October 11, 2011

  E L D E R   C A R E   E N T E R P R I S E   D E V E L O P M E N T

                  I N   T H E   U S A  -  a  C o n d i t i o n s   R e p o r t   

FOREWORD

There is a old saying to the effect that we can be sure of two things in Life: Death and Taxes!

In this Report we update that old adage by adding a third item: meeting the challenges of growing old and dealing with a sophisticated and potentially dishonest Elder Care Industry!!

No matter how you look at this evolving industry and the many options one might choose, you cannot escape the fact that ELDER CARE offers unbounded opportunities for Providers to confiscate the meager wealth of those who become Residents in those attractive retirement campuses called Continuing Care facilities where three or four levels of care are available as the resident's health fails. On behalf of Residents and prospective Residents and their families, we are pleased to present this report. This is not a marketing or advertisement piece! It is intended to improve the Elder Consumer's awareness of what he or she is exposing themselves to when the time comes to look for a place to live as health and living alone is no longer a suitable lifestyle!

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While it is true that various kinds of elder care have been available for many years,  in the past twenty years we have seen large financial partnerships taking major positions in investing in the Elder Care Enterprise field! Why has this happened?

A major influence is the impending retirement of the Baby Boomer generation, the first generation to bring more wealth with them than any other in U.S. history! Other reasons apply as well such as the size and design of Middle Class homes that are unsuited to providing a place for the old folks. The fact that many post-World War II families live farther apart, is another important factor!

Other factors exist that have made investing in Elder Care increasingly attractive to those who have adventure capital. About ten years ago, the Mom and Pop type of Nursing Homes disappeared as most of them were purchased by larger, better organized operators. Elder Care is now BIG-TIME!!  One of the most attractive options is what is called a CONTINUING CARE RESIDENT COMMUNITY (CCRC), a one-stop, one-size-fits-all campus-like facility that has many attractive features.

Multi-billion dollar Partnerships  have bought up control of many networks of Elder Care operations, installed more competent management and upgraded services and made the physical plant and grounds much more appealing. The cost of Elder Care has increased as the physical plant (i.e. buildings, etc) have become more attractive with better trained Staff personnel and more up-to-date accommodations for the elderly.

All of which prompts one major observation: No matter how big or small the facility may be, Elder Care enterprises must make a profit just like every other business. This is true no matter whether the facility is associated with a Church or a Foundation or if it advertises itself as a non-profit operation. Non-profit and not-for-profit operations are an IRS scam created to mislead and deceive the Public! There are many ways to circumvent the requirements to be listed as a non-profit or not-for-profit operation. All Elder Care options share a common problem: they can deplete the savings of the Senior couple, hence, financial matters must be carefully studied before signing papers and writing large Enrollment checks!

While we assume the Reader has or will read other articles on this subject, we are sure that most of what you read will be very up-beat, positive and in-keeping with the usual hype found in promotional literature. Our offering here, however, is completely non-partisan and this eight part series will follow the spirit of investigation as first exhibited in the Ida Tarbell Tradition. In addition to being a "fair and balanced" Report, it will be Objective and We Will Tell It "As It Is" based entirely on real experience, anecdotal evidence and surveys of the institutions being discussed. 

Depending upon the State where these operations are set up, the way the State has involved itself in regulating Elder Care facilities and the Amount & Quality of Oversight applied, is crucial to finding a provider of Elder Care who offers the right kind of services including a set of Agreements and Financial Costs that are clearly explained in writing. Always remember when you make payments to any company, no matter what its affiliation may be, you must understand exactly what services you will receive in return. In any financial transaction, this is a long standing principle of what is known as VALUE RECEIVED FOR YOUR MONEY!

Today's retailers and entrepreneurs don't want you to know anything about such things -- in fact, they don't want you to even know the REAL price of anything you buy! When you enter the Elder Care market, YOU must make sure that you have a complete picture of what you are about to do because your Lifestyle and Financial status will no longer be yours alone as when you lived in your own home!

To whom do we address this series of important articles? Our focus is on those who care for and love their elder folks who are at a point in Life where this subject is critically important. Very few families ever discuss these matters until they are forced by dire circumstances to act in a manner that exposes them to bad deals and harsh financial losses. No amount of caution will suffice to avoid being misled by an experienced, unscrupulous marketing/sales Agent!

If you are told that you must make a large deposit and also pay a monthly fee, be sure you understand what your overall cost per month will be before signing anything! If the facility keeps a percentage (i.e. usually 15%-25%) of the Entrance Fee/Deposit which:  1) they keep in an Interest bearing account, or, 2) they will spend as they please, you must add a percentage of that amount (i.e. pro rata) to the monthly fee to determine what your REAL monthly cost is! [More details on the Financial commitments you will face is discussed in greater detail in Part V.]

Many Marketing Directors of Elder Care operations will tell you the Good part of the Agreement you will be forced to sign, while avoiding the very serious financial commitments that could cost you thousands of dollars for services you will never receive! We have never heard the REAL TRUTH about how the non-refundable portion of the Deposit is held or used. Eventually, these SCAM TACTICS will be regulated by States or by the Federal Government.

From the Resident's point of view, if you intend to calculate the monthly cost of living in a facility that takes 20% of the Entrance Fee Deposit, you must add that amount (say, $25,000) to the Monthly Fee, then divide the total by the number of months you have lived there. A more realistic way to figure what assets you have committed to this complicated scheme is to compute the entire Enrollment Fee (say $140,000) into your computations. There is no absolute guarantee that you will ever see the Refundable amount when a Provider goes into bankruptcy! (We will return to this subject in Part V, later!)

The most dangerous Elder Care operator is one that overwhelms the family with a 40 to 75 page Agreement and demands a deposit that is larger than the final proceeds from the sale of the family home! Those who sign such Agreements will soon discover that there is no escape from such an Agreement that, in fact, charges as much as $4,000 to $6,000 per month rental cost for a modest unit on the Independent Living campus. As the Residents require more care such as moving into Assisted Living, the monthly fee will jump from $3,250 for a couple to $4,000-$5,500! The next jump to Intensive Nursing Care will take the monthly charge to $10,000-$12,000! Meanwhile, the Operator still holds a large amount of your big deposit, which is generating interest or being spent on facility upkeep and improvements for the Operator. If you have signed up on the basis of an 80%/20% deal, at least, $30,000 could already belong to the Operator/Provider forever! All of which raises the question: exactly what services are you or will you receive for that $30,000? Reputable Providers normally have these details spelled out carefully in their lengthy Agreement! Again, we remind YOU of the main Caveat: ASSUME NOTHING; Investigate, ask questions repeatedly until you get  informative answers that you trust.

Unfortunately, most prospective Residents and their families do not always know WHAT TO ASK ABOUT! Most of them are overwhelmed by the details and minutia!  To further address your needs in this regard, we provide you with a comprehensive Checklist as to what to look for when you visit and evaluate prospective Provider locations! (go to FACILITY PROVIDER CHECKLIST #THNHL10A-2012) (by April 30, 2012)

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   Part I