By Glenn Ruffenach
New York (May 6, 2021) – “My father might need to move to an assisted-living community. How do I evaluate, or how can I investigate, the financial health of these developments? The fees/costs are very high; how do I know a facility won’t go bankrupt soon after he moves in?”
I hear these questions more frequently as baby boomers, in particular, look for long-term care for aging parents. It’s important to evaluate the financial health of any type of senior housing for two reasons. First, as you note, the costs can be considerable, especially if a large entrance fee is involved. A community that falls on hard times could put your investment in that community at risk.
Second, and equally important, a development with financial problems could cut staff or services and, as such, reduce the quality of residents’ care. In the worst case, a facility could close its doors and transfer residents to other housing or leave them to search for a new home. In either instance, a distressing experience.
As for your father, an assisted-living community, as the name implies, is for people who are largely independent but who need help with activities of daily living—say, bathing or cooking meals. In 2020, the annual median cost for a one-bedroom residence was $51,600, a 6.2% increase from a year earlier, according to Genworth Financial Inc. About four out of five residents pay for care out of pocket, according to AARP.
In most cases, moving into assisted living, says Letha McDowell, president-elect of the National Academy of Elder Law Attorneys, is “like moving into an apartment.” You make a deposit and then pay month to month, usually with no long-term contract. The point: There is no large, initial investment on the resident’s part, Ms. McDowell says. As such, there is little to lose—at least financially, if not emotionally—if a facility should fail.
By contrast, consider a continuing-care retirement community, which enables residents, if the need arises, to move from independent living to assisted living to nursing care, all within a single setting. CCRCs are perfectly fine solutions for some retirees—but they typically require a hefty entrance fee. In the first quarter of this year, that fee averaged about $395,000, according to the National Investment Center for Seniors Housing & Care.
As for digging into an assisted-living community’s financial health, most developments are privately held and, as such, aren’t always eager to provide numbers. Still, start by “asking the marketing or executive director, ‘Do you have any information about your community’s financial stability?’ ” says Don Husi, a managing director who focuses on senior housing and care at Chicago-based Ziegler, a specialty investment bank.
In some instances, the community will be owned by a publicly traded company (examples: Diversicare Healthcare Services, Inc., Pennant Group Inc., Five Star Senior Living ) or be part of a health-care real-estate investment trust. If that’s the case, there should be, at the least, quarterly financial statements that you can examine.
A few states require assisted-living communities to disclose information about their operations, Mr. Husi says. A Place for Mom, a senior-living referral service, has a good tool that provides links to each state’s assisted-living records and reports, including regulation standards, as well as inspection summaries and violation histories for individual facilities.
If all else fails, “use your five senses,” Mr. Husi says. “Look around the community. Does it have curb appeal? Is the building well maintained? Is it clean? What does the landscaping look like? What’s the demeanor of the staff? Are they there just for the job, or do they care about the residents? How does the food taste? Is the ‘hot food’ really hot?”
Says Mr. Husi, “In most cases, quality is a sign of financial stability.”
A Place for Mom is an online platform connecting families searching for senior care with a team of experienced local advisors providing insight-driven, personalized solutions. As the nation’s leading senior advisory service, A Place for Mom’s mission is to enable caregivers to make the best senior living decisions. With hundreds of senior living experts nationwide, A Place for Mom helps hundreds of thousands of families every year navigate the complexities of finding the right senior living solution for their loved one across home care, independent living, memory care, assisted living, and more. A Place for Mom is paid by the senior living communities and care providers in its network so its service is provided at no cost to families. For more information, please visit https://www.aplaceformom.com.
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