Long-term care needs to change its focus.
Depends on whom you talk to, I guess. Some seem to think that the malaise facing both nursing facilities and assisted living is cyclical in nature, that--like real estate--the field has its inevitable highs and lows, requiring simple perseverance to survive and prosper. I noted, for example, in another long-term care publication a panel of senior housing investment experts expressing their conviction that the sector "has hit bottom after four years of financial stress and is poised for a strong rebound"; one panelist noted that "the industry has come full cycle from 10 years ago and is in the best position in five years for renewed financial strength and solid investment returns."
I think I'd feel better about such predictions if they weren't coming from the same public equity market experts whose industry prognostications have consistently been a day late and a dollar short. Wasn't it Wall Street, after all, that a few short years ago propelled assisted living valuations to heights not seen until the dot-corn era of irrational exuberance? And then turned ferociously on that same industry when "saturation" became the new buzzword? No, I certainly wouldn't want to stake my future on the public equity market's ability to predict anything about the industry's future.
Others would suggest that what we are witnessing is little more than a need to revamp our product lines to account for changing customer likes and dislikes. Nursing homes need to become more "homelike," it is said. Assisted living, for its part, needs to offer even more amenities designed to appeal to evolving customer tastes. Along with all this, maybe we should change the "culture" of our facilities.
I wouldn't dispute the validity of any of these statements; they're all important. Culture change, for example, is indeed critical if facility-based long-term care is to survive, at least over the short run. But culture and product change, while necessary to our survival, are both more of an attempt to deal with yesterday's failings than with tomorrow's challenges.
To deal with tomorrow, it's necessary to understand the very genesis of facility-based long-term care and, based on that understanding, to determine what the industry needs to do in a fundamental fashion to avoid repeating its past.
I have argued in previous columns that the birth of both nursing homes and assisted living had little to do with customer preferences and more with the exigencies of financing (public as well as private). Quite frankly, the purchase of both products was driven less by customer desire than by a perceived lack of alternatives and/or the dollars with which to pay for them.
It's basically true that nursing homes, as we know them today, are a direct result of the public financing vehicle known as Medicaid. American consumers didn't ask for the product. Long-term care as we know it today became available in 1966 as a benefit under Title XIX of the Social Security Act. Coupled with an arcane provision called "spend-down," Medicaid proved to be the only way that America's seniors could afford the high cost of facility-based long-term care. As the only financially viable alternative for most Americans, the fast-growing nursing home industry was populated with residents who often could have been accommodated elsewhere--if elsewhere existed.
Back in the early days of the Medicaid program, Sen. Frank Moss (D-Utah), founding chair of the Senate Special Committee on Aging, suggested that as many as 42% of nursing home residents were there only because of the absence of alternatives. A quarter-century later, assisted living became one of those alternatives. Its success, as such, was both unparalleled and financially disastrous for the industry it overtook. It happened because seniors were suddenly able to afford an alternative.
Once thought of as one of the most financially needy of America's population cohorts, seniors have found their disposable income rising steadily over the years. Propelled by Social Security and augmented by the growth of pension s, the median yearly family income for households headed by a senior is now approximately $35,000. Coupled with an in creasing propensity for adult children to support their senior parents' long-term care choices, nursing homes are no longer the only affordable game in town. As a result, nursing homes' private-pay residents now account for less than one-quarter of the average facility's residents.
Which brings us back to the customer preference questions I began this essay with. Are we seeing increasing acceptance on the part of seniors (and their families) of assisted living as their product of choice? Or is it more likely that assisted living is seen simply as the lesser of two evils when compared to nursing homes? Is assisted living's current occupancy problem--a hangover of the high-flying 1990s--cyclical, or is it intrinsic to the business? If the latter--if people are no longer satisfied with the lesser of two evils--might our aforementioned panel of experts have to rethink its optimism about the future?
What we might really be talking about here is an overwhelming popular aversion to facility based care, no matter what the setting. If the countless focus groups I've attended have taught me anything, it's that seniors recognize, but don't wish to be confronted with, images of their impending frailty. Say what you will about public perceptions of nursing homes, I have always argued that the average senior's aversion to them stems less from the issue of facility quality than from an unwillingness to confront the realities of aging. A facility whose primary purpose is to deal with the frailties and illnesses accompanying aging is not likely to be embraced by its customers.
I would emphasize that I include assisted living in this analysis. Assisted living facilities are, after all, not all that different from nursing homes in terms of their customers' frailty. I've taken my share of brickbats for having offered some years ago a definition of assisted living as "a nursing home with a chandelier." But the phrase was never meant to belittle assisted living. Rather, it is simple shorthand for the reality that assisted living facilities deal with exactly the same residents as did the nursing homes of yore called intermediate care facilities (ICFs), thus my description of them as "nursing homes." While assisted living facilities have had to attract residents in a highly competitive market, nursing homes did not--thus the "chandelier." The customers remain the same--the same moderate level of ADL dependencies, the same incidence of cognitive impairment. While preferring the ambience of assisted living over the institutional flavor of the traditional nursing home, most customers still see assisted living for what it really is--a healthcare provider whose purpose lies in caring for the elderly and the needs attendant to aging. Changing the corporate logo doesn't change that.
So what's the solution to long-term care facilities' declining acceptability? Well, it just might be to make the facility's healthcare aspects clearly incidental to its primary purpose, a purpose other than healthcare. And how might one do that? Probably by emphasizing housing--not health--as the primary product. Continuing care retirement communities (CCRCs) perhaps do this best. Because housing is the primary focus of a CCRC, with care discreetly in the background, the relative differences in marketing strategies of CCRCs vis-a-vis assisted living are not that difficult to under stand.
But CCRCs are not alone in this regard; the "housing as the product" lesson has been learned by many in long-term care, even by growing numbers in the nursing home field. For example, Bill Thomas, MD, (of Eden Alternative fame) has long predicted the demise of the nursing home for having failed to pay attention to customer needs and preferences. While I have often taken issue with him for his blanket dismissal of an entire industry, I do commend his recognition that what seniors are looking for is not the right healthcare provider but the right housing environment. His recently launched "Green House" initiative in Mississippi is an attempt to fulfill that goal. Green Houses are group homes that use a social model of care. They are designed to feel more like home than today's typical long-term care institution and to blend easily into their community or surroundings. They are caring institutions, in a very professional sense, but they look and function like houses.
Whatever the solution (or solutions) might be to winning the hearts and minds of customers, long-term care's focus must change, it must change in a way that is meaningful for and acceptable to the customer and it must speak to underlying customer preferences, not just those we might wish to ascribe to them. Customers want a home that will help them stay healthy (or as healthy as possible). They don't want all of one and not the other; they just don't want to dwell on the "other."
Paul R. Willging, PhD, was involved in tong-term care policy development at the highest Levels for more than 20 years. For 16 years as president/CEO of the American Health Care Association, Dr, Willging went on to cofound the successful Johns Hopkins Seniors Housing and Care postgraduate program (cosponsored by the National Investment Center for the Seniors Housing & Care Industries), and later served as president/CEO of the Assisted Living Federation of America. He has enjoyed an equally tong-rived reputation for offering outspoken, often provocative views on Long-term care.
To comment on Dr. Willging's views, as expressed here, please send e-mail to email@example.com.
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|Title Annotation:||Paul Willging Says ...; health care industry|
|Author:||Willging, Paul R.|
|Date:||Feb 1, 2004|
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