Converting Some Independent Living Units Makes Economic Sense
About 5.1 million people in the United States age 65 and older, or 13% of the population (one in eight persons), currently have Alzheimer’s Disease, the most common cause of dementia (60-80% of the cases), with a new case occurring every 70 seconds, according to 2009 Alzheimer’s Disease Facts and Figures, a report published by the Alzheimer’s Association. By 2030, the number of dementia patients is expected to increase 50% to 7.7 million; and by mid-century, someone will develop Alzheimer’s every 33 seconds.

Already, 3.4 million people age 71 and older (14%) and 2.7 million people currently over age 85 (about half) have Alzheimer’s, according to the report. More than twice as many women as men suffer from the disease, because it nearly always occurs later in life and women live longer. And since the overall number of Americans surviving to age 80, 90 and beyond is also expected to grow, the population that has the disease will also grow.

About 70% of people with some form of dementia live at home, and most receive help from family members and friends, according to the report. Half of those utilizing elderly adult day center services, 45-65% of assisted living residents, and 47% of nursing home patients have some form of dementia. At the same time, only 5% of all nursing home beds are set aside as Alzheimer’s special-care units; just over half of assisted living facilities provide some specialized dementia care.

So given the growing need, retrofitting some independent living units to memory care makes both practical and financial sense for some senior living providers. Experiencing a rising number of vacancies in its independent living units and a move-out rate of 8-10% per month because residents were experiencing memory problems, that’s exactly what Horizon Bay Retirement Living, a privately held for-profit organization based in Tampa, Florida, is doing at seven of the 80 properties it manages around the country. The increased need and the opportunity presented by delivering memory care services certainly relates to those in the not-for-profit sector, as well.

About 70% of Horizon Bay’s portfolio consists of independent living units, with an average occupancy rate of 91.5%. In the first five months of 2009, however, vacancies rose 2%. While partly due to many seniors being unwilling or unable to sell their homes, about 400 move-outs per month have been occurring simply because the residents developed memory problems and now require specialized services and care.

Horizon Bay is converting just over 200 of its independent living units to dementia care residences at communities, mostly in the Sun Belt but also in Rhode Island, so they can shift those residents needing more care to the memory care section of the buildings. The converted units will be grouped together, usually on one floor of a building, for safety purposes. The conversions, which are costing about $30,000 to $100,000 per building, involve redecoration and modifications for security. Kitchens will be removed, and bedrooms and bathrooms will be equipped to meet special needs, as necessary or appropriate.

The desired result for Horizon Bay is to provide existing residents with the option to stay in the community should memory care become necessary, according to Mike Roderer, Vice President of Asset Management. Additionally, the company is seeking to increase its census by adding new care types and bringing new residents into the buildings. The ultimate goal is to provide an opportunity for the Horizon Bay resident to age in place in the same community.

New developments being planned by Horizon Bay will also have a large memory-care component. In a 120-unit project currently underway in Illinois, for example, about 30% of the units are set aside for seniors with memory problems.

The Silverado model of care
Successful memory care requires more than physically converting units. It requires a specific environment and expertise. “I would describe that environment as similar to a traditional assisted living environment, in that it’s very much residential, but staffed and providing much the same level of clinical services as a traditional skilled nursing facility,” said Mark Mostow, Senior Vice President, Sales and Marketing, at Silverado Senior Living in San Juan Capistrano, California. The 19 communities that Silverado owns and operates in four states (California, Texas, Utah, and Arizona) and a 20th community scheduled to open later this year in Los Angeles/Beverly Hills are all dedicated 100% to people with dementia.

“The secret to our success, philosophically, is realizing that individuals with dementia can still enjoy a tremendous quality of life if they are given the opportunity to have freedom and dignity and choice,” said Mostow. “People who don’t understand the disease also don’t understand that aspect, so they’ll often use medications to restrain people or to manage behavior. Patients are kept isolated and confined to avoid any potential hazards. At Silverado, we give residents the freedom to enjoy the quality of life that they still deserve.”

On the clinical side, Silverado’s secret for success has been its model of care. Each community has a staff physician/medical director, who oversees the clinical programs, along with a full-time director of health services, who is an RN. Licensed nurses are onsite 24/7. “Our medical model allows us, in most cases, to use less medication and instead use redirection and behavior modification techniques,” Mostow added. “Our communities are restraint-free environments. We allow people the freedom to move around and to continue to be as active and as independent as possible.”

Dementia doesn’t necessarily mean that people are physically incapacitated. Some are very strong and otherwise healthy. Early stages of the disease involve confusion, disorganized thinking, personality changes, and unsafe wandering. As the disease progresses, though, people become less aware of their surroundings and increasingly need help with daily activities such as bathing, dressing, using the bathroom, eating, and so forth. In the advanced stages, patients become bed-bound and must have 24/7 care.

Silverado doesn’t specifically separate residents according to the severity of their illness, although it does try to create neighborhoods and environments for people at a similar level of illness so they can enjoy each other’s company. Those with the later stages of the disease and who are less capable of doing things for themselves are often placed closest to the wellness center and the nurse’s office. “But if someone doesn’t want to move, we certainly aren’t going to move them,” said Mostow. “Again, it’s a dignity and quality-of-life issue.”

Silverado offers residents either private or semi-private (“companion”) rooms that are similar to assisted living accommodations; each person has a private bath. “We have beautiful courtyards and playgrounds where the grandchildren and great-grandchildren of residents, as well as the children of our staff, can play,” Mostow added. “We have beautiful dining rooms, living rooms, and sunrooms for residents and their families to enjoy.”

While each Silverado community is enclosed within a secured perimeter, several doors lead out to courtyards or secure yards so that residents don’t feel locked in or confined. “In a traditional senior living community with an area that has been converted to dementia care, there’s usually one main entrance that’s secured and one door that leads to a small, secure courtyard or patio area,” said Mostow. “In contrast, some of our communities have acres of property for residents to enjoy on their own.” And just as they would in their own home, residents are invited to help themselves to sandwiches, fruit, ice cream, juices, milk, and other snacks that are kept in a stocked refrigerator in several “country kitchens.”

What about the cost?
Memory care is far more costly to provide than traditional assisted living due to the level of staffing and services required. In the Silverado model, for example, the physician/medical director and the extensive complement of nurses and master’s-prepared social workers that are on staff bump up costs significantly. A traditional assisted living environment often has no nurses on staff and very limited, if any, clinical services available to residents.
Horizon Bay will be staffing its new memory care units more extensively by adding health-care professionals. More dietary personnel are normally required for memory care residents, as well, both for extra meal preparation and to closely monitor meal times. And the communities will have to meet more stringent licensing and regulatory requirements, depending on their location.

The cost of providing health-care services and long-term care for patients over age 65 with Alzheimer’s or other forms of dementia is three times the cost of providing care to those without the disease, according to the Alzheimer’s Association report. In 2004, for example, the cost was $33,007 per patient with dementia and $10,603 per patient without dementia. Medicare paid about 46% of those costs, and Medicaid paid about 20%. Only about 7.5% was paid out of pocket, with the balance paid by private insurance, HMOs, and other sources. Medicaid is the only federal/state program that covers long-term nursing home stays, which most dementia patients require in the late stages of the illness; but Medicaid beneficiaries must already be poor or have depleted their assets in order to receive coverage for long-term care.

Silverado residents pay $5,000 to $6,500 per month, or $165 to $205 per day, for a semi-private room—about twice the average cost of a traditional assisted living facility but right in line with the average cost of nursing home care. “It’s strictly private pay,” Mostow noted. “There’s no Medicare or Medicaid reimbursement.” Long-term care insurance, which may pay for some of the cost, is becoming more popular partly for that reason.

“We’re very hopeful that researchers will come up with a miracle cure or treatment for dementia patients,” he added. “In the meantime, a lot of people need care—and we expect there will be a lot more of them.”