The Future of Assisted Living

Assisted living has become the fastest-growing long-term care option for those who want to live independently with assistance, according to the Assisted Living Federation of America (ALFA). With this growth comes a host of challenges including affordability, state and federal regulations, oversight, disclosure, and the constantly changing models of care. Consumer demand and focusing on the individual has become the leitmotif of assisted living. In order to assess the current state of assisted living, Long-Term Living‘s Executive Editor Maureen Hrehocik spoke with Assisted Living Federation of America’s (ALFA) President and CEO Richard Grimes and The National Center for Assisted Living’s (NCAL) Executive Director Dave Kyllo.

ALFA represents companies operating professionally managed assisted living communities for seniors and advocates choice, quality care, and accessibility for people of all income levels. NCAL is the assisted living “voice” of the American Health Care Association, the nation’s largest organization representing non-profit long-term care providers.

Hrehocik: On today’s continuum between skilled nursing and independent housing/services, how does assisted living define itself?

Grimes: The so-called “continuum”—from home care to independent living to assisted living to nursing homes—is entirely an artificial creation of business and government. As people age, they do not make decisions to move along some kind of continuum; they make decisions about how and where they want to live. Assisted living is one option that provides resident-centered care in a residential setting to meet the needs of the resident. The philosophy of assisted living provides for freedom of choice, independence, and the opportunity to live and age with dignity, privacy, and respect. This philosophy supports the resident’s decision, not the government’s decision, to live in the setting of his or her choice. We use terms that support this philosophy and we avoid terms that conjure up institutional forms of long-term care: assisted living has residents not “patients,” communities not “facilities”; our communities contain a number of apartments, not a number of “beds”; our residents are not admitted or discharged, they move in and they move out. Visitors check in at a front desk or a reception area—not a nursing station.

Kyllo: Assisted living prides itself by focusing on what the customer or the consumer wants and working to achieve that level of expectation. Assisted living is dynamic and ever-changing and assertively works to meet the needs of the individual. If we step back from assisted living and look at the entire continuum, it’s changing at a rapid pace. Nursing homes have become post-acute centers and rehab centers for a vast number of people they serve. Assisted living has now become the predominant site of service for the traditional senior population—those in their 80s and beyond.

Hrehocik: Has assisted living emerged from the “overbuilt” era and started to grow again?

Grimes: While the full impact of the recession has yet to be realized, assisted living seems to be on track for sustainable growth. Moreover, there are huge opportunities for substantial growth depending on our industry’s collective ability to inform and educate the public about the many available noninstitutional forms of long-term care, such as independent and assisted living. Consider this: There are roughly 200,000 Americans aged 75 to 80 with disposable incomes of about $35,000 who enter the senior living market every year. Yet, of this cohort of 200,000, senior living is currently capturing only about 20% or 40,000 new residents. The fear of moving from one’s home to an “institution” is probably the biggest single obstacle for most of those in this available market. As people learn that assisted living is not an institution, provides a very attractive lifestyle, and can be more enriching than being alone at home, we expect more people will choose this option.

In terms of the current market, we are seeing some potential residents starting to wait a little longer to move into assisted living—perhaps to see if the selling price of their homes will recover. For example, someone’s home two years ago may have brought $600,000; today it may only bring $460,000. This may be someone who feels they have “lost” money even though they bought their home 40 years ago for only $20,000!

Kyllo: Assisted living continues to expand and develop. What we have today is modest growth and smart growth. The philosophy used to be, “If you build it, they will come.” We now know that’s not the case. Today we ask, “If we build it, will they come?” We strive to answer this question through market research and a better understanding who it is we can serve and how we can best serve them.

Hrehocik: How are providers addressing aging-in-place and affordability?

Kyllo: These issues are being tackled in a number of ways. One is obviously through assessments—understanding how residents’ needs are changing and what we need to do to meet those needs. Another path to addressing these issues is through the regulatory system. If you step back and look at regulations state by state, you will see the regulatory climate changing rapidly. Last year we had 12 states do major overhauls of their regulations. At the state level, we are seeing rapid change. More than 20 states in 2007 made regulatory changes. Twelve states made major overhauls. The states are rapidly regulating to address the changes going on in assisted living as it grows and matures. It’s this state responsiveness that is one of the key reasons that we believe states are better equipped to regulate assisted living. States are more flexible, act more quickly, are “closer to home” on issues, and work directly with providers to address issues.

The kinds of changes we’re seeing on the state level are facilities doing criminal background checks for staff, infection control, emergency preparedness, food safety, disclosure, medication management, and staff training. We’re seeing changes in the ways we operate, becoming more sophisticated in the way we approach assessments and service planning. We’re seeing people have more chronic conditions and more healthcare needs than they did in the early years of assisted living. If you look at assisted living today compared to 10 years ago, there’s no question the acuity levels have risen, particularly upon move-in.

Affordability remains a huge challenge. Unfortunately, I don’t think, Medicaid policy is keeping pace with diversification of long-term care the way it should. There’s a new preliminary study by the Department of Health and Human Services’ Office of the Secretary of Planning and Evaluation showing that we actually experienced a decline in the last three years of the number of assisted living residents served by the Medicaid program. From our perspective, we’re going in the wrong direction. I don’t think anyone would have anticipated the number would be declining. I believe one of the primary reasons for the decline is that the states are sadly following the same path of Medicaid under-reimbursement for assisted living services that they have done in nursing homes. Part of that is the Medicaid program. There is simply no excuse for states that have had programs in place for five or six years and haven’t made one change in the rate they pay for the services. Therefore, it is not a surprise that Medicaid is not catching on. I think we have a long way to go with our nation’s long-term care financing system.

The Center for Excellence in Assisted Living or CEAL, is a collaborative group of 11 national provider organizations, as well as organizations such as AARP, the Alzheimer’s Association, Paralyzed Veterans of America, American Assisted Living Nurses Association, and many different key groups with vested interests in assisted living. They have come together and are working on issues pertaining to quality in assisted living. NCAL, as a participant in CEAL, has created an affordability committee to look at issues about how we can address the lack of affordable living. This is a priority. Obviously, it’s not just an industry-based look; it is industry, regulators, the state Medicaid programs, state lawmakers. Our goal is to come up with some creative ideas about how we can make assisted living more affordable.

The challenge that we have with affordability in assisted living is that the bulk of the costs are not in operations or the physical plant. You can’t cut down on an amenity here and an amenity there to make it more affordable. The bulk of our cost rests in our staff and staffing expenses. You’re limited in what you can do on the staffing side without jeopardizing the quality of service you’re providing. That is an ever-present challenge.

Grimes: Most people want to live in their own homes indefinitely, that is, they want to “age in place.” When it becomes apparent to individuals or to family members that home care is too expensive, or that they can no longer live safely at home, or they become socially isolated (as evidenced, in part by, the onset of depression), assisted living is often the very best option.

Many individuals can stay in their assisted living community indefinitely, depending on the levels of care and services provided. We believe that the decision to move to another assisted living community (offering higher levels of care) or to a nursing home should be made by the individual and family along with the individual’s physician and provider. Too frequently, however, the decision for a resident to leave an assisted living community is not made by the resident or family but by a state regulator enforcing wrong-headed state regulations. For example, in several states, regulations forbid individuals in assisted living from receiving hospice services. They are forced to move to a nursing home, hospital, or to a relative’s home when they are dying even though—get this—the individual, the individual’s family, the assisted living provider, the family’s physician, and the hospice provider agree that it is best for the person to stay in the assisted living community. Prohibiting hospice in assisted living is wrong and we are working to change that in every state. We strongly believe people of all income levels should have the opportunity to live in the setting of their choice.

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?

Grimes: The challenge at the federal level is related to the tension between those who believe that our nation’s problems related to long-term care can be solved best at the federal level as opposed to those who believe they are best solved at the state level. ALFA endorses the latter. We believe that the individual states best serve the needs of the individual states’ citizens. In other areas of long-term care, we’ve seen how federal laws and regulation imposed across the country can undermine the creativity of providers, create “cookie cutter” institutions, and create a huge and unnecessary burden on taxpayers.

Because the assisted living industry is relatively young, we still find it necessary to educate lawmakers and government officials, even those who work on long-term care issues. We have encountered federal government staffers who believe there’s not much difference between a nursing home and an assisted living community. We host tours for staff of federal agencies to show them the differences. These visits are eye-opening experiences that should ultimately be translated into sensible policy.

ALFA believes in consistency, high standards, and even-handed enforcement of state regulations to ensure the safety and quality of life of those we serve. ALFA is working with our state affiliates and state chapters to help states revise regulations and catch up to the consumer preference for choice and independence. Twenty-one states revised their regulations between 2004 and 2007 and 12 more are currently in the process of revising their regulations. ALFA has developed core principles to help shape state regulation and establish sensible and workable regulations in every state.

Kyllo: As I mentioned earlier, there were significant regulatory changes impacting the assisted living profession in the last year. NCAL tracks these regulations and changes in our annual “Assisted Living State Regulatory Review.” We believe these alterations of assisted living regulations strengthen our professions’ ability to care for our nation’s seniors and disabled in the safe and secure environment that best meets their needs.

As we move further into the election year, we encounter the roadblock of a smaller volume of new legislation being passed in Washington. The $20,000 question at the federal level is oversight. I don’t think we’ll see a big push for that in 2008. In 2009, however, everything is up in the air. We’re going to have a new Congress and a new president in the White House, and we will see where the new administration and Congress lay down their priorities. Some key Democratic leaders have expressed concern about assisted living and we’re working closely with those members.

I think 2009 will bode well for assisted living. That being said, there are some issues that are going on today that are very important to us on the legislative front. Most important to us is the Part D fix we’ve worked on dealing with prescription copays for dual eligibles (individuals who are on both Medicare and Medicaid). Seeing that passed this year is NCAL’s number one legislative issue.

Hrehocik: What does assisted living have to do to improve performance in the coming years? How do you envision the future?

Grimes: Assisted living was conceived in response to consumer demands. Not long ago the only option for someone who could no longer live at home was a nursing home with 24-hour care. Assisted living has become the fastest growing long-term care option for those who want to live independently and only need some assistance with daily living. Also, we know that our customers “vote with their feet” if their assisted living community is not providing what they demand in service, care, and attention. When they are dissatisfied with a community’s performance, they will find another community that will meet their needs. Finally, the future of senior living will be profoundly affected by the changing needs and desires of the next generation of seniors: the baby boomers. Boomers are already learning a lot about what they like and don’t like and want for themselves as they seek appropriate assistance for their own parents, aunts, and uncles today. As we look toward the future, we believe the very best options for seniors will be largely influenced by the demands of baby boomers. We believe the very best options for long term care have yet to be invented.

Kyllo: The future of assisted living is as exciting as the past. Twenty years ago, assisted living had barely been heard of. No one knew what it was. Today, it’s mainstream. I think as we move forward and the industry matures, we will watch customers continually changing and asking for new things and asking for old, traditional services to be delivered in a new way. We are going to see a lot of diversity and innovative ways to care for the elderly. Choice is one of the greatest gifts assisted living has given to the senior population. Assisted living has come up with a new way to deliver care. Our philosophy is to keep the focus on the individual and their needs and preferences. Today we have a host of services and care settings available that support individual choice.

To contact Rick Grimes, President and CEO of ALFA, phone (703) 894-1805 or visit https://www.alfa.org. Dave Kyllo, Executive Director of NCAL can be reached at (202) 842-4444 or visit https://www.ncal.org. To send your comments to the editors, e-mail hrehocik0508@iadvanceseniorcare.com.

Sidebar

—Dave Kyllo, NCAL

“ALFA is working with our state affi liates and state chapters to help states revise regulations and catch up to the consumer preference for choice and independence.”

—Richard Grimes, ALFA