How to Become an Assisted Living Entrepreneur
Why an Assisted Living Facility is a Timely Business
Assisted living facilities, a healthy, safe and independent lifestyle for its residents, provide a combination of housing, personalized supportive services, transportation, meals, housekeeping, 24 hour supervision, and health care designed to meet the needs of people who require assistance with the activities of daily living. In the current financial crisis, healthcare businesses have emerged as one of the global top dependable business opportunities. Consequently, owning an assisted living facility is a good practical business opportunity as well as a chance to help others in need. This article will discuss why it is a timely and financially beneficial business, the population it serves, funding sources for residents, proprietors and types of assisted living.
A Timely and Financial Beneficial Business
Currently, more than one million Americans live in an estimated 20,000 assisted living residences. The Assisted Living Industry today, for the most part, caters to the top affluent 10% of the senior population of the country. This field has expanded rapidly from 1990 until 1997; then, overbuilding occurred in the field in 2002 and again in 2005. In 2007 the field started to expand again and in 2008 the field has expanded by individual entrepreneurs with smaller facilities that are in the 15-50 unit range. Niche, facilities continue to thrive and expand. Another need which makes an assisted living facility a timely and beneficial business is the ageing Baby Boomer population. The average Baby Boomer is 65 years old today. According to the United States Census Bureau report, We The people: Ageing In The United States – a special Census 2000 report authored by
Yvonne J. Gist and Lisa I. Hetzel, “In 2000, the 65-and-older population comprised 35.0 million people. Within this group, 18.5 million people or 53 percent were aged 65 to 74, 12.3 million or 35 percent were aged 75 to 84, and 4.2 million or 12 percent were aged 85 and over. Women outnumbered men in this group: 20.6 million women compared with 14.4 million men. The age groups 65 to 74 years and 85 and older each had nearly 2 million more women than men, and the 75-to-84 age group had nearly 3 Million more.”
Further, according to the United States Census bureau the total population of people 65 years and older in 2007 make up 12.6% of the total US population. With Florida, West Virginia and Pennsylvania making the top three states where these residents reside. The Baby Boomers, who will not fully impact the assisted living market until 2010, are starting to enter the assisted living market. The senior citizens’ market has expanded beyond any previous experience in American or world history because of the Baby Boomer phenomena. These individuals, whose unprecedented multiple numbers will now become senior citizens, and because of the modern medical community’s efforts, and our population in general living a healthier life style, a senior citizen market that we have not prepared for nor anticipated is developing. Consequently, it is a beneficial business opportunity to own an assisted living facility due to the shear statistics of a developing older population, advances in medical technology leading to people living longer and the federal and state governments looking to reduce costs utilizing assisted living facilities and adult day care centers as a continuum of care for the elderly.
The Population an Assisted Living Facility Serves
The typical assisted living resident may be young or elderly, affluent or low income, frail or disabled. A typical resident is a woman in her eighties and is either widowed or single. Residents may suffer from Alzheimer’s disease or other memory disorders. Residents may also need help with incontinence or mobility. Assisted living homes are not for people who need constant professional nursing care. As we gaze into the future to prepare for the Baby Boomers, some industry insiders agree that it is difficult to predict what this new age group will look like, while others are advising providers to prepare for an onslaught of demands for convenience, luxury and location. This current group will have a significant discretionary spending capacity. They have more money to spend on travel, cars, appliances and toys than anyone else. Also, the long-term care industry will have residents who have been presidents, CEO’s, CFO’s and vice presidents of large corporations, extensive computer knowledge, financial independence all of which will lead to a higher-acuity of care. Service development, innovative facility design, product design, personalized social and memory care activities and high functioning care facilities will be things to consider no matter the size of your facility.
These facilities will provide services which include meals, housekeeping services, transportation, health promotion and exercise programs, personal laundry services, social and recreational activities, on-site salon, memory care or dementia services. Further, these facilities may provides access to health and medical services such as emergency call systems, bathing, dressing, medication management and needed assistance with eating, walking and toileting. Some of these services are not usually paid for by health insurance or the Medicare or Medicaid programs. Not all residents of facilities need significant care or assistance. Many are there because they want a simpler lifestyle without the worry of maintaining a home and they seek the companionship of other people their own age. They also may need some minor help such as taking medication or they desire a secure environment or they may require some supervision
COSTS AND FUNDING
Resident Funding: Costs will vary depending on the level of care and services provided. Assisted living care may be paid for by a long-term care insurance policy, but most individuals pay the cost themselves, which is referred to as the term, private pay. There are still more assumptions than known facts about where the money to pay for assisted living comes from. A recent study conducted by the National Investment Center for the Seniors Housing and Care Industries, reports that more than a third of residents receive some outside assistance, in the form of Supplemental Security Income (8.9%), Medicaid coverage (7.2%), payments from private insurance (3.2%), state assistance (2.8%), Veterans Administration supplements(.5%), or payments from Social Security, Medicare, Prisoner of War benefits, worker’s compensation, state aid, pensions, and the military. Meanwhile, federal, county and state assistance programs are shifting more Medicaid funds from home health and skilled nursing to assisted living. Further, the survey indicates that residents receiving financial assistance have longer lengths of stay than private-pay residents, and that residents receiving state assistance stay the longest, on average 4.13 years.
Business Funding: There is a variety of funding available for individuals starting an assisted living facility.
1. HUD (Housing and Urban Development)
2. USDA (United States department of Agriculture) for facilities in rural areas.
3. SBA (United States Small Business Administration)
4. OWBO (The Office of Women’s Business Ownership)
5. Non-Profit Organizations such as The Robert Wood Johnson Foundation
6. Community Block Grants
7. Private Investors
Facilities Vary in Size and Nomenclature
While assisted living is the most common term used in the nation both by industry and state regulatory agencies, assisted living settings may be known by different names, including, but not limited to, residential care, personal care, adult congregate care, boarding homes, adult congregate living, community based retirement facilities, retirement residences and domiciliary care. The difference in licensing is usually based on size of the facility or the services they offer.
Residential or board and care is usually a converted home or small facility with six to ten beds where the caregiver is a homeowner or single proprietor with little or no support staff. These facilities typically are not allowed to offer much care beyond bathing, dressing, providing meals or helping residents move around. Some of these homes however, may contract with home health agencies, home visiting doctors or nurses to provide care for their residents.
Newer facilities look more like apartment buildings with private rooms or suites with locked doors. Instead of a nurse’s desk, there is a help desk. And instead of a hospital-like lounge area and sterile cafeteria, assisted living has gathering areas with couches, fireplaces, gardens, atriums, etc. Central dining areas look more like banquet rooms and often offer entertainment during or after meal times. Meaningful activities and chats with neighbors in pleasant surroundings, keep residents active and stimulated.
More and more assisted living facilities specialize in the care of Alzheimer’s patients or individuals with memory care issues. An Alzheimer’s patient typically does not require a lot of medical attention but often requires supervision, confinement, quite calm surroundings, gardens with pathways, and locked entrance doors to prevent residents from wandering.
In conclusion, the assisted living business is continuing to grow and expand services to a escalating population which in turn lend itself to a vertical market with positive potential and growth for a business venture.