assisted living facilities deal with exactly the same residents as did the nursing homes of yore (then called intermediate care facilities, or ICFs). Thus my description of them as “nursing homes.” While assisted living facilities have had to attract residents in a highly competitive market, nursing homes did not—thus the “chandelier.” The customers remain the same—the same moderate level of ADL dependencies, the same incidence of cognitive impairment. While preferring the ambience of assisted living (again, the chandelier) over the institutional flavor of the traditional nursing home, most customers still see assisted living for what it really is—a healthcare provider whose purpose lies in caring for the elderly and the needs attendant to aging. Changing the corporate logo from “assisted living” to “senior living” doesn’t change that.

The data are becoming increasingly persuasive that the assisted living facility of today is, indeed, the nursing home of yesterday. Before the landmark legislation called OBRA ’87 (the federal Nursing Home Reform Act), the majority of all nursing facilities were, in fact, licensed as ICFs. Some states (Oklahoma comes to mind) had almost no SNFs (skilled nursing facilities). For whatever reason (mostly political and financial in nature), the ICF was the name of the long-term care game. And when one looks at the characteristics of assisted living residents today, they bear a remarkable similarity to those of yesterday’s ICF.

Today’s assisted living resident, has, indeed, become the nursing home resident of yesteryear. The recently published 2006 Overview of Assisted Living clearly demonstrates the increasing acuity of assisted living residents, while a comparable article by Frederic Decker (National Center for Health Statistics) shows equally significant changes in the characteristics of nursing home patients. The implications for the future of assisted living stemming from this mutually reflective “morphing” are significant.

And those implications are both long term and short term, operational and strategic. Let’s start with the short term—staffing. As assisted living takes on more of the characteristics of the nursing home (certainly in terms of resident characteristics), it will have no choice but to provide the resources necessary to address those changing patient needs. And I know there is considerable aversion in an assisted living community to calling its residents “patients.” But I consciously use the word to point up the dramatic increases in frailty and acuity experienced by the industry over the past decade. My mom spent her last (and relatively happy) years in great assisted living facilities. But post-stroke, bed-bound, and with serious and chronic cardiac and wound care issues, she was—like it or not—a patient. And the services she received, and the healthcare professionals from whom she received them, were not the same services and staff predominant in the typical assisted living community just 10 years ago.

And this is the changing healthcare environment in which tomorrow’s assisted living facility is going to have to operate. And let’s be clear about one thing. Assisted living is no longer “hospitality” (assuming it ever was). It is healthcare. Pure and simple. Admittedly, it’s healthcare with a difference. Its focus is on the continued independence and empowerment of the customer. But that’s the environment in which services are provided, not the essential nature of the services themselves. Staff in assisted living strive to maintain a customer focus. But that speaks to personal, not professional, qualifications. One can dress a wound while paying attention to a customer’s unique and personal desires, interests, and needs. But you’re still dressing a wound and need to have the qualifications that allow you to do so competently.

So, where is this new and more professionally qualified staff going to come from? From the same inadequate pool used by nursing homes to fill their positions. And that doesn’t look promising. Nor is it limited to any particular segment of the healthcare workforce. The problem extends across the entire breadth of function and career, across programs and professions. Let’s start at the apex of geriatric care—the board-certified geriatrician. Certainly, the need for geriatricians is indisputable. A recent report by the Association of Directors of Geriatric Academic Programs (ADGAP) put some pretty stark numbers on the table. The 7,500 trained geriatricians in practice today constitute barely one-half of those needed. And given the geometric growth in America’s elderly population, the 14,000 we need today will balloon to 36,000 25 years from now. Worse yet, the numbers of geriatricians actually in practice are diminishing—dramatically so. ADGAP estimates that 2,730 fewer certified geriatricians are practicing today than in 1998, a more than 29% decline.

What does this have to do with assisted living? There is, after all, no requirement today that assisted living have in its employ trained geriatricians. There is not even a requirement for medical direction. But given the increasing acuity of the assisted living resident, just how long will (or should) that last? If assisted living does not itself enhance its access to trained medical direction, the states will ultimately do it for them.

Now, let’s move to the other end of the continuum—aides. Certainly in the long-term care facility, this is where the rubber meets the road—where the care is actually delivered. And the data are compelling. Average facility turnover among aides in nursing homes can exceed 100%! In an environment in which quality of life has become our primary goal, the one person a resident is most dependent upon to realize that goal will have a new name and face every 12 months. And the problem permeates the entire profession. In a study released a few years back by the Centers for Medicare & Medicaid Services, 54% of the nation’s nursing facilities were so understaffed as to threaten the very quality of the care delivered. Nor is the problem limited to nursing homes. A report published some years ago by the Assisted Living Federation of America (ALFA) foresaw the need for an additional 600,000 caregivers in the business by 2011. But ALFA expressed concern that there “just aren’t enough applicants to fill these vacancies.”

Now, what’s the end result? Well, absent qualified staff, it’s nigh on impossible to provide acceptable levels of service. Absent acceptable levels of services, we are likely to see increasingly disgruntled customers (if, not indeed, the scandals that plagued nursing homes for so many years). And what is the likely result of that? Well, if history is any guide, the inevitable result is more and more regulation. (Note the use of the word “inevitable.”)

Government has a propensity to ignore cause and effect. Nursing homes have traditionally been inappropriately staffed—not because management chose not to—but because management couldn’t afford to. Just to achieve the minimal staffing standards suggested by the Hartford Foundation some years ago would cost additional billions of dollars, dollars not likely to be provided by the primary payer of nursing home care—the government. And, having pronounced itself for some many years as the low-cost alternative to nursing homes, assisted living will confront the same problem, with equally distressing results. Only by paying more money can assisted living recruit additional staff. But, by paying more money, assisted living loses whatever competitive edge it might have held vis-à-vis the nursing facility. And what does that do to the bottom line?

But absent requisite staffing, the inevitable scandals will come. And with the inevitable scandals will come the inevitable regulations. And with the inevitable regulations will come the greatest challenge confronting assisted living—the fight for its very soul. Assisted living is rightly known for its customer focus. And that customer focus is best served by the community’s willingness and ability to innovate. But most government regulation is almost antithetical to innovation. Robert and Rosalie Kane perhaps put it best in a book coauthored with Richard Ladd (The Heart of Long-Term Care). “If,” they point out, “the new forms of long-term care are forced to follow the demands of nursing home regulations, they will inevitably come to resemble nursing homes and thereby lose whatever advantages they offer as more innovative, flexible, and client-focused care.”

But, there’s hope. Right? No one’s forcing the regulators to follow the nursing home model. Right? Dream on. As the authors go on to say, “Most regulatory efforts have been directed at structure and process. These two components are most comfortable to administer. They offer a set of activities that can be prescribed. In effect, they limit the provider’s responsibility.” In short, since the regulators are most comfortable with the nursing home approach, since they find it easy to administer, and since they actually think it works, that’s the model that will inevitably be followed. And does recent history suggest otherwise?

So, there you have it. Enough depressing news for everyone—be they in the nursing home field or assisted living. But I refuse to end this column on a “downer.” Rather, I would point to the same possible outcome as I did two months ago—by pointing to the scenario suggested by the editor of this magazine: a future consisting in enough “entrepreneurial owners and operators moving to take advantage of the new long-term care trends, master the various creatures lurking about, and create new and flourishing businesses in the age-old profession of caring.” Because isn’t that actually the history of long-term care? Haven’t people like me made innumerable predictions of impending disaster? And haven’t the good operators always figured out how to survive—and even prosper? In short, understand the dangers. Develop strategies to confront them. And you will prosper. But be careful out there.