What do we mean when we use the term “seniors housing community”?   The industry defines seniors housing communities as properties offer a place to live and varying levels of supportive services.   Discussions of seniors housing generally focus on professionally managed, market-rate properties with capacity for at least 25 seniors. Such housing is grouped into four categories: (1) independent living, (2) assisted living, (3) memory care and (4) continuing care retirement communities that combine multiple levels of care on a single campus, CCRCs may include units providing skilled nursing care in addition or in lieu of assisted living and memory care units.

Board and care homes are private residences in which usually less than ten seniors may be cared for.   Such facilities may offer a more homelike setting for seniors with limited needs for care but many such facilities are targeted to seniors that qualify for Medicaid rather than for private pay clients that are the focus of this post. Also not included in the definition of seniors housing are age restricted/senior apartments or condominiums that do not provide meals or supportive services and skilled nursing facilities that are considered healthcare facilities rather than supportive seniors housing.   While skilled nursing facilities historically provided long-term supportive care for seniors they are increasingly providers of either short-stay post-acute care following a hospital visit or long-term care for very frail seniors that need high levels of medical care or are indigent and covered by Medicaid.

It is helpful for consumers to understand the categories of seniors housing available. However, in reality, there is considerable overlap between the categories of seniors housing noted above and it is important to assess how well a particular community will meet your needs or the needs of a family member regardless of how a community is categorized. Increasingly IL communities offer assistance with the activities of daily living (ADL) services through affiliated or third party homecare providers, further blurring the distinctions noted below.

Independent Living Community

Snapshot

• $1,800 TO $4,000+ per month
• Meals, transportation, housekeeping
• Emergency call buttons, 24-hour staffing, sprinkler systems in some

The typical IL community is located in a suburban setting, has been open eight years, and contains approximately 137 units. It offers full-size apartments with kitchen facilities as well as a central dining room and common areas for services that may include exercise classes, lectures, concerts, bingo, Wii sports, etc. We have seen properties with well-equipped gyms and pools, and more communities are adding space for rehabilitation and medical care. However, some older IL communities offer small units with limited space for services and face a risk of functional obsolescence.[1]

Approximately 92% of the IL communities surveyed by the American Seniors Housing Association (ASHA) in 2010 were owned by for-profit companies, with about 25% owned by publicly traded companies and 8% owned by not-for-profit organizations. About 94% of the IL communities surveyed by ASHA in 2010 were rental, and 6% had an entrance fee of more than $20,000.[2]

ASHA’s survey of IL community residents[3] indicates the average age of a resident moving to IL is 81.7 years. In IL communities, 54% of residents were widowed, 35% married, and 6% divorced or never married, and more graduated from college (45%) than in the general population of the same age. While the majority of residents in CCRCs (see Exhibit 16) live in IL units, CCRC residents are generally younger, have more education, and more are married than is the case in free-standing IL communities. Approximately 73% of IL residents had one or more cars at the community, and over 90% of those with cars drove within the last week. About 10% of new IL residents receive home health services in their residences, and the growing availability of home health services in freestanding rental IL communities is beginning to blur the line between IL and AL service offerings. Surprising to us, 37% of IL residents say they have long term care insurance. According to the ASHA’s IL survey, 61% of new IL residents were moving from a single-family detached home and 85% owned their former residence. About 20% of new IL residents moved from an age-restricted active adult community to IL. A majority of residents moving to IL communities (53%) had been hospitalized within a year before moving. The median income of all IL residents was approximately $46,500. About two-thirds of the residents moving to IL sold their homes when they moved, and the median sales price was approximately $243,000.

Assisted Living Community

Snapshot

• $2,400 TO $6,000+ per month
• Hospitality services – meals, transportation, housekeeping
• Safety – emergency call buttons, 24-hour security, most offer sprinkler systems
• ADL care – bathing, dressing, transferring, eating, toilet use
• IADL care – financial oversight, phone use, shopping, money management
• Medical Care – Medications management, in some cases dementia care, possibly registered nursing on site full or part time

The typical AL community is located in a suburban setting, has been open for nine years, and has an average of about 62 assisted living units and 20 dementia care (ALZ) units, with a resident capacity between 90 and 100. Assisted living units are more akin to efficiency apartments with private baths, but with minimal or no kitchen facilities. Common areas include a central dining room and space for hospitality services, but on a smaller scale than in an independent living (IL) community. In most surveys, freestanding Alzheimer (ALZ) communities are considered a specialized type of AL community. The typical Memory Care (MC) community is smaller and slightly newer than the average AL community and has higher staffing ratios. An MC community is usually a one story secure community with about 40 units or 60-resident capacity. Memory care is also often provided in dedicated units within an AL community (on the third floor of the community shown above for example) or in a dedicated unit within a skilled nursing facility.

Approximately 98% of the AL communities surveyed by ASHA in 2011 were owned by for-profit companies, with about 47% of the total owned by publicly traded companies and 2% owned by not-for-profit organizations. All of the AL communities surveyed were rental communities.[4]

According to the 2009 Overview of Assisted Living (published by a coalition of industry groups)[5], the average entry age for an AL community is 84.6 years. Female residents outnumber males by about three to one. Most are widowed, and only 12% are still married or have a significant other. Average length of stay in combination AL/MC communities is 26.6 months. The decision to move in was either entirely (22%) or partially (40.9%) the responsibility of the resident, and about 70% of residents moved from a private home or apartment. About 80% of residents live within 25 miles of a relative. The median single occupancy rate at combination AL/MR communities is $3,700 per month, with median resident income of about $19,000 per year and net assets of approximately $205,000 including home equity. About 66% of residents are self-paying, 10.6% receive assistance from their families, and the remainder pays with various combinations of Medicaid, VA, etc. However, the pure private-pay percentage is typically higher at communities operated by publicly-traded companies.

Memory Care

[6]

Snapshot

• $3,500 TO $10,000+ per month
• Hospitality services – meals, transportation, housekeeping
• Safety – emergency call buttons, 24-hour security, most offer sprinkler systems
• ADL care – bathing, dressing, transferring, eating, toilet use
• IADL care – financial oversight, phone use, shopping, money management
• Medical Care – Medications management, dementia care, possibly registered nursing on site full or part time

The typical MC community is located in a suburban setting and is generally somewhat newer than the average assisted living facility because the development of standalone memory care communities is a relatively new phenomenon.   In memory care communities, services are generally considered more important than design and layouts do vary, but a purpose built memory care community generally averages about 40 units and 60 person capacity or smaller.   Purpose built properties are generally one story with outdoor space that is secured to prevent dementia patients from wondering off the site.   Service offerings are similar to those for assisted living and many assisted living communities also include a dedicated memory care unit but a memory care community will generally have higher staffing levels, with more staff per resident and more staff with medical training such as registered nurses or nurse practitioners because medications management can be more extensive in such communities.

Independent statistics on ownership of memory care communities is not readily available because such communities are often grouped together with assisted living but the ownership characteristics for memory care and assisted living should be similar with most owned by private companies and run by for-profit operators.

Average entry age for many memory care communities is similar overall to assisted living and the incidence of dementia increases with age but may include younger residents suffering from early onset Alzheimer’s.

Continuing Care Retirement Community (CCRC)

Snapshot

• $1,800 to $10,000+ per month and may include entrance fee options
• Typically offers IL, AL and may offer MC care, all on a single campus and may, in addition also offer skilled nursing care providing for post-operative rehabilitation and long term care for very frail patients.

The typical CCRC is located in a suburban location, has been open for 15 years, and contains approximately 300 units, with over 60% of these being independent living accommodations. According to the American Seniors Housing Association (ASHA), about 13% of the units are assisted living and 23% skilled nursing. The large size of a typical CCRC allows these projects to offer a greater range of dining and hospitality options than are available in stand-alone IL or AL properties.

Publicly traded companies owned 16% of the CCRC communities surveyed by ASHA, another 31.2% were owned by private for-profit companies, and 62.8% were owned by not-for-profit organizations.[7] Of the CCRC communities surveyed, 77% were rental and 23% charged an entrance fee of more than $20,000.²⁵

The majority of residents in CCRC communities are independent living residents with characteristics similar to those described above for IL communities. However, residents of entrance fee CCRC communities (see payment options below) are younger and significantly more likely to have a college degree, have higher household income, receive $300,000 or more from the sale of their home and have a net worth of $1 million or more.[8] We believe CCRCs, particularly entrance fee CCRCs, target more affluent seniors and those who are more likely to plan ahead for future care needs.

Payment Options

Most senior housing is operated as a rental on a monthly basis. The monthly fee covers room and board with an additional sliding fee based on the level of assistance the resident requires. In some settings, the community may bill only for room, board, and basic hospitality services, while a separate home-health agency may provide and bill patients directly for assistance with the activities of daily living, medications management, and other potential healthcare services.

Some private senior housing operators, notably Brookdale Senior Living and  Vi, and many non-profit providers operate entry fee CCRCs exclusively or in addition to operating communities charging only a monthly rental and service fee.  ASHA notes three types of entry fee contracts. These include:

• Life Care Contract, in which the resident pays an upfront fee and an ongoing monthly fee in exchange for lifetime occupancy at whatever service level (independent living, assisted living, Alzheimer’s, or skilled nursing) the resident may need, with the monthly fee staying the same regardless of the service level provided;
• Modified Life Care Contract, in which the resident pays an upfront fee plus a monthly service fee for independent living services with the community obligated to provide assisted living or skilled nursing care when required, but only for a specified period of time at a specified rate that may or may not be tied to the independent living rate; and
• Fee for Service Contract, in which the resident pays an entrance fee essentially to pay for the real estate and a monthly fee that varies according to the services provided, with the community offering priority admission to its assisted living, Alzheimer’s, and skilled nursing units, but no guarantee of all services being available.

[1] American Seniors Housing Association, The State of Seniors Housing 2011.

[2] Ibid, the 94% assumes All or Virtually All Rental (60.8%) plus No Response (33.2%).

[3] American Seniors Housing Association, The Independent Living Report, 2009

[4] American Seniors Housing Association, The State of Seniors Housing 2011.

[5] American Association of Homes and Services for the Aged (AAHSA), American Seniors Housing Association (ASHA), Assisted Living Federation of American (ALFA), National Center for Assisted Living (NCAL) and National Investment Center for the Seniors Housing and Care Industry (NIC), 2009 Overview of Assisted Living, 2009

[6] Layout is of an Arden Courts community operated by HCR Manor Care and features four self contained neighborhoods to make the property easier for dementia patients to negotiate.

[7] American Seniors Housing Association, The State of Seniors Housing 2011.

[8] American Seniors Housing Association, The Independent Living Report, 2009