Extra fees driving profits in facilities
Assisted- living centers have become an appealing retirement option for hundreds of thousands of baby boomers who can no longer live independently, promising a cheerful alternative to the institutional feel of a nursing home.
But their cost is so crushingly high thatmost Americans can’t afford them.
These highly profitable facilities often charge $5,000 amonth ormore and then layer on extra fees at every step. Residents’ bills and price lists froma dozen facilities offer a glimpse of the charges: $12 for a blood pressure check; $50 per injection (more for insulin); $93 a month to order medications from a pharmacy not used by the facility; $315 a month for daily help with an inhaler.
The facilities charge extra to help residents get to the shower, bathroom or dining room; to deliver meals to their rooms; to have staff check-ins for daily “reassurance” or simply to remind residents when it’s time to eat or take their medication. Some even charge for routine billing to a resident’s insurance for care.
“They say, ‘ Your mother forgot one time to take her medications and so now you’ve got to add this on and we’re billing you for it,’” said Lori Smetanka, executive director of the National Consumer Voice for Quality Long-term Care, a nonprofit.
About 850,000 older Americans reside in assisted- living facilities, which have become one of the most lucrative branches of the long-term care industry catering to people 65 and older. Investors, regional companies and international real estate trusts have jumped in: Half of operators in the business of assisted living earn returns of 20% or more than it costs to run the sites, an industry survey shows. That is far higher than themoney made inmost health sectors.
Rents are often rivaled or exceeded by charges for services, which are packaged in a bundle or levied a la carte. Overall prices have been rising faster than inflation, and rent increases since the start of last year have been higher than at any previous time since at least 2007, according to the National Investment Center for Seniors Housing & Care, which provides data and other information to companies.
A public opinion survey conducted by KFF, the organization formerly known as the Kaiser Family Foundation, found that 83% of adults said it would be impossible or very difficult to pay $60,000 a year for an assisted-living facility. Almost half of those surveyed who either lived in a longterm care residence or had a loved onewho did encountered unexpected add- on fees for things they assumed were included in the price.
And even older people who can afford an assisted-living facility often find their life savings rapidly drained.
Unlike most residents of nursing homes where care is generally paid for by Medicaid, the federalstate program for the poor and disabled, assisted-living residents or their families usually must shoulder the full costs. Most centers require those who can no longer pay to move out.
The industry says its pricing structures pay for increased staffing that helpsmore infirmresidents and avoids saddling others with costs of services they don’t need. Prices escalate greatly when a resident develops dementia or other serious illnesses.
“It’s profiteering at its worst,” said Mark Bonitz, who explored multiple places in Minnesota for his mother, Elizabeth.
Lashuan Bethea, executive director of the National Center for Assisted Living, a trade association of owners and operators, said the industry would require financial support from the government and private lenders to bring prices down.
For residents, themedian annual price of assisted living has increased 31% faster than inflation, nearly doubling from 2004 to 2021, to $54,000, according to surveys by the insurance firm Genworth. Monthly fees at memory care centers, which specialize in peoplewith dementia and other cognitive issues, can exceed $10,000 in areas where real estate is expensive or the residents’ needs are high.