3 AVOIDABLE MISTAKES PEOPLE MAKE WHEN CHOOSING A SENIOR LIVING COMMUNITY

Moving into a senior living community could be the second largest transaction one makes in his or her lifetime. It’s important to get it right; otherwise, a family may have to search for a new place, again, or risk depleting all their loved one’s assets. Here’s a list of three mistakes people make when searching for and choosing senior living communities.

  1. They don’t consider that their cost of care could increase. Many communities charge rates depending on the level of care that the resident requires. It’s common for a resident’s level of care to increase as he or she ages. As a result, costs are likely to increase during a resident’s stay at a senior living community, and by how much is something people generally do not consider. When selecting a community, it is a good idea to select one well within your income limit to avoid costs overrunning assets or income.

So, by how much should one account for costs increasing over their course of his or her care needs? It depends on the client’s age, diagnoses, level of care at the start of residency, and the home, among other things. This is a question we will help families account for in our process to find them the best place for their loved ones.

  1. They don’t find communities that specialize in their love one’s care needs. While some people may consider nursing homes and senior living communities all the same, those that are familiar with the industry know that they are very different. Not only are those two settings of care different, there can also be differences in the level of care at nursing homes and senior living communities. Meaning, not all nursing homes and not all senior living communities do the same thing. When selecting a home for a loved one, to maximize value, it’s important to choose a home which offers care tailored to your loved one’s needs. Homes can differ on what they specialize in based on diagnosis, such as people with dementia, or ambulation level.

When residents are properly matched with a home based on their level of care, they have a better chance to maximize the value of the home. For instance, a resident who is ambulatory who only needs medication management would probably be overpaying if he or she moved into a home that is heavily staffed to care for people who need two Certified Nursing Assistants (“CNAs”) to help them transfer from the bed to a wheelchair. In order for the home to be able to afford to pay its CNAs, it must charge its residents a premium above its rental expense. As a result, an ambulatory person will likely be paying for care he or she does not need. That’s why it’s important for people to search and choose homes that are tailored to their loved one’s needs.

  1. They don’t negotiate with the communities. In our opinion, many people don’t negotiate because they don’t know that they have considerable buying power over the providers or are frightened at the sign of confrontation. It bears repeating, moving into a senior living community, and hence signing a contract to do so, is likely the second largest purchase one will make in their lifetime. Negotiate!

To negotiate well, one has to know his or her negotiating position. When working with clients, we combine three things to develop a negotiating position: (1) our analysis of the client’s situation; (2) number of communities to choose from; and (3) knowledge of market indicators. By following this strategy, we have been successful helping many of our clients lower their costs.

If a family is successful at avoiding these three mistakes, they have a much better chance of giving their loved one the quality of life they intend. While any family can come up with a solution on their own, we strongly suggest they seek expert advice to avoid mistakes that naturally come with trying something new. We’re happy to set up a free consultation to talk about your circumstances.

Best Wishes,

THE RISE OF ASSISTED LIVING IN THE US

The US used to have more multi-generational households than there are today. Several generations under one roof made for a symbiotic relationship among the family members. For instance, the elders preserved the traditions of the family, shared their wisdom with the young, and provided caregiving to the infants.

Then as they grew older, the youngest child would stay home to care for their aging parents or grandparents, instead of searching for work when they became of age. When the elders passed away, the youngest would inherit most of the land and the wealth of the family. At the beginning of the 1900s in America, the average life expectancy at birth was 41 years1. Because life expectancy was short, it wasn’t long before the youngest would inherit the land and then proceed with raising a family of their own.

As real GDP per capita climbed, life expectancy increased, caregiving became more accessible, and families had fewer children, the value-proposition tilted towards children seeking independence over caring for their parents and grandparents at home. Additionally, today’s parents and grandparents have been fortunate to have access to social, retirement, and health care programs that have helped them remain independent longer. These historical trends have slowly increased the elderly’s demand to live in retirement communities.

Retirement communities in America date back to the 17th century when the English settlers brought the idea of nursing homes to America; they called them almshouses. However, almshouses were also open to orphans and the mentally ill. During the Great Depression, these houses became overwhelmed with residents, and the elderly complained2. The US responded to the complaints by passing The Social Security Act of 1935. The Act provided a small amount of federal and state assistance to what we now know as nursing homes3.

Nursing homes’ popularity accelerated later when the US enacted two health insurance programs, called Medicare and Medicaid. Modern day health insurance started in the Depression Era when Baylor University Hospital discovered a new way to charge its patients for health care. Prior to Baylor’s discovery, hospitals billed its patients directly, using a fee-for-service model. During the Great Depression, patients didn’t want to pay large, one-time medical bills when they had little-to-no income. Baylor thought that it could change consumers’ perception of health care by changing its payment structure. It began to charge patients a small amount of money each month in exchange for covering their cost of care. While that payment system is widespread today, the idea didn’t catch on quickly. In 1940, only about 9% of Americans had some form of health insurance3. However, WWII changed the health insurance marketplace.

During the War, the US had a shortage of labor, so companies tried to increase their wages to attract workers. However, the US didn’t want wages to rise. Higher wages would translate to more expensive goods, which means a more-expensive war, and increased the risk of hyper-inflation. In response, the US passed the 1942 Stabilization Act to limit rising wages. Employers responded to the Act by offering their employees health insurance–if they couldn’t entice qualified workers with higher wages, then they had to attract them with better fringe benefits.

Harry Truman saw that access to health insurance corresponded to people living longer. He tried and then failed to pass a national health care plan in 1949. Inspired by Truman, Lyndon Jonson later signed the Social Security Amendments of 1965 at the Truman library. The law established Medicare and Medicaid, which provided health insurance to many Americans, in addition to funding to nursing homes. As nursing homes’ popularity surged, assisted living communities began to sprout. Assisted living facilities were designed as a variation of nursing homes. The idea of assisted living was to reduce environmental and organizational stress while promoting residents’ autonomy: the model includes private living spaces, a full array of services, and the residents’ right to make choices regarding daily activities and health care4. The success of assisted living in promoting independence, while offering supplemental care, has led to the constructions of over 28,000 assisted living facilities in the US.

GET THE RIGHT AMOUNT OF CARE

If you know someone who has had a surgery, you may know that when they first heard that they needed the procedure, they were bummed out. Chances are they got a second opinion in case another source gave them hope that there was an alternative. Similarly, anyone should get a second opinion before choosing a senior care provider.  Here’s why:

Senior care is very expensive. You should not rely on the providers to tell you what you or your loved one needs. Their opinions can be biased. That’s because providers typically generate more profit by providing higher levels of care. Before you choose a care provider, we recommend that you seek an unbiased opinion from a senior advisor, the benefits of which are more than just saving money.

While care providers typically administer an assessment, it can be incomplete. For instance, an incomplete assessment is likely to happen when someone who would qualify to live in an independent living community, applies to live in an assisted living community—a more expensive care setting. The nurse at the assisted living community will qualify the senior to live in assisted living; however, the nurse will avoid opining on whether the senior qualifies for independent living as well.

You never want to pay for more help than you need. The reason is that you will be over paying for care, and the person entering into care can prematurely lose their autonomy. If you take one thing away from this post, take this: it is extremely important to preserve a senior’s autonomy.

Karen Wilson, an original builder of assisted living communities, was inspired by her mother, because her mom wanted more independence than what she had in a nursing home. When Karen approached investors, they were skeptical of the assisted living concept, because they thought there was a tradeoff between health and freedom (i.e. more freedom meant worse health outcomes). Fortunately, she received funding and constructed an assisted living community in Portland, Oregon.

The community that Karen built supported impoverished elderly people on government support. When the community began to admit residents, she tracked their health, cognitive capabilities, physical function, and life satisfaction. Her findings revealed that the residents didn’t trade their health for freedom. In fact, their life-satisfaction increased, physical and cognitive function improved, and incidence of major depression fell. The program was a success from the cost side too: costs for those on government support were 20% lower than what they would have been at a nursing home. Karen believed that the assisted living community restored a portion of the residents’ independence, which boosted their quality of life and then drove positive health outcomes.

Granted, sometimes nursing homes are necessary. While nursing homes are for people who need a high level of care, the best ones creatively find ways to give seniors purpose. When Bill Thomas became the medical director at Chase Memorial Nursing Home, he enhanced the purpose of the residents when he purchased one hundred birds, four dogs, two cats, a flock of hens, a colony of rabbits, and hundreds of plants. Some of the residents got birds, some got plants, and some got both. Bill said that people who had been completely withdrawn and non-ambulatory started walking the dogs, and others, who he thought couldn’t speak, started to talk again.

Researchers studied the effects of Bill’s program over two years, comparing a variety of measures of Chase’s residents with those of residents at a nearby nursing home. Prescriptions-required-per-resident fell to half that of the nearby nursing home, total drug costs fell to just 30 percent of the comparison facility, and deaths fell by 15 percent. The study couldn’t say why, but to Bill it was obvious that the difference in death rates could be traced to the fundamental, human need for a reason to live. In this case it was caring for a plant or an animal.

The key take away from Karen’s story is that independence can actually improve health outcomes and quality of life. Bill’s story demonstrates that when given responsibility, seniors’ will-to-live increased. When someone is overqualified for a level of care, but he or she is given that level of care anyway, his or her autonomy can be prematurely stripped—the assistant performs more of the senior’s daily tasks than needed, which can have undermining effects on the senior. This may result in an expedited decline of the senior’s health, because the caregiver has just taken away something fundamental to that person, a sense of purpose.

Rather than asking a care provider if a person qualifies for a level of care, ask a senior advisor. A senior advisor will give you unbiased advice that could preserve a person’s quality of life and lower the bill.

This post was inspired by “Being Mortal” by Atul Gawande. His book is a must read if you find this topic interesting. The stories herein are from his book. 

FOR-PROFIT VS. NOT-FOR-PROFIT SENIOR LIVING COMMUNITIES

If you’ve searched “not-for-profit vs for-profit senior living communities” on Google, then you’ll know the search results are filled with posts from blogs on not-for-profits’ websites. You also may believe that not-for-profits, or nonprofits, are more genuine senior living communities. Be careful, the argument is not as simple as the nonprofits make it seem. Here’s why:

About 80 percent of senior residential care facilities are private and for-profit1. To outline the differences between for-profit and not-for-profit senior living communities, let’s quickly highlight some facts about each:

For-profits

  • Can generate positive net income, which is profit after operating expenses, interest expense, and taxes
  • Communities can be large or small
  • Can have government subsidy programs
  • Can have Medicare and Medicaid beds
  • Can be affiliated with not-for-profit hospitals
  • Can host religious ceremonies or have a large fraternal presence
  • May or may not remove residents from their communities for delinquent payments

Not-for-profits

  • Cannot generate net income, which is profit after operating expenses, interest expenses, and taxes
  • Communities can be large or small
  • Can have government subsidy programs
  • Can have Medicare and Medicaid beds
  • Can be affiliated with not-for-profit hospitals
  • Generally affiliated with a faith or fraternal organization that is mission driven
  • May or may not remove residents from their communities for delinquent payments

The major difference between for-profit and not-for-profit communities is that for-profits can generate positive net income. A nonprofit community will try to persuade you to think that this is a bad thing. A nonprofit might say, all-things-equal, a for-profit community will cut costs to be able to generate a profit to pass along to shareholders. That may sound good in theory, but it’s not a practical way to manage a community for long-term success.

Let’s say there are two neighboring communities that are identical, except one is a for-profit and the other is a not-for-profit. If the for-profit reduces its number of caregivers and then pays investors the savings, then which community would prospective residents choose? Under an efficient market, they would choose the not-for-profit community, because the caregiver-to-resident ratio is better. How is the for-profit going to respond? In this scenario, the market dynamic indicated that prospective residents are sensitive to the caregiver-to-resident ratio. The for-profit may find new investors or encourage its current owners and shareholders to invest back into the community. The for-profit may generate enough funds to hire even more caregivers than the nonprofit community. As a result, the for-profit begins operating a better business and winning new prospective residents.

This doesn’t mean that for-profits are better because they can attract capital more easily than non-for-profit communities. Investors only want their community to be marginally better or to be perceived as better than the competition so that when a prospect comes, he or she chooses the investor’s community. A perceived-to-be-better-community may have allocated more funds to marketing, rather than hiring an additional caregivers. So don’t be tricked into thinking a community is nice because its handouts are plated in gold. Instead, analyze each community based on a predefined set of criteria.

Also, don’t let generalizations sway you to consider only one legal structure. For example, if you want to find a community that has a large veteran population, it is likely that you’ll find one that is a not-for-profit, but don’t exclude for-profit communities from your search. Some for-profit communities have large veteran populations too. The same thing would apply if you’re searching for a community that has many residents of a particular faith. While you are likely to find a not-for-profit that is affiliated with your loved one’s religion, there are also for-profit communities that have certain concentrations of residents of the same religion too.

Unless the cause of the nonprofit community means a lot to you or your loved one, don’t let the basis of your decision ride on the community’s legal structure. Instead, we advise that you ask your loved one what he or she wants, or ask yourself what he or she wants. Create a list, and then find a community that fits your criteria. If you’re having trouble creating a list, ask a senior advisor. He or she will be able to help you brainstorm some important lifestyle factors to consider, and then show you a few communities that best meet your criteria.

CHEAP CARE COMES WITH ETHICAL PITFALLS

If you’re searching for a caregiver, chances are you will hear a few companies quote rates that are approximately five dollars per hour lower than their competition. In this post, I explain why some firms charge lower hourly rates and why cheaper is not always better.

There are five main factors that affect the hourly rate charged to a family: location, qualifications of the worker, number of hours, profitability of the firm, and the business model.

1. The hourly rate can increase if the family lives in an expensive part of the country or the caregiver lives far away from the family. All things equal, a firm that employs a caregiver that lives closer to the family will be able to charge a lower rate than a firm that employs a caregiver who lives farther away from the family.

2. The more qualifications the caregiver has, the higher the hourly rate a firm will charge. For example in Washington D.C., a registered nurse (“RN”) may cost $40 per hour while a certified nursing assistant (“CNA”) may cost $25 per hour.

3. In most cases, the hours per day and the hours per week that a family needs a caregiver will affect the hourly rate—the more hours that a family needs a caregiver, the cheaper the rate.

4. Firms may charge more money just to be more profitable—while some firms may pay their caregivers higher wages, and therefore can justify their higher rate, more likely than not most firms of the same business model with above average prices are attempting to run a more profitable business by charging more for the same services.

5. There are two types of business models in the home care industry, registry and agency. The registry model is generally cheaper than the agency model. The rest of this post defines the registry model and explains why it is generally cheaper than the agency model.

A firm that employs the registry model does not hire its caregivers. Instead, the caregivers are independent contractors referred by the firm. Generally, a family will pay a billing company, which then pays the caregiver and the firm. The firm charges a referral fee as a portion of the hourly rate charged to the family for the caregiver’s services. The caregiver gets paid for the number of hours the family uses his or her services. Caregivers who work under the registry model are cheaper than the caregivers who work under the agency model because they typically do not get health insurance, retirement options, and other common employee benefits that come with working for a firm full-time. For this reason, families should ask themselves if they are comfortable employing someone who does not receive these benefits yet may work over 36 hours per week.

Many firms that use the agency model will say that the registry model is bad because the caregivers are not CNAs, they are not reimbursable by long-term care insurance, the families are responsible for scheduling other caregivers if their main one is absent, the families are liable for anything that the caregivers steal, and the families are liable for any injury to the caregivers.

The truth is that these are generalizations and cannot be extrapolated to all registry firms. Some registry firms only contract with CNAs, charge fees that are reimbursable by long-term care insurance, will schedule another caregiver if the main one is absent, will reimburse the family for the value of stolen goods, and cover the liability of the caregiver if he or she is injured on the job. There are registry firms that operate this way in Maryland and Washington D.C.

Of the five main factors that affect a caregiver’s hourly rate, factors (1) and (4) families can control by shopping around to different firms, (2) and (3) will be determined by how much care their loved one needs, and (5) depends on the family’s feeling toward the ethics of hiring a contractor who may not receive employee benefits for doing the same work that an agency-caregiver would do and who receives employee benefits. From what I can tell through my research, (5) affects the hourly rate by approximately $5.50.

If you contact a senior advisor, he or she can refer a firm that employs the business model that you prefer, help you get the care that you need, confirm that you are protected, negotiate to lower your cost of care, and ensure that you are paying a reasonable rate. If you want to learn more, here is a link to contact us.

SENIOR CARE OPERATORS MUST RESPOND TO RISING WAGES

Caregivers are expected to be in short supply, but will the state-led minimum wage increases attract new talent or lessen families’ access to caregivers? Read about my opinion in the post below:

Maryland and D.C. have voted to approve an increase in the minimum wage while Virginia has not. D.C. led the pack in 2016 when Mayor Muriel Bowser signed an Act that would increase D.C.’s minimum wage a little each year until July 1, 2020. Afterwards, the minimum wage will remain at $15 per hour. The minimum wage requirement applies to any employee who works at least 50 percent of the time in D.C., regardless of where the worker resides. The date of this post marks the second to last minimum wage increase in D.C. As a result, D.C.’s minimum wage will be $14 per hour until July 1, 20201.

Currently, Maryland’s minimum wage is $10.10 per hour. At the end of March 2019, Maryland’s General Assembly overrode Governor Larry Hogan to pass an Act that will increase Maryland’s minimum wage over the course of seven years. Below is a summary of the state’s planned increases2:

For companies with at least 15 employees, this is the schedule of increases:

  • $11.00 on Jan. 1, 2020
  • $11.75 on Jan. 1, 2021
  • $12.50 on Jan. 1, 2022
  • $13.25 on Jan. 1, 2023
  • $14.00 on Jan. 1, 2024
  • $15.00 on Jan. 1, 2025

For companies with fewer than 15 employees, this is the schedule of increases:

  • $11.00 on Jan. 1, 2020
  • $11.60 on Jan. 1, 2021
  • $12.20 on Jan. 1, 2022
  • $12.80 on Jan. 1, 2023
  • $13.40 on Jan. 1, 2024
  • $14.00 on Jan. 1, 2025
  • $14.60 on Jan. 1, 2026
  • $15.00 on July 1, 2026

Personal care aides typically make more than the current minimum wage, but home care agencies and senior living communities will likely need to pay their aides more, especially as the minimum wage approaches $15 per hour. An RTI International report in 2017 found that nationwide 87% of healthcare support-related occupations in assisted living (AL) and continuing care retirement communities (CCRCs), namely personal care aides, will require wage increases if the minimum wage increases to $15 per hour3. Experts believe that even if caregivers are currently making more than $15 per hour, employers of personal care aides will have to increase their wages due to the “spillover” effect. That’s because the caregivers may find more valuable work elsewhere, say for a firm that does increase its wages. As a result of the minimum wage increases, it is likely that caregivers who work in the home and in the community will receive a pay bump regardless if they make minimum wage or not.

If the communities assume all of the financial impact from the increased labor costs, they may be able to preserve demand for their rooms. However, that is an unlikely scenario as investors will want to mitigate the financial impact of wage increases. A more likely scenario is that communities will pass on labor cost increases to the consumer in the form of higher monthly rates. Higher monthly rates will translate to less affordable housing options to consumers.

I believe the same dynamic will persist for home care agencies and registries: minimum wage increases will cause these firms to pay their caregivers more and then to pass on part of the cost increases to the consumer by charging more.

Fortunately, there is a winner in all of this: the hard-working people we know as caregivers. The US health care system needs more of them and needs them to remain with their clients longer. Higher wages will hopefully help resolve both of those issues. It’s not fair to the families and seniors who are constantly having a new face walk in their house because the former caregiver had to leave her job to find a better opportunity—that’s unhealthy for both the caregiver and the senior. So while wage increases may make access to care more difficult for some, it has the potential to better many more lives. If you are concerned about the rising cost of care, talk to a senior advisor. He or she may be able to guide you to an affordable option.

Sources
https://www.dcbar.org/pro-bono/newsletters/summer-2016/Minimum-Wage-2020.cfm
https://www.baltimoresun.com/politics/bs-md-minimum-wage-explainer-20190328-story.html
https://www.theceal.org/images/reports/RTI-CEAL-Minimum-Wage-Report-2017-FINAL.pdf

MANAGING CAREGIVER STRESS

I was at a caregiver talk two weeks ago and the presenter said that in the situation when one spouse must care for the other, 20% of the time the caregiver dies first. One reason that percentage is high is because the caregiver burns out. In my following post I talk about the symptoms of caregiver stress and a few resources the caregiver can use when he or she is feeling overwhelmed.

Spouses and people with some form of dementia are typically the most difficult people to care for1. For spouses, the caregiver is emotionally invested in the situation, and he or she may be frustrated that things aren’t the way they use to be. People with dementia can be tough to care for too because they may become violent, have emotional moments when they become confused, or think of conspiracies involving others stealing from them. There is no doubt that caring for someone else is tough and that’s why professional caregivers deserve our respect.

Caregivers must learn to care for themselves as well as the person they are caring for. The first temper tantrum is manageable. It’s the second one in a day, after a bad night’s sleep, that wears on the soul. That happens and it’s why caregiver stress is real. Its symptoms often mimic those of depression: changing sleep patterns, gaining or losing weight, feeling tired, losing interest in other activities, and being irritated easily1. As a caregiver, it’s good to check-in with yourself and assess if any of these things are happening to you. If so, it may be time to consider the next part of this post.

If you have some extra spending dollars each month, hire a caregiver. Caregivers are typically trained professionals who can help ease the load from your shoulders. He or she also may be able to teach you how to care for your loved one when the caregiver is not there. That’ll make you more effective at your job, which will help to mitigate anything from going wrong and causing you to get frustrated. Additionally, the caregiver will free your time so that you can focus on you. As a result, you may spend your time sleeping, getting chores out of the way so that you can get to bed on time, socializing with friends, or maybe traveling. Taking care of yourself is important, because when you’re well-rested, the next temper tantrum will be much easier to manage. A caregiver can free up your time to rest. Think about hiring one if you’re feeling overwhelmed.

What if you don’t have extra spending dollars each month for a caregiver? There’s great news: you have high-quality options! County governments all over the country are funding respite care programs. Respite care is short-term care. If you’re an unpaid, live-in, primary caregiver for a senior you may apply to receive free home care—check with your county on the programs and terms. In Montgomery County, Maryland, you may qualify for a maximum of 140 hours a year in free home care through The Arc Montgomery County, a local chapter of a larger not-for-profit2. Given there are 168 hours in a week, these respite care programs aren’t long-term solutions; however, they may allow you to catch up on sleep and then clear your mind. Once you’ve recovered, you should join a support group, take a couple classes on caring for your loved one or shadow a caregiver, get organized, and then develop a plan. By taking these steps, you will have given yourself a chance to be proactive towards managing your loved one’s situation.

If you take the latter approach and still find your stress levels creeping up, don’t be afraid to ask for help. Family members, adult day care, and caregiving agencies may have the resources to relieve you just long enough to get your mind centered again. Even if you spend a little money to relieve yourself, it’s okay. Do it. The caregiver must remember that he or she has to keep himself or herself in a good mindset; otherwise, he or she runs the risk of becoming an ineffective caregiver. If you don’t know who to call or what resources to turn to, contact a senior advisor. He or she may be able to lower your caregiver costs, put you in contact with a local respite care program that is funded by the government, or introduce you to other services that can help relieve your workload.

Sources:

  1. https://www.womenshealth.gov/a-z-topics/caregiver-stress
  2. https://www.montgomerycountymd.gov/HHS-Program/Resources/Files/A&D%20Docs/DDAC/2017ARCRespiteProgram.pdf