ASSISTED LIVING: Looking At A Fast-Growing Industry
Yesterday's Wall Street Journal took a look at "the loosely regulated but increasingly popular form of housing generally known as continuing-care retirement communities," a nursing/retirement home hybrid that provides assisted living to an estimated 1 million seniors. The Journal reported on a host of horror stories in which senior residents, "[i]n effect ... used their life savings to make no-interest loans" in the form of costly entrance fees of up to $500,000 in exchange for a promise of lifetime care, only to see their money vanish when homes go bankrupt due to unwise investments by the facility's management. "Nationwide, there are now as many as 2,700" continuing-care retirement centers, up from 1,500 ten years ago. While many residents are completely happy with their continuing-care facilities, the Journal warns consumers to watch out for non-refundable entrance fees, a lack of nursing home beds (especially ones covered by Medicaid), forced evictions from apartments, steep rent increases and a lack of accountability in the facilities' investments. Ilene Rosenthal, chief of housing services for the Maryland Department of Aging, said, "It's important to think about the worst-case scenarios" (Moss, 10/8).
The Nashville Tennessean reports that pressure on hospitals to "cut the number of beds they staff" and "Washington's latest reimbursement changes" have produced "a boom in the construction of homes for senior citizens too frail to live alone but too healthy and independent to need a nursing home." The paper reports that continuing-care centers are "a purported investor's dream of an idea that appeals to the booming elderly population while avoiding problems that have driven other health care stocks into the ground." The major industry players include American Retirement Corp, National Healthcare Corp., GerAssist, LifeTrust America and Belmont Corp. Concerns are surfacing: "[t]he industry is subject to the boom and bust cycles of real estate"; some companies are using creative accounting to "shelter start-up losses" that can total up to $700,000 per year for a new facility; and the lack of state regulation means that "consumers are on their own" (Bell, 10/8).
Today's Raleigh News & Observer reports that Duke University Health System "has almost completed a merger with United Methodist Retirement Homes" of Durham, NC. The merger offers benefits to both partners. "For Duke, the deal welds a new link in the health-care system it is building to serve patients from cradle to grave," the News & Observer reports. For United Methodist customers, it offers access to "Duke's deep pockets and the sense of security that comes from a formal merger with Duke's health system" (Bickley, 10/9).