Building up, costs down for assisted living facilities
Demand may be peaking as pressure grows on rates
After a building boom that has resulted in new assisted living centers across southwestern Connecticut, a new survey suggests that costs have declined for those who secure quarters in those facilities.
In an updated CareScout study of the cost of longterm care nationally sponsored by Genworth, researchers estimated a 3 percent annual decline over the past five years on average for a private room in an assisted living center in southwestern Connecticut, to $195 a day or $71,000 for a full year.
Connecticut was one of just three states along with Delaware and Illinois to see a decline in the cost of assisted living, with facilities designed to provide health services as residents may require, as well as help with other daily living needs, and opportunities for social engagement and mental stimulation. CareScout derives the estimates from more than 15,000 facilities nationally.
Developers have built a number of new centers in southwestern Connecticut the past several years, to include Maplewood Senior Living based in Westport, Bridges by Epoch and Sunrise Senior Living. They are now looking to differentiate their services, including Maplewood, which is working with Western Connecticut Health Network to build a new center at the site of the former Norwalk YMCA, with plans to offer health services in conjunction with nearby Norwalk Hospital.
“There’s campus-like construction that’s been done in the past, but not necessarily the sharing of the physical structure in one building where you’ve got these commingled uses,” said Chris Smith, CEO of Maplewood Healthcare, in an August interview with Hearst Connecticut Media. “It’s about continuity of care and how that (health care) delivery is taking place.”
Nationally, construction commenced in the third quarter on nearly 1,440 new assisted living facilities, according to the National Investment Center, an Annapolis, Md.-based organization that tracks the overall market for senior living communities. The new projects arrive against an 85.3 percent occupancy rate on average in assisted living centers, below an overall 89.3 percent occupancy rate across all forms of senior housing.
Speaking to investment analysts this week, the CEO of Brookdale Senior Living described as “difficult” the current competitive landscape for senior living communities, with the company’s Connecticut homes including Brookdale Wilton.
“Construction as a percentage of senior housing inventory remains near historical highs, yet it is starting to abate,” said Brookdale CEO Cindy Baier in a Monday conference call. “New openings are taking longer to fill up or stabilize (and) this may put additional pressure on underwriting future new construction. While the slower fill-up may put some pressure on rates, we have not seen widespread discounting.”
The deflationary pressure on assisted living is occurring even as costs increase, particularly with regard to labor, as noted in the CareScout and Genworth survey, which called it “a simple case of supply and demand” with not enough workers for an ever-expanding number of facilities and patients, par- ticularly those requiring help with Alzheimer’s disease, which requires more training.
In addition to nursing home care, CareScout calculated rates for other forms of senior and invalid care, to include home health care and supervised day care for adults outside of their homes. The cost of a home health aide worker was up 2 percent in southwestern Connecticut to $24.50 an hour or $154 a day.
CareScout calculated a daily rate of $494 for a semi-private nursing home room in southwestern Connecticut, or $180,000 for a full year’s care. That pulled Connecticut’s average annual rate up to $151,000, second highest in the nation.
Southwestern Connecticut nursing homes have increased rates for shared rooms 4 percent annually on average over the past five years. That was more than double the rate of increase in Connecticut, with Arizona the only state to see a lower level of inflation.