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The Future of Assisted Living

May 1, 2008
by Maureen Hrehocik, Executive Editor
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Heeding the call of consumer demand

Most assisted living residents, in our membership, pay out of their own personal resources or with support from family members and choose assisted living communities within their means. However, those dependent upon Medicaid have no choice. They are forced into much more costly institutional settings at taxpayer expense. In our view, those best served by assisted living run up against an institutional bias in favor of nursing homes and against assisted living. We see this bias in the new Medicare Part D program. One of ALFA's main priorities is to change the requirement that dual-eligible residents in assisted living pay a copay for their Medicare Part D prescriptions. Without a legislative remedy, these low income assisted living residents will be forced to move into skilled nursing care to be able to afford their medications. Federal social net programs for seniors, created at a time when there were few long-term care options, have not yet caught up with the marketplace or the customers.

Hrehocik: Are providers operating more these days in a campus environment as opposed to standalone? Are they diversifying their services and doing more with wellness?

Kyllo: You do see a lot of campus environment building going on, but you're also seeing a lot of different models being tried. We are diversifying services and the physical look of our communities. You're even starting to see and hear about assisted living being offered in trailer parks or in other kinds of settings.

We are certainly not at the end of where assisted living is going to go. The model of assisted living will continue to broaden and change. The industry will mold itself to fit consumer needs and expectations as they change. As a result, we're going to see a great deal of specialization and more nontraditional settings in the future.

Grimes: Because the industry is consumer-driven, providers offer a wide range of options, levels of care, and a diversity of services. There is something to fit every preference and every need. In our industry, we say, “When you've seen one assisted living community you've seen one assisted living community!” No two assisted living communities, even within the same company, are the same. Many now offer home care agencies, hospice, physical and occupational therapy services, memory care, and a wide variety of other services and activities. Wellness and preventative care is the approach taken by many communities to keep residents active and healthy. There is an enormous bounty of creativity within our membership reflected in our annual “Best of the Best” in operational excellence awards. We are also seeing a very rapid emergence of assisted living communities that meet the needs of specific ethnic groups (for example, communities that appeal more to Asian, Indian, or Middle Eastern groups) and alternate lifestyles (communities that appeal more to gay and lesbian groups.)

Hrehocik: How are providers educating residents and the public about the cost of services?

Grimes: Fortunately, the “Greatest Generation” benefits from pensions and retirement plans, Social Security, savings, equity in their homes ($1 trillion by some estimates for this cohort of seniors), and when necessary, support from their family. They can generally afford assisted living from their personal funds. For others, many mistakenly believe that Medicare and Medicaid pay for assisted living. Medicare, of course, does not cover assisted living while Medicaid pays for a tiny portion of the assisted living population in those states that sought and obtained Medicaid waivers. And most people do not carry long-term care insurance. Baby boomers who are dealing with their own aging parents, aunts, and uncles are beginning to realize there will be a substantial gap between their assets and the cost of long-term care when they need assistance. Unlike their parents, they won't necessarily benefit from pensions, retirement plans, or Social Security. We are optimistic, however, that these boomers will translate this knowledge into more thoughtful financial planning for themselves as they age.

By the time a resident moves into one of our member's communities, the resident and their family already know about the services provided and the associated costs. ALFA believes that every community should provide a consumer-friendly disclosure document to prospective residents and families. Disclosure statements include information about services, costs, limitations on care, and the move-in and move-out process. By being transparent and providing advance written information in the disclosure statement and a signed residency agreement, our residents and families know exactly what to expect.

Kyllo: Disclosure has been something that the industry has been extremely committed to. Congress, in the late 1990s, identified disclosure as an issue needing to be addressed. The assisted living industry can feel confident in knowing that all of its associations are committed to working together to address this issue and promote the importance of full disclosure, and how it translates in the real world. We've done a lot of education. Our members have embraced it and trained their staff and changed their operations to ensure consumers have what they need to make informed choices. We tell consumers to ask providers questions such as, “What services is the community going to provide?” and “How much am I going to be charged for those services?” Our goal is that each consumer is fully informed. I think we should be proud of the progress that we've made over the past five to eight years on the disclosure issue.

Hrehocik: What is happening on the state and federal regulatory front?