Senior-living industry seeking more comforting housing options

From independent living to assisted living to skilled-nursing care, the senior-living industry has historically operated with the idea of moving people through a care continuum, and while industry executives still refer to a continuum of care as people age, care advocates increasingly focus on providing care in most seniors’ first choice of settings — their homes.

It’s one of the reasons that occupations like home health aides are expected to be among the fastest-growing of the decade, but it could also muddle some opportunities for the construction industry even as the population ages and requires more care.

“The concern is that you have a lot of for-profits right now going into memory care and assisted living and building like crazy. Are they going to overbuild in the market?” — Rick Bova, CEO, Oakwood Lutheran Senior Ministries

Both independent and assisted-living facilities, which rely on private payments from people with means, have grown service-rich. Meanwhile, skilled-nursing facilities, which face limited reimbursement from Medicaid, increasingly focus on short-term acute care or end-of-life services. Whether they focus on one niche or provide a certain level of each, older facilities built in the 1970s and 1980s now face old age themselves, and their operators are contemplating renovation or expansion.

Mary Ann Drescher, president of Attic Angel Association, a Middleton-based retirement-living provider, noted that construction contractors would see more retrofitting business to make homes senior-friendly. “There are additions planned for some of the organizations, but there’s much more of a movement to do whatever we can to increase the overall health and wellness of seniors living in their homes,” Drescher noted.

Down memory-care lane

One exception to the home-and-hearth approach is memory care, because those suffering from dementia can’t always be safely cared for in the home.

Susan Rather and her husband, Jeff Tews, acquired BrightStar’s local in-home care franchise in 2008, but they recently added assisted living because Dane County is becoming somewhat of a senior magnet. And When BrightStar’s assisted-living community opened last March, “the memory care suites filled up first,” Rather noted.

Perhaps the most futuristic senior-living facility under consideration is the Tennyson facility now being planned by Independent Living Inc. However, with 36 units devoted to memory care in the first phase, Tennyson only begins to meet the projected need for such space on Madison’s north and east sides. At the end of 2012, a market study identified a high-end need for 1,500 memory-care community units combined in those two sections of Madison, according to Rita Giovannoni, CEO of Independent Living.

With some creative approaches like Supper to Seven, the community might not need quite that many units for permanent placement. Under the program, people with dementia come to the facility after dinner and remain there until the next morning. “It’s for that person with memory problems that has a great deal of difficulty at night, when they’re up and wandering around in the home,” Giovannoni explained. “That’s really disruptive to the sleep of their caregivers.”

The outlook for options outside the home is clouded by workforce compensation issues. In Wisconsin, the number of assisted-living units is now greater than the number of skilled-nursing beds, according to David Griffin, president and owner of ElderSpan Management, which manages senior-living facilities. When Griffin looks at the projected growth of the senior population, finding a sufficient number of quality people to take care of them is concerning, especially when some providers offer little in the way of compensation.

Some assisted-living providers are paying what Griffin calls “inappropriate” wages in the $8 to $9 an hour range, without fringe benefits. Dane County senior-living providers could never afford to do that, he asserts, even with a healthy number of employment opportunities. “Those [low-pay] providers, in my opinion, are generally not real successful, wherever they might be,” he said. “They could be in markets where there is very little competition, so maybe they’re doing okay, but in a market like Madison, there is a lot of competition, a lot of senior living providers, and a lot of job opportunities.”



Rick Bova, CEO of Oakwood Lutheran Senior Ministries, the parent of two Madison continuing-care retirement communities, Oakwood Village University Woods and Oakwood Village Prairie Ridge, noted that skilled-nursing care involves serving an older, sometimes low-income population. This is particularly true of people who run out of money and rely on Medicaid assistance for care within a nursing home.

Medicaid, however, doesn’t cover the cost of skilled-nursing care. “It’s a pretty significant difference between what we’re reimbursed and what it costs us,” noted Bova, who has worked with two other organizations that were significantly affected by low Medicaid reimbursement. Those organizations were located in a geographic area inhabited by a higher-income population and therefore had a low reimbursement rate.

“You could see anywhere from $100 a day to $150 in terms of the difference between what it costs to provide those services [to a patient] and what is reimbursed by the Medicaid system,” Bova said.

Some of that is made up by private pay, but such facilities are seeing a dwindling number of people who pay privately. The bulk of it is offset through the Medicare program, so nursing homes are forced to bring in short-stay rehab residents. Those reimbursement rates are not exactly rising, but at least they are higher than Medicaid and sometimes more than cover the cost.

“A lot of times, even at that level, you still run into situations where you lose money, even on a Medicare resident, because they don’t reimburse you for some of the more intense drug therapies,” Bova said.

When many senior-living communities are green-lighting renovation or expansion, the not-for-profit Oakwood could actually go smaller. “There are opportunities for some memory care, but the concern is that you have a lot of for-profits right now going into memory care and assisted living and building like crazy,” Bova noted. “Are they going to overbuild in the market? For a for-profit, it’s easier to take that overbuilding than it is for a not-for-profit like us.”

Keith VanLanduyt, vice president of marketing and community relations for Oakwood, said the need for facility improvement is widespread. If Oakwood expands, it would launch a capital campaign to help finance the expansion; fortunately, the financial markets are more creative than in the past. “I met with a group of guys who are doing some Federal Housing Administration financing for some of these projects,” he said. “That’s not something a lot of these organizations have looked to do in the past — specifically, public financing through a bond issue.”

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