Senior housing assisted living and independent living communities are not immune to the financial and real estate market downturn.
Senior housing assisted living and independent living communities are not immune to the financial and real estate market downturn. A recent article by Jack Healy in the New York Times, “Unable to Sell Homes, Elderly Forgo Assisted Living (November 24, 2008) speaks to the challenges of seniors stuck in their homes without the financial means to move into senior housing in a timely way.
The financial slow down has hit seniors considering a housing change in two major ways: shrinking nest eggs in a poor investment market, and a tough real estate market in which to sell their homes. Without a large cash asset, most seniors find it difficult to make the move.
The economic slow down has had a domino effect on senior housing providers. The occupancy data for the second half 2008 are not in yet, but given the anecdotal accounts we have been hearing for the last three months, move-in rates have slowed and vacancies are going up. As the New York Times reported, “Across the country, occupancy rates for independent and assisted-living facilities have fallen slightly in the last year, by about 2 percent through the middle of 2008, according to the National Investment Center for the Seniors Housing and Care Industry. But the problem is playing out acutely in hard-hit areas like Florida, where the vacancy rate at some facilities is up 20 percent to 30 percent over last year.”
In the broader real estate market, now is a great time for qualified buyers to make a purchase. The same is true for anyone considering a move to the senior housing market. Although many senior housing providers seem paralyzed, reporting a “wait and see” attitude with no proactive strategy in process, others are stepping up with new ways to compete more effectively to acquire the right resident. Some are reducing or waiving up-front fees. Others are partnering with organizations that provide bridge loans until a senior’s house sells. Still others are reducing monthly costs over a guaranteed term. If you have been considering a senior housing move but put your plans on hold because of tough economic times, it may pay dividends to inquire about “move-in specials” that might be available now.
In this increasingly competitive environment, consumers should also be aware of industry efforts to increase the pool of potential new “sales leads” and how some practices can affect your choices among senior housing providers. Here are some inside-the-market points you should keep in mind:
1. Many online services that claim to help consumers find appropriate senior housing limit their referrals to the housing providers that pay them for leads to deliver prospective residents. And most providers that pay these vendors only accept private pay residents--they don’t accept Medicaid payment. The payment to some referral services for landing a new resident can be as high as the first month’s rent, so it’s worth the vendor’s time to steer consumers to the most expensive home they can—whether or not it’s the right choice.
2. Several states have legislation prohibiting senior housing providers to pay vendors for referrals on a per-lead basis. Examples include Florida, Texas and Oklahoma. The idea is to prevent a “kick-back” environment in senior housing referrals.
3. The Federal Anti-kickback Laws and Regulatory Safe Harbor of 1972 prohibit providers to be paid on a per-lead or referral basis for residents eligible to receive Medicare or Medicaid funds. Private pay residents are not included, but it is not unusual for a prospective resident or family to be unsure of how they are going to pay for senior housing, especially down the line when private pay options are exhausted. http://www.oig.hhs.gov/fraud/docs/safeharborregulations/safefs.htm
To ensure that you are considering all the options that fit your senior housing needs, consult sources that don’t benefit financially from your choice of provider. Start with a Web search on the Senior Housing Locator at www.snapforseniors.com, a searchable listing of all 60,000+ licensed senior housing providers nationwide. Check with your local Area Agency on Aging or your local Long-Term Care Ombudsman (http://www.ltcombudsman.org) for more information on specific facilities. Your own informed research, combined with the potential for incentives or financial assistance available from the provider of your choice, could transform this slow housing market into the best time ever to make the move.