Planning for Affordable Assisted Living
Thinking it through makes development a breeze
By Jeffrey Anderzhon, Anderzhon+Carlson+Architects
 Much has been
said and written lately about "affordable" assisted living. So much in fact,
that it is in danger of becoming the latest assisted-living "fad." That
affordable assisted living is becoming more popular should not be surprising because it is
a housing option that is appealing to all members of our society, regardless of income
levels. An individual's health status and need for assistance with activities of daily
living does not recognize socio-economic boundaries. So, it is not only fashionable to
talk about affordable assisted living, but it is a market that needs to be addressed in a
serious and meaningful fashion.
Affordability has divergent meaning to each of us, depending on our individual incomes.
However, it is probably best to refer to affordable assisted living as a housing option
for those individuals who have neither the assets nor the income to meet the financial
requirements of typical market-rate, assisted-living facilities. Thus, these individuals
are forced to remain in their current housing situation regardless of their ability to
adequately function within that environment. When affordable assisted living is not
available to them, they are effectively barred from the full choice of housing options
available to others, becoming a victim of their financial situation.
Since the advent of Social Security, it has become somewhat of a tradition in our
society to provide for those individuals less fortunate than others. This tradition has
taken on many forms and is aimed at various social problems, including the provision of
adequate housing for all levels of income and society. That this tradition should extend
to housing options such as assisted living is, in many respects, logical, timely and an
extension of today's culture.
Before embarking on the development journey of affordable assisted living, we must
closely consider all aspects of an assisted-living development from the perspective of how
it contributes to both the initial cost of the development and the on-going operational
costs of the facility. If we can minimize these costs without detriment to the quality of
care provision and without detriment to the marketing of the development, then we will be
able to provide affordable assisted living.
Planning
Because there is very little financial maneuvering room in the development of
affordable assisted living, each step of the development process requires maximum
scrutiny. It could, therefore, be said that development of affordable assisted living
requires a good deal more effort and imagination than market-rate assisted living
development. It certainly requires thorough planning before each step in the process is
undertaken. Each phase of the project-- particularly design, financing, management and
operations, and implementation--must be addressed in a professional manner before funds
are spent in order for the facility to provide cost-effective care provision and a
pleasant environment that enhances care. This planning time will result in an attractive
and efficient facility that is a marketing and financial success.
Design
Consideration of design details is critical, not only from a standpoint of cost
effectiveness, initial construction and ongoing maintenance, but also considering how the
design of the facility will affect staffing efficiency. Aesthetics of the chosen design
details will also affect the marketability among the target market.
Cost-effective design begins with careful site selection. Obviously, a site that
requires expensive earth moving or is a lengthy distance from utilities will drive up the
capital investment cost of the facility. Similarly, if the site will require re-zoning,
the developer may face costly and lengthy legal fees and adverse publicity, ultimately
affecting the facility's marketing. However, marketability dictates care in site selection
to assure a desirable location with respect to community amenities for the target market.
When considering site locations, working in concert with an established local
health-care provider, such as a hospital or long-term-care provider, may have significant
benefits. Often, these organizations have vacant parcels of land adjacent to their
facilities and would welcome the addition of an assisted-living program nearby. These
parcels also generally have full utilities to the site and the owners may be motivated to
convey the land in order to establish a relationship that will help increase their census
over the long run.
Building design can have a significant effect on staffing efficiency as well as staff
maintenance. A compact design, for example, provides easy access to resident rooms for the
staff and may even allow a lower staffing ratio. Comfortable surroundings promote staff
longevity. While it is critical for the designer to not waste building area, the designer
must also create an image that contributes to the ease of marketing and convenience of
staff.
Converting existing, non-related buildings into assisted living, such as unused school
buildings or hotels, can provide an affordable method of quickly putting a facility on the
market. A good assessment of the existing facility by a professional with the conversion
program in mind is essential in order that time, money and great effort is not wasted when
it is found that the conversion is unrealistic.
It's not necessary to create expensive, extravagant or lavish finishes to have a
marketable and affordable assisted-living facility. Spare but sensitive use of more
expensive appointment materials, such as oak trim, can be effective as marketing tools,
but still cost effective when used sparingly as accents in public areas such as lounges
directly off of the main entry.
Careful attention to building finishes and appropriate material selection is also
critical as building maintenance is determined by these selections. A brick exterior
provides low long-term maintenance, but is considerably more expensive than vinyl siding
that may require a yearly cleaning. Initially spending a little more on additional
insulation may drive up the first capital expenditures, but will return that expenditure
in energy savings. Ceramic-tile bathroom floors are durable and attractive, but expensive.
A compromise may be the use of less expensive but higher maintenance sheet vinyl or vinyl
tile.
Spatial considerations can have a significant effect on the cost of assisted-living
facilities. The more area one builds, the more costly the building, although the cost per
square foot may decrease. Generally, affordable assisted-living projects will have
somewhat smaller bedroom units and perhaps somewhat smaller congregate space in order to
economize on building costs. But developers should not overlook opportunities to provide
unique spaces that may generate non-care provision revenues such as rentable community
rooms or leaseable spaces such as banking offices, doctor's offices or small convenience
stores.
Financing
Imagination is important in financing the affordable assisted-living facility. Care in
the preparation of an accurate and realistic pro-forma is not only a necessity, but it
will aid in the search for creative financing. There are numerous and imaginative ways to
finance the creation of affordable assisted living-facilities even in today's
unpredictable financial climate.
The use of available federal funding programs such as the HUD 232 program co-insurance
or, in rural areas, Farmer's Home Administration funding, may require additional paper
work and may take somewhat longer than conventional financing. However, such programs will
enhance the financing package, lower the interest rate and allow the developer to spend
the more income on care provision rather than on bank interest.
Alliances with community groups and community governments can provide sources for funds
that market-rate assisted living could not receive. Local agencies on aging, as well as
community economic development groups, are not only good resources for marketing
assistance but potentially good resources for some funding. If the developer is a
not-for-profit organization, there are grant programs available through state and federal
governments, as well as tax-free health-facility bonding programs available through most
local communities.
Management and Operations
Regardless of the capital spent on buildings and furnishings, the operations of a
facility will largely determine monthly rental rates. It is salaries and daily food costs
that will remain long after the building is completed. Planning for these costs is perhaps
the most critical planning that will go into the affordable assisted-living facility.
Creativity in setting rates and accepting payments from clients can also be useful in
attracting and maintaining a high census in the facility. Individual tailoring of fees and
working with the client and their family to accommodate individual needs may be necessary
in order to assure an ongoing cash flow and to avoid discharge due to non- payment. It is
also important to establish and maintain a good working relationship with governing
agencies that, depending on state location, may have control over waiver payments for
clients. Making sure each client is receiving their full entitlement is not only good
marketing technique, but can assure the facility the funds that may be necessary to
operate profitably.
Implementation
Of course, planning is ineffective unless there is appropriate implementation of that
planning. Once the proforma spreadsheets and designs are complete, and once there has been
thorough value engineering done to each aspect of the project, the developer must actually
break ground and begin the construction and marketing process. This is not the time to sit
back and relax, however. At this point, diligence on the part of the developer is critical
to ensure all the previous planning has not been in vain. Accounting for each construction
dollar spent, making sure that every marketing opportunity is taken, assuring that
financial commitments are met and convincing the new staff to accept the mission of the
development can, at this stage, either assure failure or make the project successful.
The journey to affordable assisted living is one that can be rewarding, both personally
and financially, if that journey is carefully thought through. It is a journey that needs
to be taken by more developers, not simply because it is a fad that is currently in style,
but in order that all of society can benefit from the advantages that assisted living
offers.
Jeffery W. Anderzhon, AIA, is president of Anderzhon+Carlson+Architects, an Omaha,
Neb.-based architectural firm offering services exclusively to the lifecare industry
throughout the United States. He is licensed to practice architecture in 20 states, holds
a National Council of Architectural Registration Board certificate and is a licensed
interior designer. Mr. Anderzhon is currently serving a two-year term as president of the
Alzheimer's Association of Omaha and Eastern Nebraska.
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