A new business model for assisted living?

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David Grabowski, Ph.D.
David Grabowski, Ph.D.

Will the future of assisted living see providers coordinating health and long-term care services to benefit their residents and save the healthcare system money? It's a possibility, but operators will face challenges along the way, including a potential shake-up of their business model.

That's according to the lead author of new research published in the October issue of Health Affairs.

“There's this real feeling that the system is changing, and I think this is where you sense some tension within assisted living,” David Grabowski, Ph.D., tells McKnight's Senior Living. Operators want to keep the characteristics of resident independence and personal choice that make assisted living an attractive alternative to nursing homes, says the professor of healthcare policy at Harvard Medical School. Offering more clinical services, however, has the potential of making assisted living communities feel more institutional.

Resident quality of life doesn't need to suffer when care and service coordination is increased, Grabowski says, “but it's a different model, and with it comes regulatory issues, malpractice issues and all sorts of things that I don't think assisted living has really encountered in the way nursing homes and other healthcare settings have.”

The potential for some savings in the healthcare system currently is untapped, Grabowski says, in part because of the private-pay nature of assisted living. “Yet [residents'] healthcare is covered by Medicare, and in many instances, the Medicare program is spending quite a bit for their care,” he adds. In fact, Grabowski and his co-authors found that people living in residential care facilities — assisted living, board-and-care homes, congregate care, enriched housing programs, homes for the aged, personal care homes and shared housing — had rates of chronic illness and Medicare utilization that were similar to matched individuals living in nursing homes or in the community, and their level of functional dependency was in between those living at home and those living in nursing homes.

“We hear a lot that the assisted livings of today are like the nursing homes from a few years ago,” Grabowski says, “but actually seeing the numbers of activities of daily living needs and chronic illness, it really is the case that there's a very frail, medically complex population in assisted living facilities around the country.”

Grabowski and colleagues undertook their research with an unrestricted gift, announced in 2013, from six senior living companies (Atria, Brookdale, Erickson, Elmcroft, Emeritus [now merged with Brookdale] and Sunrise) and three real estate investment trusts (HCP, Health Care REIT [now Welltower] and Ventas). “They really wanted us to think about these sets of issues,” he says.

Their finding that little care coordination exists in assisted living didn't surprise the researchers, Grabowski says, given that incentives to encourage such coordination are lacking. Care coordination can benefit residents and lower healthcare costs, however. The researchers uncovered a Dartmouth study that found that putting physicians on site at continuing care retirement communities helped prevent hospital transfers, and Erickson's Medicare Advantage plan, through which physicians are available on site, led to a decrease in inappropriate hospitalizations. Offering such options may be difficult or ineffective for smaller operators, however, Grabowski says.

Other possible approaches to increased care coordination include more monitoring, linkage of electronic health records, registered nurses performing more case management or the use of telemedicine, he says. “Maybe the next step in this research is to figure out what the right delivery-level, on-the-ground model looks like, because I don't think we know that today,” Grabowski adds.

Some operators may decide not to assume more care coordination, he says, but for those who do, the future may not be entirely in their hands.

“Going forward, we will, I would imagine, see some increased policy efforts directed toward this sector,” Grabowski says. “It wasn't the first place [the government] looked, but it will be a place they look going forward.”

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