New Housing Options for an Aging America
As America ages, housing and community development allies work together to develop new choices for seniors.
by Natalie Orenstein
When Mary and Joe Siolek’s son insisted on taking them to visit John Knox Village, a retirement community in Florida, they were skeptical. Though tired of depending on their children for rides to the doctor or shopping from their Long Island home, the thought of leaving their home for assisted living was far from appealing.
After three days in the sun, however, the New Yorkers had changed their minds. In particular, Green House homes, one of the living options in John Knox Village, had convinced them. Unlike any institution the Sioleks had seen, these homes looked and felt like a normal house. Just a handful of other residents lived there, each with a private room and an independent schedule. If more intensive care were needed, facilities were nearby. They moved in later that year and recently celebrated their 70th anniversary with a private dinner on site.
The Sioleks are in the vanguard of an elderly population that will balloon in the coming years. Every day, 10,000 people turn 65 in the United States, according to Pew Research Center. By 2030, more than one in five Americans will have crossed that threshold.
With the average cost of nursing homes topping $200 per day, many baby boomers are hoping to remain at home. But can they? The suburbs where many live are car-centric, leaving many seniors stranded at home. And social isolation carries a real threat. Doug Jutte and colleagues found that social isolation was a greater risk to life than high blood pressure. Their homes are also not designed to age in place, with too many stairs or cupboards that are too high.
Every day, 10,000 people turn 65 in the United States. The country is facing this tsunami of aging without the infrastructure to accommodate this population.
The country is facing this tsunami of aging without the infrastructure to accommodate this population. Like those at the helm of the national Green House Project, developers and investors are scrambling to design innovative models to accommodate this wave. New forms of financing are emerging, spearheaded by community development financial institutions and others. New partnerships are also emerging between the public, philanthropic, and private sectors. These early efforts may just be a model for the future.
Putting the “Home” Back in “Nursing Home”
Several years ago, Susan Ryan worked as the director of nursing at a long-term care facility. Ryan believed the institution did not provide a healthy setting for its residents. The facility had a practice of restraining seniors when they were at risk of harming themselves or others. The intention was to keep everyone safe, but it often caused more problems, Ryan noticed.
Ryan switched to working in home care “to prevent the institutionalization of the elderly,” she said. But she found that the typical model of home care did not meet many seniors’ needs either.
“It is either cost-prohibitive or socially isolating,” she said. “As wonderful as home is, we will always need to have long-term care environments.”
Searching for a happy medium between home care and long-term care, Ryan came across the Green House homes model. Developed by geriatrician Bill Thomas in 2001, the now 200-plus Green House homes around the country are long-term care facilities designed to resemble normal, inviting houses as closely as possible. Ryan is now senior director of the Green House Project, which works with groups — like John Knox Village in Florida — that want to develop or operate a home using the model.
Green House residents maintain the small yet vital facets of independence that are typically stripped away from those in nursing homes.
Green House homes serve just 10 to 12 residents, each of whom has a private bedroom and bathroom. Each home has a communal dining table, a cozy living room, and a patio. There are no long, hospital-like hallways or other institutional signposts. Two staff people on site — or one at night — provide direct care, coordinate with nurses and other clinical professionals, and cook. They receive extra training to perform this multifaceted role. In the intimate environment, the staff build personal relationships with the residents, becoming closely attuned to their habits and needs and recognizing immediately when something is off.
Green House residents maintain the small yet vital facets of independence that are typically stripped away from those in nursing homes. They decide when to wake up, when to eat, and what to wear. Residents who have been frail for a long time often gain weight after they move into a Green House home, Ryan said, because they can smell the food being cooked on site, feel a sense of familiarity at the dining room table, and are not forced to eat breakfast at the crack of dawn — unless they want to.
“Philosophically, this is their home,” Ryan said. “The person really has the locus of control and the power to make their decisions.”
For full-fee Green House residents, the cost is akin to that of a private room in a traditional nursing home — not insignificant at a national average of around $7,000 per month, though most Green House residents say they are willing to pay more than they would at a nursing home. About one-half of all Green House homes serve low-income residents and are supported by Medicaid, Ryan said. (Medicaid covers more than 60 percent of all nursing home residents, according to the Center on Budget and Policy Priorities, and 40 percent of costs for long-term care.) Full-fee residents who can no longer pay the entire price are never kicked out, she said — the Green House homes team works with them to determine a feasible fee.
Putting Innovative Financing Models to Work
Developers have used a variety of financing methods to build Green House homes. Many nonprofit developers raise their own capital, and others qualify for federal housing assistance, such as New Markets Tax Credits or US Department of Agriculture loans for rural projects. Some for-profit developers finance Green House homes with private capital.
“It sometimes takes a lot of creativity to put together the financing package that will make it work,” Ryan said.
The Robert Wood Johnson Foundation established a 10-year, $10 million loan fund for Green House homes serving low-income residents.
In 2011, the Robert Wood Johnson Foundation, which has supported the Green House Project since 2002, established a 10-year, $10 million loan fund for Green House homes serving low-income residents. (RWJF also supports the Build Healthy Places Network.) Capital Impact Partners, a community development financial institution (CDFI) that provides capital to markets that traditional lenders are reluctant to enter, administers the fund and draws in more investors to leverage RWJF’s commitment.
Capital Impact knows Green House homes well. They helped develop and replicate the model nationally until it was able to operate as a stand-alone organization beginning in 2016.
“We’re a unique CDFI in that we do both capacity-building and lending,” said Candace Baldwin, director of strategy for aging in community at Capital Impact. “As a mission-driven nonprofit organization, we have a theory of change about how we think problems can be solved,” and they apply that model to help get new facilities off the ground and operating efficiently.
The CDFI more recently launched Age Strong , an investment fund, with AARP, AARP Foundation, and Calvert in 2015 to expand its lending to projects that support low-income older adults in their community. The fund has deployed more than $14 million to date. Investors can earn up to 4 percent returns, Baldwin said.
“What is exciting about Age Strong is that it allows individuals to align their values with their investments,” Baldwin said. “This program is helping to open the door to new opportunities for growth in the impact investing market while simultaneously supporting socially conscious CDFI lenders.”
Private-Sector Developers Eye the Market
But mission-driven investors and community development practitioners are not the only ones catching wind of the growing demand for innovative senior housing and care. Commercial real estate developer Matt Arnold even categorized the private senior living supply in some cities as “oversaturated.” Arnold is a director at Madison Realty Companies, a private real estate firm that acquires and builds properties, including senior housing and assisted living facilities in several states.
The firm is in the process of acquiring property in Mesa, Arizona, to build an innovative style of senior housing. Seniors will live in a series of “cottages,” 6,200-square-foot buildings with 16 bedrooms and a common kitchen, dining room, and living area. Each cottage caters to a specific population, such as residents with memory care needs or those with high physical needs. Each has its own staff administrator, and care and activities will be customized for the resident population. The site has a medical office building that is leased to a group of third-party physicians.
Like the Green House homes, “these are built like custom homes,” Arnold said. “There is not a lot of institutional feel.” The cottages have vaulted ceilings, an open floor plan, and single and double bedrooms off to the side.
The cottages will serve a mix of full-fee and Medicaid-supported residents, and the full-fee residents will typically pay less than a number of area competitors, on average $4,500 per month. The smaller size and built-in flexibility of the cottage model allows it to be more nimble, said Arnold, which translates into lower overhead costs while not reducing quality.
“Anyone can pop up a building, but making sure residents’ needs are met is challenging,” he said.
“Those big buildings, they have to find 120 residents” before they can open their doors, he said. The cottage model can open with 20. In addition, he said, “We can adapt care plans as needed.” They can also tailor their marketing as baby boomers move into different levels of care. “From the marketing and operations side, we can focus on a group with diabetes, for example,” he said. “You can deal with obesity, high blood pressure. You can cater the food and other requirements for them.”
For the private-pay residents, Madison expects operating margins between 20 and 35 percent. For Medicaid residents, the expectation is 15 to 20 percent. By comparison, the margin on a standard apartment building without senior services is 40 to 45 percent. Margins are lower in senior care because operating costs are much higher.
Some private developers are diving into the senior living market with amenity-filled buildings that look like the rest of their portfolio, aiming for a higher margin. Arnold believes that approach is shortsighted. Developers who have not given thought to seniors’ unique circumstances are in for a reality check, he said.
“Anyone can pop up a building, but making sure residents’ needs are met is challenging,” he said.
He also thinks many builders are overestimating the number of baby boomers with healthy savings accounts.
“Everyone is building to pencil out at $6,000 rent per month,” he said, “but the bigger segment will be the $2,500-$3,500 per month group.” He’s probably right. The typical American who has put aside money for retirement has saved $60,000 — which would cover less than one year at $6,000 per month. Almost one-half of all Americans have put no money aside at all.
Bringing Services and Supports Home
Theresa Hope is in kindergarten. Guy Hope used to be, but he likes to say he has “graduated” to the second grade. At 80 years old, it’s about time.
The Hopes, a couple living in St. Albans, Vermont, are not students, but grandparents assisting teachers. The Hopes visit the local elementary school as often as five days a week, sometimes braving snowy weather on their way. The couple has no desire to abandon this routine or leave the home they have lived in for 20 years. Most of their five children, 10 grandchildren, and 17 great-grandchildren live in the area, so they keep busy. But a few years ago, both Guy and Theresa were worried they would have to give it all up.
Guy has lymphedema, a chronic condition that causes incapacitating swelling, in both legs. For years Theresa got down on the floor each day to wrap her husband’s legs in compression stockings. But a few years ago she had a medical issue of her own — a gallbladder surgery that required her to recuperate for weeks and give up the task.
The Hopes looked into a number of options for services and care for Guy. Nothing seemed feasible.
The Hopes were at their wits’ end until a social worker referred them to a program called SASH, or Support and Services at Home.
“We’re both on Social Security,” Theresa said, “but we’re in that little niche where it’s rather expensive for us to do it on our own, but we do not qualify for financial aid of any kind.”
The Hopes were at their wits’ end until a social worker referred them to a program called SASH, or Support and Services at Home. SASH wellness nurses and care coordinators visit Medicare recipients at home, providing basic care and health coaching there, and coordinating connections to social service agencies and health and housing providers as needed. SASH works throughout Vermont at 140 affordable senior housing complexes and single-family homes in the surrounding neighborhoods. The aim is to provide basic assistance to help seniors “age in place” healthfully and cost-effectively until they truly need to relocate.
Affordable housing nonprofit Cathedral Square manages SASH, which is implemented by regional housing organizations and authorities in partnership with hospitals and health, housing, and aging agencies. Then-CEO of Cathedral Square Nancy Eldridge developed the idea in 2009. She had repeatedly watched seniors move out of their homes prematurely because of problems that could have been remedied. A former associate director of primary care at the University of Vermont’s College of Medicine, Eldridge was also acutely aware that the health care system was not prepared to handle the impending growth of the elderly population.
But it was not only her rich professional background that prompted Eldridge to create the aging-in-place initiative.
“Personally I had seen my father wither away on the vine for four and a half years in a nursing home,” she said. Although he did not have significant medical needs, he did not have the social network or help he needed at home to complete simple yet critical tasks, like managing his medicine.
“Absolutely, in my mind, that could have been dealt with,” Eldridge said. “There are numerous triggers that send a person to a nursing home for the rest of their life, often at a young age. That’s just unethical.”
SASH is Eldridge’s attempt to build a scalable model — leveraging existing community resources — to provide inexpensive care for an entire aging population, with plans tailored to meet each member’s needs.
SASH pursued every avenue for the Hopes, eventually referring Guy to a physical therapist who helped him learn to wrap his legs with a piece of equipment — not an easy endeavor at first, but one that has allowed the Hopes to continue with their lives, to their great relief.
“I don’t know where we’d be if we didn’t get their help,” Theresa said.
The program’s attentive care and small solutions reduced Medicare expenditures by an average of $1,536 annually per participant in an early study.
Medicare covered the whole cost, and the SASH wellness nurse still visits the Hopes annually. But the attentive care and small solutions provided by the program greatly reduce Medicare expenditures overall — by an average of $1,536 annually per participant in an early study.
As creative models of long-term care and assisted living continue to crop up, innovative aging-in-place programs offer an important alternative for many. The variety of options ensures that seniors with different levels of capability and dependence can live safely where they wish.
As baby boomers enter their 70s and 80s, Susan Ryan of the Green House Project said, “there’s going to be a consumer demand for innovative models and buildings, and the same old, same old is just not going to cut it.”
To develop and then expand innovations in time will take “some intention,” Ryan said. “It’s going to take mission-minded community development organizations that are willing to partner and step up.”
“If we get our heads together and figure out what pieces each of us play and how we create these alliances or partnerships maybe we can solve what I believe could be a rather significant societal crisis.”
Starting about a year ago, Ryan began fielding phone calls from economic developers and organizations inspired by her effort to build healthy places for aging community members. The interest from diverse stakeholders gave her hope.
“If we get our heads together and figure out what pieces each of us play and how we create these alliances or partnerships,” maybe, Ryan said, “we can solve what I believe could be a rather significant societal crisis.”
The success of SASH has also taught Eldridge that cross-sector collaboration is critical.
“We [need to] treat this as a community problem with a community solution,” she said. “We could do so much more if we didn’t leave families on their own to figure it out.”
At some point, many families confront a heart-wrenching choices. Do you move a parent or relative out of their long-time home? Do you drain savings to hire a caregiver? Do you take time off from your job to care for mom? These decisions will become all too real for many Americans in the coming decade.
Arnold, the private developer, never thought his passion for real estate finance would lead him to the world of senior housing. But he, like many working in and around the field, has grown increasingly adamant about its importance. As he develops the Arizona cottages, his aging grandparents are front and center in his mind.
“Maybe my grandma will need this care,” and she will likely have to rely on Medicaid to cover the costs, Arnold said. “I want to make sure there’s somewhere for her to go.”
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