Financial support from the federal government and private lenders would be required to lower assisted living rates, National Center for Assisted Living Executive Director LaShuan Bethea told the New York Times and KFF for an article posted Monday on the KFF Health news website.
The piece in which Bethea was quoted, titled “Extra Fees Drive Assisted Living Profits,” is part of a KFF-Times project entitled “Dying Broke.” In part, the article scrutinized an industry pricing structure that adds fees on top of basic charges, to cover additional services such as help with activities of daily living, insulin injections and blood pressure checks.
“Assisted living providers are ready and willing to provide more affordable options, especially for a growing elderly population,” Bethea told the media outlets. “But we need the support of policymakers and other industries.” Offering affordable assisted living, she added, “requires an entirely different business model.”
The article also referenced a 2022 survey by KFF, published Nov. 14, that found that 83% of adults said it would be “impossible” (37%) or “very difficult” (46%) to pay $60,000 a year to live in an assisted living community or get help with ADLs at home (14% said it would be “not very difficult,” and 3% said it would be “not a problem at all”).
The article also cited the growth of rate increases, the for-profit status of most providers, and the operating margins they see. Several provider organizations and real estate investment trusts were named.
“For residents, the median annual price of assisted living has increased 31% faster than inflation, nearly doubling from 2004 to 2021, to $54,000, according to surveys by the insurance firm Genworth,” wrote the article’s authors, who also noted that 80% of the 31,000 assisted living communities nationwide are operated by for-profit organizations.
American Seniors Housing Association President and CEO David Schless told the media outlets that the median operating margin for assisted living communities in 2021 was 23% for communities offering memory care and 20% for communities not offering it.
Providers and shareholders aren’t necessarily just pocketing profits, Bethea said.
Operators can invest returns back into communities’ services, technology and updates to buildings, she pointed out, adding that their doing so contributes to the industry’s “high customer satisfaction rates.”
Beth Burnham Mace, special adviser to the National Investment Center for Seniors Housing & Care, also made the point that a la carte pricing promotes choice and allows residents to pay for what they “actually desire and need.”
Issues beyond provider charges also are in play, the article shared.
The market for long-term care insurance, which individuals could purchase to help them pay to live in assisted living, “has virtually collapsed,” the authors noted, and most assisted living residents pay using private funds. Eighteen percent of residential care facilities do accept Medicaid payments, they said, citing data from the Centers for Disease Control and Prevention’s National Center for Health Statistics, although “a resident must be frail enough to qualify for a nursing home before Medicaid will cover the health care costs in an assisted living facility,” and 37 states have waiting lists.