On the Right Track
Assisted living makes a move to Alzheimer's care
By Andrew MacPherson and Balaji Gandhi, Volpe Brown Whelan & Co.
 Recent advances
in medicine have greatly improved the treatment and management of physical ailments, such
as cancer and heart disease. These advances boost the likelihood that people will live
long enough to encounter the various mental disorders common in the elderly. As a result,
mental conditions, such as Alzheimer's disease and related dementia (ARD), have rapidly
increased their prevalence, making it hard for assisted living to resist coming aboard to
offer ARD care.
These diseases affect a high percentage of the rapidly growing U.S. elderly population.
In 1998, nearly 4.3 million people over the age of 65 suffered from Alzheimer's disease,
according to Volpe Brown Whelan & Co. Including all other forms of dementia affecting
the elderly, this population was more than six million, representing more than 17 percent
of all Americans above the age of 65.
Alzheimer's disease dramatically increases in prevalence as people age beyond 65. Of
people aged 65 to 75, 5 percent to 10 percent of the population have the disease.1
But, of people over the age of 85, nearly 50 percent have Alzheimer's disease.2
The growing demand for assisted-living services and the simultaneous boom in the demand
for ARD care is being fueled by the growth of the population cohort aged 85 and older.
Currently, there are approximately four million people over the age of 85 in the country.
This cohort is projected to grow to 4.3 million in 2000 and 5.7 million by 2010. The U.S.
Bureau of the Census is projecting an increase of 10.3 percent over the next three years
and 46.8 percent over the next 13 years. In addition, this age group is projected to
increase at a compound annual rate of 2.4 percent throughout the year 2030.
Family members spend an average of more than 100 hours per week caring for their loved
ones. The increased demands on a caregiver's time frequently lead to difficulty sleeping
and increased levels of depression. Past and current studies attempt to analyze the social
and physical impact on family caregivers in different care settings (e.g., home health and
adult day care).
As the severity of the disease increases, so do the associated costs. It is estimated
that the total annual costs for the treatment of Alzheimer's disease exceeds $105 billion.
In the late stages of the disease, the level of care required necessitates either
full-time, in-home nursing or placement into an assisted-living or skilled-nursing
facility. It is also estimated that in the severe stages of the disease, annual costs are
$45,000 per patient.
Supply and Demand
The 4.3 million Americans with Alzheimer's in 1998 accounted for approximately 12.5
percent of the total population over 65. Currently, only 87,000 skilled-nursing beds and
30,000 assisted-living beds are specifically designated to care for these residents.
The majority of seniors with ARD are either in their homes or in skilled-nursing
facilities due to a lack of options. In recent years, many skilled-nursing providers have
designated a percentage of beds to special-care units (SCUs) to treat ARD. Projections
have been made that the total number of SCUs and dementia-care assisted-living facilities
cover only 3.5 of the total potential market population.
Despite the increase in the number of SCUs, several studies assessing them indicate
that the type of care provided is not materially different from traditional
skilled-nursing units. The existing Certificate of Need (CON) regulations, relating to
SCUs as well as the consumer demand for an alternative setting of care specifically
designed for ARD residents, will limit the expansion of dementia SCUs.
Although ARD have been clinically diagnosed conditions for nearly 100 years, most
senior-care providers have only begun to develop discreet programs of care in the last
several years. Even today, the majority of seniors with ARD are either cared for by family
members full-time or are inappropriately placed into skilled-nursing facilities.
Assisted-living facilities have grown to fill the gap between skilled-nursing
facilities on the higher end of the acuity scale, and independent living and home
healthcare on the lower end. The recent rapid growth in assisted living is a result of the
need for a cost-effective alternative to skilled-nursing care for individuals better
suited to a residential rather than an institutional setting.
The programs of care and services at assisted-living facilities are designed to keep
residents both physically and mentally active. Care programs in assisted-living facilities
are generally designed to foster bonds between residents and their caregivers. Through
their daily interaction in social activities and providing assistance with ADLs, trained
caregivers are able to quickly identify any physical and psychological changes in
residents. These same goals apply to ARD care. As a result, many of the programs and
activities utilized in assisted-living facilities are easily adapted to caring for seniors
with ARD. Therefore, several companies already providing higher acuity assisted-living
services could, without undue effort, add programs to care for seniors with ARD.
Leading Programs of Care
The design and construction of Alzheimer's and dementia-care facilities have been
greatly influenced by clinical research findings and the general increase in the public's
awareness. Most design characteristics that are beneficial for Alzheimer's care are also
beneficial for traditional assisted living. Therefore, purpose-built Alzheimer's
facilities can easily be transformed to accommodate assisted-living residents, thereby all
but nullifying the threat of functional obsolescence.
Several leading public and private assisted-living companies offer well-defined,
dementia-care programs. In many cases, the care programs and facilities were designed to
meet the recommendations made by the medical and social-services communities.
For example, in the public universe, Alterra (formerly Alternative Living Services
Inc.), provides specialized dementia care to capture significant market share. As of March
31, the company operated more than 2,500 ARD units (15 percent of the company's total
operating capacity) in its purpose-built Clare Bridge Memory Care Residences. The Clare
Bridge program is designed to nurture independence, improve self-esteem and provide
optimum comfort to each memory-impaired resident. The physical environment at each Clare
Bridge facility allows residents to wander safely and engage in memory-enhancing
activities in a homelike setting. Caregivers at these communities are assigned to specific
residents to assist with ADLs.
In the private arena, Portland, Ore.-based Encore Senior Living, a provider of
assisted-living-based, dementia-care services, operated nearly 1,045 ARD units as of June
1. Encore's ARD concept, Rediscovery™, represented more than 40 percent of the
company's total operating units. Rediscovery specializes in later stages of Alzheimer's
disease, offers several different facility-types and price points, and establishes a
variety of research and advisory affiliations.
While many existing assisted-living providers implement dementia-care programs as a
component of their overall package of services, several companies exclusively dedicated to
ARD care also have been established. For example, Uncommon Care, based in Austin, Texas,
currently operates four facilities in Texas. The company's prototype facility, Barton
House, looks more like a home than a traditional nursing facility or hospital. Primrose
Alzheimer's Living also operates assisted-living-style facilities focused exclusively on
ARD, including the development of larger, multibuilding campuses as well as adult day-care
services. Silverado Senior Living, of Aliso Viejo, Calif., operates specialty-care
communities designed to meet ARD residents' physical and emotional needs, including family
support. Silverado utilizes physicians, registered nurses, social workers and research
professionals, together with family members, to identify and provide for the needs of each
resident.
There are currently only a small number of assisted-living facilities, or wings of
facilities, dedicated to caring for seniors with ARD. As more assisted-living-based ARD
programs are established, more nursing-home residents requiring specialized care for these
services will transfer into this more comforting, stimulating and homelike setting.
Andrew J. MacPherson is vice president and senior analyst at Volpe Brown Whelan
& Co. (VBW). He joined VBW in 1998 as an analyst covering the assisted-living sector.
Prior, Mr. MacPherson spent several years at Salomon Brothers as a junior analyst in
equity research, covering the assisted-living sector and as a financial analyst in
corporate finance in the firms' Health Care Group. Balaji Gandhi is an associate at VBW.
Before joining VBW in 1998, he worked for HealthCare Financial Partners Inc. For more
information, call (415) 274-4400.
| Estimated Total Annual Healthcare
Expenditures for Care and Treatment of Alzheimer's |
|
1998 |
2000 |
2010 |
2020 |
%Change1998-2020 |
| Population (000s) |
| 65-74 |
18,365 |
18,136 |
21,057 |
31,385 |
70.9% |
| 75-84 |
11,924 |
12,315 |
12,681 |
15,378 |
29.0 |
| 85+ |
3,996 |
4,259 |
5,671 |
6,460 |
61.7 |
| 65+ |
34,285 |
34,710 |
39,409 |
53,223 |
55.2 |
| Individuals With AD (000s) |
| 65-74 |
725 |
716 |
832 |
1,240 |
71.0 |
| 75-84 |
1,651 |
1,706 |
1,756 |
2,130 |
29.0 |
| 85+ |
1,905 |
2,030 |
2,703 |
3,079 |
61.7 |
| 65+ |
4,281 |
4,452 |
5,291 |
6,449 |
50.6 |
| AD Cases by Level of Severity (000s) |
| Mild |
1,927 |
2,003 |
2,381 |
2,902 |
|
| Moderate |
1,648 |
1,714 |
2,037 |
2,483 |
|
| Severe |
706 |
735 |
873 |
1.064 |
|
| Estimated Annual Cost by Level of Severity |
| Mild |
$8,500 |
$8,843 |
$10,780 |
$13,141 |
|
| Moderate |
35,000 |
36,414 |
44,388 |
54,109 |
|
| Severe |
45,000 |
46,818 |
57,071 |
69,569 |
|
| Implied Total Annual Costs (billions) |
|
|
|
|
|
CAGR |
| Mild |
$16.4 |
$17.7 |
$25.7 |
$38.1 |
-- |
| Moderate |
57.7 |
62.4 |
90.4 |
134.3 |
-- |
| Severe |
31.8 |
34.4 |
49.8 |
74.0 |
-- |
| Total Annual Costs |
$105.9 |
$114.5 |
$165.9 |
$246.4 |
3.9% |
| U.S. Bureau of the Census, Current Population
Reports, 1997, and Evans, D.A., et al., "Estimated Prevalence of Alzheimer's Disease
in the United States," Journal of the American Medical Association, 1990, (68)
267-289 and Volpe Brown Whelan & Co. |
| 1U.S. Department of Health and
Human Services, Agency for Health Care Policy Research, Early Alzheimer's Disease:
Recognition and Assessment, September 1996. 2U.S. Department of
Health and Human Resources, Alzheimer's Disease Fact Sheet, August 1995. |
Breakthrough Vaccine Discovery Extends Hope to Alzheimer's Victims
By Wendi Hope King
Word has spread like wildfire about the possibility of a vaccine for Alzheimer's
disease. A recent study published in the journal Nature, revealed a technique that
may also possibly treat other neurological diseases, such as Parkinson's. San
Francisco-based Elan Pharmaceuticals developed AN-1792, which seems to prevent and reduce
the presence of proteins that cause Alzheimer's and other dementia. So far, only mice have
been tested--but with success.
The two experiments used genetically engineered mice to study the drug's effects. The
Alzheimer's Association reported that Elan's results showed that, in comparison to a
control group, mice that were immunized at an age before protein development never
developed any signs of Alzheimer's. In the second experiment, mice already showing signs
of Alzheimer's pathology were treated with AN-1792, which halted and reduced the level of
plaques.
Alzheimer's disease is caused by a protein (beta amyloid) that accumulates in the brain
tissue, reported Dr. Dale Schenk, vice president of neurobiology at Elan Pharmaceuticals
and the report's head author, in an online (abcnews.com) chat July 8. AN-1792 is a
synthetic mimic of the plaque material that stimulates the immune system to attack and
remove the plaque from the brain tissue, he continued. The drug attacks the deposits, but
it is unsure if it will prevent them.
Although neurons cannot regenerate, recuperation is possible, and hopes are high for
that effect after removing the cause of the problem. So far, there are no side effects,
and it is too soon to tell if a person's mental status will improve.
Currently, Elan is examining four other possible treatments, although AN-1792 is the
most advanced at this time. Predictions for when the drug will be available span between
four and 10 years. The company has plans to file an application this year with the U.S.
Food and Drug Administration to begin the clinical study of the drug on humans.
"Until now, we had no way of directly altering the Alzheimer's disease
pathology," concluded Schenk. "This study--although in mice--suggests that the
very real possibility now exists to potentially treat and possibly prevent Alzheimer's
disease."
For more information, contact the Alzheimer's Association at (800) 272-3900; Web www.alz.org |
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