Assisted Living 2005: What Now?



We are well into what may prove to be a watershed year for assisted living. After several years of struggling to absorb excess capacity, many providers appear poised for new growth-but growth of a different order, targeted to specific populations. Occupancies appear to have stabilized, ending a downward trend. The financial community continues to show a healthy interest in lending to solidly performing assisted living communities. And despite a flurry of newspaper exposTs last year describing resident injuries and deaths in facilities allegedly not equipped to deal with frail, vulnerable elderly, there has been no rush to federal regulation-yet. But this relatively good (if not great) news encompasses issues that could prove troublesome to the industry, including chronic staffing needs, occupancy turnover, and that perennial puzzle, the definition of assisted living itself. Recently, Nursing Homes/Long Term Care Management interviewed three industry analysts for their unique perspectives on today’s assisted living state of the art. Following are summations of their comments.

Jim Moore, President, Moore Diversified Services, Inc.: “Occupancy is an important current issue because of the huge impact of resident turnover in this field. An average 50% of assisted living capacity has to be refilled each year. It’s obvious that marketing leads will not grow exponentially because there are finite limits to the market that assisted living, as constituted today, can accommodate. That means we have to manage our existing marketing resources more effectively. Basically, that means improving raw lead conversion ratios. Generally throughout the industry, the ratio of raw leads to admissions is 20 to 1; in some it’s lower, and in some higher. The question is, how well are we defining our leads and managing them?

“Part of this involves reaching out to meet consumers on their own financial terms. There’s no question that the typical assisted living consumer has taken a big hit financially during the past few years. Wall Street has not been kind to many of them-for example, on a certificate of deposit, you’re lucky to get a 1.5−1.7% return. Meanwhile, they still have to cope with inflation, escalating costs for home repairs and maintenance, and growing home care needs. While assisted living providers have generally raised their rates about 4% a year to keep up with inflation, consumers have become increasingly price-sensitive. Assisted living can’t survive as a price-sensitive commodity. That means we have to start selling value to help the senior to understand the financial realities of remaining at home versus moving into a facility. We no longer can take a ‘don’t ask, don’t tell’ approach to financial discussions with our prospective customers.

“Another issue is defining the true scope of assisted living services. Many facilities have yet to ask themselves, ‘What business are we really in? What should our admission and discharge criteria be?’ Making this decision can be a very difficult balance to strike. ADLs can help define the lines for assisted living, but on the other hand, you don’t want to exclude too much. Those newspaper stories last year about organizations exceeding their capacities varied in accuracy, but I would offer this advice: Realize that people someday will view your facility with 20/20 hindsight, just as these were. Try taking this perspective yourself and decide whether you like what you see. We know that accidents and similar events will happen, if only because the clientele of assisted living tend toward more dependency and therefore risky lifestyles. But you should decide whether your operation will only exacerbate an unfortunate situation.

“In looking at assisted living operations that are succeeding in today’s marketplace, I see two characteristics: On the clinical side, they very clearly define their criteria for care-what they are staffed and equipped to manage and what they’re not. On the business side, they are very aware of cost creep as resident acuity increases. They find a way to pass along these cost increases in their rates, usually by fully explaining to residents and families the added services and the value received. They know that simply trying to hammer down expenses without focusing on the total picture is not the way to go.”

David Peete, President and CEO, AIM: The Society of Senior Living Professionals: “Over the past several weeks I’ve been meeting with assisted living CEOs around the country to get some idea of their development needs and how our organization might meet them in its educational presentations and offerings. The number one concern I heard: the need to develop leadership at the individual community level. What these top CEOs want is a de facto CEO for every building, in itself a typically $3 million to $15 million operation. They wonder, how can they prepare people for this role? And once they’re up and running, how can they get them to stay for, say, three to five years? If they can get someone to function as a strong leader and stay on board for some years, they consider this to be a success. That’s supported by ALFA and NIC data, which have shown that the buildings that stay full and retain frontline staff are those with a strong executive director, one who has stayed in place for a significant period of time.

“Executive turnover in this field is approaching at least 40% a year, a higher rate than skilled nursing. For the most part, assisted living administrators are not licensed, and what often happens is that someone decides to give it a try and finds that he or she doesn’t like it. This is the situation that top CEOs are grappling with at the community level.

“Another is the growth in demand for middle management leadership at the regional level. Some companies have found themselves in the position of being not quite big enough for this level of management but gradually becoming too big to do without it. Companies like ARC and Hearthstone have been creating new ways to prepare local facility and community executive directors for these growing regional roles-managers who can oversee, say, ten communities. This not only provides the management strength to cope with growth, but it opens a career path for local executive directors. It also offers these leaders possible mentoring relationships that will make these career paths a realistic option for them and encourage retention.

“As assisted living continues to evolve and accommodate an increasingly frail population, there is recognition for more educational and training support to meet this. Specifically, assisted living managers are clamoring for more information on managing Alzheimer’s-only facilities. There is growing recognition that managing this population takes a special kind of commitment and understanding. It is not knowledge that one would acquire in other areas of healthcare and transfer to assisted living. It is an area for special-purpose education.

“At the same time there’s a paradox here. While the Alzheimer’s-only setting is pushing the edge on the clinical side, there is also strong interest at the basic operational level in training for customer service. Recognition is growing that excellent customer service is a key to marketplace success. It is the organization that can absorb both ends of this spectrum that stands to do well in today’s market. You might call it the medically responsible social model, and I think this is the wave of at least the near future.”

David Kyllo, Executive Director, National Center for Assisted Living (NCAL): “Everything in long-term care is changing, and changing rapidly. Many organizations now are expanding into new levels of service, toward more independent living and home care. And we’re starting to see more interest from the financial community in supporting this diversification. There will be growth in assisted living, but it will be modest, smart growth. The old philosophy of ‘if you build it, they will come’ no longer exists.

“In line with this trend, there has been amazing progress in the area of wellness. Residents want to keep their strength and mobility for as long as possible. As a result, we’re seeing development of more wellness facilities and strength-training programs. As these programs increase in popularity, many assisted living communities are becoming livelier settings and dispelling the myths of aging.

“There is no question that, on the other end of the spectrum, assisted living has become a dominant player in dementia care. Many companies now have assisted living models focused solely on residents with dementia. We’re looking forward to the caregiver guidelines that the Alzheimer’s Association will be publishing later this year for assisted living and skilled nursing organizations.

“Outside of the Alzheimer’s realm, although acuity levels of assisted living residents are increasing, there remains a significant difference in these from the residents of skilled nursing. The difference is something that will bear strong attention, as states continue to review their assisted living regulatory systems. There will be a major role in this and other quality initiatives for the new Center for Excellence in Assisted Living [CEAL], an organization representing providers, consumers, and professionals in the field, which had its debut conference last December.

“NCAL will be dealing with several specific issues this year. We will be working with the federal Agency for Healthcare Research and Quality, the National Center for Health Statistics and, the HHS Assistant Secretary for Planning and Evaluation on developing a new government survey of assisted living capacity, similar to the survey that’s periodically conducted about the nursing home profession. NCAL has developed a Web site called Caring for Our Caregivers [], aimed at helping providers improve staff retention, and is producing a new staff orientation manual that will be available for sale. We also recently released, free of charge, an in-service program for complaint processing. These programs support our Quality First program initiative to promote continuous quality improvement.

“Meanwhile, in Washington, we are continuing to explore what the Medicare Part D prescription drug program means to residents. We are part of the fight to prevent Medicaid cuts, which could potentially affect at least 10% of all assisted living residents throughout the nation and significantly higher percentages in some states. Finally, we are looking forward to participating in this year’s White House Conference on Aging, the first such conference in ten years, and are planning a long-term care mini-conference this month to develop recommendations for consideration by the full conference in October.

“We also continue to track the fascinating changes that technology is bringing to assisted living care, enhancing resident independence and improving medical record keeping through the electronic medical record.”

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