NIC Releases Landmark Study on Assisted-Living Residents
Believed to be the most comprehensive and authoritative study ever conducted in the
assisted-living field, the National Survey of Assisted Living Residents: Who is the
Customer? was published by the National Investment Center for the Seniors Housing
& Care Industries (NIC). Conducted for NIC by the ProMatura Group and co-sponsored by
the Assisted Living Federation of America, it profiles the demographic and lifestyle
characteristics--beyond age, gender and marital status--of residents in a broad
cross-section of assisted-living communities, including modern, purpose-built and
professionally run assisted-living properties. More than 1,000 residents were surveyed in
178 assisted-living communities nationwide.
"For the first time, we have detailed information about residents from the
residents themselves--or from their families if residents were cognitively impaired,"
explains Robert Kramer, executive director of NIC. "This gives us a solid foundation
for understanding the nature of assisted-living residents--and prospective residents--on a
national and regional basis. In addition to confirming previous industry research, the
study contributes new information about the typical assisted-living resident, particularly
related to their health, physical and cognitive status."
Four key points emerged from the study:
1. The reported incomes and net worth of assisted-living residents are substantially
lower than is currently believed. About two-thirds (64 percent) of residents reporting
their income (including savings interest, dividends and Social Security) said it was
$25,000 or less per year. Yet, the average monthly fee charged by the communities--$67 a
day or $24,433 per year--was near or more than 100 percent of the average resident's
income. The study also suggests that a significant amount of "spend-down" is
occurring by residents, in that the net worth of residents decreases in relation to their
length of stay. These findings taken together, along with other evidence presented in the
study, suggests that the industry--at least on the basis of financial eligibility--could
potentially be three times as large as presumed from current industry feasibility
benchmarks.
2. There are significant differences in the length of resident stay by payer.
Assisted-living residents receiving state assistance had lengths of stay almost twice as
long (4.1 years) as private-pay residents (2.1 years). Those receiving Medicaid assistance
or SSI payments had an average length of stay 50 percent longer than private-pay
residents. This information--along with the finding that residents are spending down their
assets--provides compelling evidence to suggest that residents could remain longer in
assisted-living communities if they had the financial support to do so. This insight could
have important implications for how many states ultimately adopt Medicaid waivers and the
emphasis placed on them.
3. Assisted-living residents are similar in most demographic characteristics to
nursing-home residents, but the latter have far greater limitations in activities of daily
living (ADLs). This research demonstrates that assisted-living residents, on the
average, need far less assistance with ADLs than nursing-home residents. The typical
assisted-living resident needs help with 1.3 ADLs, while other research has shown that the
average nursing-home resident needs assistance with 3.67 ADLs.
4. The occupancy rates of older properties appear to be suffering at the hands of
newer ones. Properties open 10 years or more had an average occupancy rate of 88.9
percent, while those open between three and eight years had an average occupancy rate of
93.5 percent. This suggests that older properties (those opened in 1989 and before) may
not be able to compete as well as newer properties, possibly due to differences in their
physical plants. For example, older properties have significantly fewer one- and
two-bedroom units and significantly fewer units with refrigerators. The overall industry
occupancy rate was 91 percent. However, the median occupancy rate remained strong at 95
percent, indicating that there was a number of poorly performing properties pulling down
the mean.
Other results reveal which factors motivated residents to move, the types of settings
they moved from, how far they moved from their former to their new residences, and the
characteristics of the assisted-living communities.
Founded in 1991, NIC serves to facilitate efficient capital formation for the
senior-housing and care industries through networking, research, and providing business
and financial information. Proceeds from its annual conference, attended by more than
1,200 decision-makers in the financial and senior-living industry, are used to fund
research. For more information on the National Survey of Assisted Living Residents: Who is
the Customer? , call NIC at (410) 267-0504 or visit the Web site at www.NICinfo.org. The
400-page report, containing more than 150 full-color charts and graphs, is available for
$195.
Senior-Housing/Healthcare Funding Outlook Improves in 1999
Capital markets stabilize following unexpected turbulence
 Forget all that
talk about tight credit in the senior-housing/healthcare industry. Following still another
expected directional change, the scenario for borrowers has improved measurably in recent
weeks, reported Cambridge Realty Capital Ltd., a Chicago-based merchant baking firm, in
its annual forecast and 1998 recap for the senior-housing/healthcare industry.
The year began with an exceptionally rosy outlook for healthcare lending, but this
changed dramatically in mid-August as healthcare REIT stock prices plummeted with the
stock-market correction and real-estate mortgage investment conduits, pension funds,
insurance companies and other capital sources were negatively impacted by a widening
spread between AAA bonds and two-year Treasuries. The spread widened from 65 basis points
(a basis point being 1/100 of a percent) in the second quarter of 1998 to 220 basis points
in late October before reversing course in November, said Jeffery A. Davis, chairman.
Then, almost as quickly as it arrived, the liquidity crisis in the capital markets
miraculously improved as investors bullishly acted on their insatiable appetite for common
stocks. The recent discomposure in the capital markets has once again sensitized borrowers
to the realities of unexpected chance and the need to adapt quickly to changing
situations. However, while it is rarely comfortable, change does create new opportunities,
said Davis. "For those who can adapt quickly, there will be multiple opportunities in
senior housing/healthcare in the months ahead. Available capital will continue to create
expansion opportunities."
Financial Developments
Cambridge Realty Capital Ltd., a senior-housing and healthcare lender based in
Chicago, funded an $8.2 million, permanent mortgage loan for Oak Brook Health Center, a
154-bed, skilled-nursing facility in Oak Brook, Ill. The loan, a 35-year, HUD 223(F) loan
at 6.25 percent, was closed 70 days after application using HUD's new "Fast
Track" program. For more information, call (312) 357-1601.
Versus Technology Inc., a Traverse City, Mich.-based developer and manufacturer
of infrared location, data collection and communications products for healthcare and other
markets, announced it more than doubled its prior year revenues for the fourth quarter and
fiscal year ended Oct. 31, 1998. The company also generated consistent increases in its
top- and bottom-line results for the seventh consecutive quarter. The company recorded
revenues of $3.2 million in fiscal 1998, an increase of 108 percent over revenues of $1.5
million reported the following year. Versus attributed this growth to increased acceptance
and demand for its locating information technology in the healthcare market. In the fourth
quarter of fiscal 1998, Versus reported best-ever revenues of $1.1 million, which is more
than double those generated the same quarter the previous year. For more information, call
(616) 946-5868; Web www.versustech.com.
Infu-Tech Inc., a provider of infusion therapy and other medical products and
services to patients in their homes, reported fiscal 1999, first-quarter, financial
results for the period ended Sept. 30, 1998. Revenues for the first quarter decreased to
$5.7 million from the $6.7 million reported in the same period last year. Net income for
the quarter was $8,000, compared with net income of $160,000 reported in the first quarter
of fiscal 1998. The company's vice president and CEO, Jack Rosen, attributed the losses to
the national shortage of immunoglobulin products and the loss of patients who use those
drugs.
Kuala Healthcare, an integrated, alternative-healthcare provider, reported
financial results for the three-month period ending Sept. 30, 1998. Revenues for the first
quarter of fiscal 1999 were $15.4 million compared with $16.2 million reported in the same
period last year. Net loss for the quarter was $351,000, which was attributable to reduced
revenues reported at the company's Infu-Tech subsidiary and the closing of Compremedx, a
physician-practice management company. The reduction was partially offset by revenues
generated from the Bach's Institutional Pharmacy unit, which was acquired in December
1997.
Sunrise Assisted Living, a national provider of assisted living for seniors,
reported a 90 percent increase in third quarter 1998 revenues to $46.2 million from $24.3
million for the same quarter last year, and a 213 percent increase in earnings before
interest, taxes, depreciation and amortization to $16.5 million from $5.3 million in the
quarter ended Sept. 30. Depreciation and amortization for the quarter were $5.7 million;
net income was $6.7 million.
Revenues for the first nine months of 1998 were $121.5 million, representing a 104
percent increase over revenues for the same period last year. EBITDA for the first nine
months were $41.6 million; depreciation and amortization were $15.7 million; net income
was $14.9 million. As of Sept. 30, 1998, the company had $64 million in cash and cash
equivalents and stockholders' equity of $215.2 million. The company also currently has
$227 million of unused credit lines. For more information, call (703) 273-7500.
New Developments
Village Retirement Communities, based in Greenville, R.I., acquired its eighth
property in New England. The company also plans to open a new project, The Village at
Buckland Court, in South Windsor, Conn., in late 1999. VRC owns three communities in Rhode
Island, one under construction in Massachusetts and four others in various stages of
development in Connecticut. For more information, call (401) 739-6771.
Home Quality Management Inc., located in Palm Beach Gardens, Fla.,
recently acquired three assisted-living facilities consisting of 170 beds from CareMatrix
of Needham, Mass., and assumed management of three other facilities in November 1998. The
facilities, managed and operated by the company since August 1997, are located in North
Carolina and operate under the name of Piedmont Village at Newton, Statesville and
Yadkinville. Home Quality Management operates 27 facilities in Maryland, Georgia,
Tennessee, Florida and North Carolina. For more information, contact Dennis McNatt at
(502) 894-0365.
CRSA Holdings Inc., a national consulting firm for senior housing based in
Memphis, Tenn., was awarded the management contract for Kensington Park, an independent
and assisted-living community owned by the housing opportunities commission. The facility
is home to 201 individuals. In addition to assisted living, it offers a limited number of
independent living apartments, as well as apartments for people with Alzheimer's and other
dementia-related conditions. For more information, call (901) 685-5350.
Perennial Health Management, a wholly owned subsidiary of In-House Rehab Inc.,
reached an agreement in principle to acquire eight skilled-nursing centers and one
assisted-living center. Perennial is expected to close the deal to acquire 1,579 of the
Detroit-based MediLodge Group's licensed beds early this year. With this acquisition, the
total revenues generated by In-House and its subsidiaries would annualize between $90 to
$100 million. In-House is a provider of rehabilitation, respiratory and behavioral health
services to the long-term-care, assisted-living industry. For more information, call (502)
581-1455.
McCarthy, a domestic builder and commercial-building contractor, was selected as
construction manager and general contractor for the new $60 million AFL-CIO Union Life
Resort in Peoria, Ariz., the nation's first life-care center for retired union members.
The 500-unit facility, the third Arizona senior community to be built by McCarthy, is
slated to begin construction in early 1999, with occupancy targeted for early 2000. For
more information, call (602) 262-8000.
Constellation Senior Services, an assisted-living provider, opened HeartFields
at Fredericksburg, a 68-unit assisted-living community with 10 units dedicated to
Alzheimer's care. One of 15 properties in Constellation's portfolio, HeartFields is the
first to be developed and opened in Virginia and the eighth the company opened in 1998.
Also opened in 1998 were HeartFields at Frederick and Linthicum, Md., and HeartFields at
Cary, N.C. A second Virginia community is scheduled to open in Richmond in April. Seven
others will be opened this year. For more information, call Tricia Weller Lilly at (410)
884-9725.
GerAssist Inc., a provider of integrated healthcare services for seniors,
acquired Oak Park-Clermont Inc., an assisted-living facility in Clermont, Fla., from
Addison, Texas-based Greenbriar Corp. Oak Park, opened in December 1997, is a 59-unit,
66,000-square-foot, assisted-living facility. The units consist of studio, one- and
two-bedroom apartments. For more information call (615) 221-5200; Web www.gerassist.com.
Parkside Senior Services, a senior-housing company based in Skokie, Ill.,
executed an agreement to join Active Living of Glenview as a majority member. Active
Living is the owner of The Seasons at Glenview Place, a 222-unit, rental, continuing-care,
retirement community scheduled to open in early fall of this year. Parkside also executed
a letter of intent with Leggat McCall Retirement Properties for the purchase of The
Village at Farm Pond, a 420-unit retirement community development located on the grounds
of the former Cushing Hospital in Framingham, Mass. For more information, call (847)
779-8500.
Transamerica Senior Living, a subsidiary of San Francisco-based Transamerica
Corp., purchased Seven Oaks Retirement Community in Los Altos, Calif. The acquisition
marks the eighth property owned by TSL in California and Nevada. For more information,
call (415) 472-2294.
The George M. Leader Family Corp., owner and operator of Country Meadows
Retirement Communities, has announced its plans for expansion into Frederick, Md., the
first campus to be built outside the commonwealth of Pennsylvania. Currently, the
corporation owns nine Country Meadows campuses and manages the Ecumenical Community of
Harrisburg. Future plans include a campus in Easton, Pa. For more information, contact
Abbey M. Luterick at (800) 322-3441, ext. 1037.
NGH Marriott, a Houston, Texas-based manager and operator of assisted-living
communities and a wholly owned subsidiary of Marriott International in its Senior Living
Services division, is constructing a 44,200-square-foot, free-standing, assisted-living
community for seniors named Village Oaks at Greenwood, which is expected to open in the
spring. NGH currently operates 21 assisted-living communities. For more information, call
(317) 889-9822.
 Emeritus
Assisted Living, a nationally integrated senior-housing services company focused on
operating residential-style, assisted-living communities, is in the process of naming all
new developments within its management to Loyalton. Windemere Place, a new, two-story,
100-unit, assisted-living community under construction in Hagerstown, announced plans to
change its name to Loyalton of Hagerstown, scheduled to open in early summer. For more
information, call (888) 777-6625.
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