Baby Boomers Fuel Assisted Living Biz

Assisted-living Facility Level Comparison
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As baby boomers reach retirement age, the health care industry is putting more emphasis on assisted-living facilities, which offer more independence than nursing homes.

There are six ALFs in the six counties of Northwest Arkansas and the River Valley with at least 11 more in the planning stages. Construction costs about $4 million per facility.

By 2010, Washington and Benton counties combined need another 518 licensed ALF beds, according to the Arkansas Health Services Permit Agency. That’s 10 more centers (with the average facility having 50 beds) for a total cost of about $40 million.

Until recently, the only option for the elderly was either a nursing home or an independent facility. But retirees who didn’t need much more than daily assistance with things like food or a shower had no option but to go to nursing homes. Now ALFs are giving seniors more independence, but the residents are still monitored daily by the staff.

“We believe that there are people in nursing homes that can really take care of themselves that don’t need to be there,” said Mary Brizzi, planning specialist for AHSPA. “We hope that assisted-living facilities will help those.”

Growing Pains

Developers like Denny Nooner, president of Homeplace Corp. in Bentonville, have moved into Northwest Arkansas to help meet that need. Nooner, who previously lived in Greensboro, N.C., has two ALF projects that are scheduled to start construction before the second quarter of 2006 and one that is awaiting a permit.

The population of people 85 and older is expected to increase by 33 percent to 5.6 million in the United States between 2000 and 2010, according to the U.S. Census Bureau.

In Arkansas, the percentage of people over the age of 65 in 2000 was 14 percent (374,019), compared to a national average of 12.4 percent.

In the six county Northwest Arkansas area, Benton, Madison and Carroll counties had a higher percentage — 14.3 percent in Benton, 14.4 percent in Madison and 15.8 percent in Carroll. But Washington, Crawford and Sebastian counties ranked below the state average with 9.9 percent, 11.3 percent and 13 percent, respectively.

Brizzi said the department predicts a need for 15 ALF beds per 1,000 people age 65 and older. Its projections are based on a population projection done by the University of Arkansas at Little Rock.

According to AHSPA, Benton County will need at least 402 licensed ALF beds by 2010. Benton County has 87 ALF licensed beds, which means they are currently in use. Another 253 beds have been approved by AHSPA but haven’t been put into use.

Washington County will need 274 ALF beds by 2010. The county doesn’t have any licensed beds in operation. Four centers in Washington County that are running as independent or residential care facilities have applied for and received approval for 265 beds.

Nooner plans to start construction later this year on a 57-bed ALF in Bentonville. Early next year, he is slated to begin work on a 64-bed ALF in Fayetteville. Both of those are Level I facilities (see chart). He also has applied for permits for a 62 bed ALF Level II for dementia and Alzheimer’s patients in Bentonville.

Nooner said it could cost between $4 million and $5 million to build an ALF. Although he wouldn’t divulge how much he’s spending on the ALF Level I centers in Fayetteville and Bentonville, the ALF Level II dementia and Alzheimer’s center he plans to build in Bentonville will cost about $4.26 million, according to the AHSPA permit application. The centers will be about 40,000 to 50,000 SF each and should take about one year to build.

With an average of 50 beds, ALFs are smaller than nursing homes. Brizzi said her department recommends that ALFs have between 40 and 80 beds. With such a small number of beds, more facilities will be needed.

Bentonville Center

Another developer is eyeing Bentonville to build a new senior community. Northwest Senior Services Inc. has started construction work on 33 independent village homes, a 4,000-SF senior center and has applied for a 60-bed ALF Level II center, said Jan Watson, marketing administrator for the company. The total cost will be close to $7 million.

The ALF centers are becoming more and more popular in the area, but one professor at the University of Arkansas thinks that the baby boomers and other future generations will be looking for something more.

Vaughn DeCoster, professor at the UA’s School of Social Work, has worked with colleagues on the future needs of baby boomers. He’s not sure if they will want community style living. Baby boomers may be more independent than the majority of retirees today.

DeCoster said one study found that having a multigenerational connection, meaning surrounding oneself with people across age groups, can lead to healthy aging — higher life expectancy and a better well being. One alternative is intergenerational activity centers, where there are adult daycares and child daycares combined.

“Why do we need to segregate the older adults?” DeCoster said. “Why do they need their own facility? Why not integrate older adults with younger adults, with children — really think outside the box? We’re trying to think out of different ways to do things.”

Defining the Need

In 2001, the Legislature passed the Arkansas Assisted Living Act, which created an assisted-living program within the Department of Human Services that would convert residential facilities into assisted-living facilities.

What came out of the act was an opportunity for ALFs to be built, rather than wait on residential facilities to convert. Residential facilities have different rules and regulations, but the basic difference is that every room in ALFs is required to have its own kitchenette and bathroom, said Brizzi, the planning specialist for AHSPA.

There are two levels of assisted living facilities as defined by the Arkansas Department of Health & Human Services, which issues permits for such facilities. Among other things, Level I ALFs can’t accept residents who could qualify for nursing homes, can’t provide 24-hour emergency care service, don’t need to keep nurses on staff and don’t administer medications. Level II ALFs can accept residents who qualify for nursing homes, such as those with Alzheimer’s disease or dementia; provide 24-hour emergency care service; have a staff made up of nurses; and administer medications. Level II is also a Medicaid provider, so the state helps in assistance with reimbursement of health care costs.

ALF II residents have the ability to keep some of the independent living that residents in nursing homes wouldn’t. ALF Level I residents have the comfort of knowing that there is someone to help them if they need “assistance” for daily activities, like cooking. There are meal plans and 24-hour monitor services at the assisted-living facilities, something they couldn’t get at independent facilities.

Before assisted-living facilities, residents with dementia or Alzheimer’s would be sent to nursing homes, even if they were able to walk, because they needed some assistance that they couldn’t get in independent facilities. Now they have a place to go where they can live independently with little assistance.

Nooner said debilitating diseases like dementia and Alzheimer’s have been brought to the forefront in recent years through high-profile people like former President Ronald Reagan, who battled Alzheimer’s for years. Nooner said ALFs are a better concept because they’re more like a home for the patients and not a hospital setting.

“It’s everything that frankly nursing homes couldn’t be because of government regulations,” Nooner said.

Arletta Wallace, the administrator of The Gardens at Osage Terrace in Bentonville, said assisted-living facilities have helped many dementia and Alzheimer patients. Osage Terrace was the first Level II ALF built in Arkansas after the act was passed. It is still the only ALF Level II in Northwest Arkansas.

“The purpose of [ALF Level II centers] is to keep them independent as possible in a personalized environment,” Wallace said. “Where in the past the same resident would have gone to the nursing home prematurely because there was no other way to do it.”

Osage Terrace has 45 one-bedroom apartments. Wallace said the primary age of the residents is between 80 and 82. There are about 24 full- and part-time employees, with nurses on duty 16 hours a day.