Assisted Living an Analysis of Term Paper

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"It's a cheaper option than nursing homes -- daily rates are lower," says Redding. "You pay only for what you need, not for what your neighbor needs." Policymakers do have reason to be wary. If assisted living becomes covered by Medicaid, hundreds of thousands of elderly people might take advantage of it, thereby placing an ever greater demand on scarce government resources (Horvitz 1997).

As noted above, Sunrise Assisted Living Inc. is among the fastest-growing companies in the assisted living facilities industry; further, the company has managed to exceed analysts' expectations for earnings. The McLean provider of assisted-living services reported in March 2001 that net sales for its fourth quarter of 2000 increased fully 35% to $95.87 million from $70.35 million the year before. At the same time, the company's net income skyrocketed 128% to $8.8 million (39 cents per diluted share) from $3.86 million (18 cents); the diluted shares reflected the value of options, warrants and other securities convertible into common stock (Stefanova 2001).

The company's earnings for the fiscal year also rose. For 2000, Sunrise said net sales rose 39% to $344.79 million from $248.2 million in 1999. During that time net income also rose by 20% to $24.28 million ($1.10) from $20.21 million (94 cents). An analyst with Atlantic Investment in Parsippany, New Jersey, said, "This company has clearly completed their turnaround. They have guided estimates much higher for 2001. Sunrise estimates its earnings will grow about 75% during 2001" (Stefanova 2001, p. 16). The company became one of the nation's largest providers of assisted-living services two years ago, when it acquired Karrington Health Inc. Today, the franchise of upscale facilities includes 102 fully owned properties and 41 in joint ventures throughout 25 states and the United Kingdom; in addition, Sunrise has more than 70 other properties under development. Established in 1981, Sunrise is one of fewer than 12 public companies in an industry characterized by several hundred companies. Behind the assisted living facilities previous problems was an explosion in building that began in 1997, as the time approached for the Baby Boom generation to retire; in response, many companies built far too many facilities too quickly. As a result, the nation witnessed a number of such companies begin failing; however, Sunrise stayed focused, though, building only in the top 20 metropolitan markets where it was difficult to find real estate, but the customer base was large (Stefanova 2001).

The average occupancy rate at all of its facilities in 2000 was 91.6%, the company reported. Doctrow also noted that one of the things the company is doing now that they did not do before is a shift from being an owner of properties to being a manager of properties. During a conference call announcing earnings, officials at Sunrise said they intended to capitalize on the industry's disarray, because companies that are developing facilities are looking for management services; the plan was for Sunrise to enter 10 to 15 third-party management contacts by the end of 2001. The company said that with the money from this venture it will buy back some of its outstanding shares. In 2001, the Sunrise board of directors authorized the repurchase of up to $50 million of its common stock; to this end, the company has already repurchased about 585,000 shares for under $10 million (Stefanova 2001).

Current and Future Trends. Just a few years ago, there were two basic choices available for the elderly who no longer could stay at home, and neither option was considered viable by most: "In the old days, you had a choice between nursing homes and retirement homes where you were still serf-sufficient. Most seniors didn't fit into those extremes" (Horvitz, 1997 p. 38). In fact, the term "nursing home" does not adequately describe an American institution that houses 1.7 million elderly people. According to Uhlenberg (1997), "First, no one who lives in a nursing home could possibly confuse it with a home. Sharing a bedroom 'with a sick stranger, being served institutional food on a fixed schedule, having no control over the design and furnishing of your room, and being cared for by indifferent aides contradicts the idea of home" (p. 73). Other differences between nursing homes and assisted living facilities are more definitive; nursing homes do not provide a great deal of professional nursing care for their residents, and nursing home residents receive attention from registered nurses for an average of only 9 minutes per day (Uhlenberg 1997). "The basic problem with nursing homes, however, is not the misleading name. Changing the name from nursing home to something else, as some institutions have done in recent years, does not change the experience of those forced to live in them" (Uhlenberg 1997, p. 74). The basic problem with nursing homes remains much deeper and more resistant to substantive reform; nursing homes remain costly, inhospitable structures that fail to meet the needs of the persons who must spend their last weeks or years of life in them because better alternatives are not available. The good news is that far more attractive alternatives now are available; according to David Schless, executive director of ASHA, an organization representing builders and operators of senior residences, "Probably the most significant trend is the explosion in the senior housing options and services in residential settings. It's been an amazing change. The current population of older persons and their children largely created what we see today. It's a perfect example of market-driven solutions" (emphasis added) (Hortiva 1997 p. 39).

The trend over the past several years has been to create a greater variety of living options that are much more homelike than the institutional qualities that characterized similar facilities in the past (Mollica 2001). The future of senior housing can be found in places such as John Knox Village, a continuing-care retirement community in Lea Summit, Mo., which sits on a 400-acre campus. The community is designed to serve a wide range of socioeconomic groups up to 2,100 residents aged 65 years to more than 100 years old; some of the residents live on Social Security while others independently wealthy (Hortiva 1997).

The John Knox Village enjoys an annual budget of $45 million and more than 900 full-time and part-time employees who mow the lawns, remove snow, fix leaky faucets and drive residents to the grocery store, John Knox Village resembles nothing so much as a small town. Residents even participate in the governing of the community. "What other business can you think of where your customers live with you?" queried Maria Timberlake, the vice president of management relations. For elderly citizens who are able to live independently or only need limited assisted care, a variety of housing is available at John Knox Village; these accommodations range from studio apartments to two-bedroom, two-bathroom cottages with two-car garages. In addition, there is a 431-bed nursing facility where about 45% of the residents will most likely spend their remaining years. "And at John Knox Village, no one ever need be bored. Besides the activities that are typically associated with better retirement communities such as bowling, gardening, arts and crafts and bingo, residents at John Knox Village can join Bible study and investor clubs, perform in one of 17 musical ensembles, exercise in a fitness center or learn how to use the Internet" (Hortiva 1997, p. 41). Further, community spirit is promoted at the facility; a number of residents volunteer their time to help schoolchildren at locations in nearby Kansas City. Finally, two trip coordinators also are available to organize tours to local casinos or take residents on a two-week vacation to Ireland. "We want people to stay connected beyond the boundaries of John Knox Village," says Timberlake. "The misperception is a retirement community will take away independence when it actually enhances it" (Horvitz 1997, p. 41).


The research showed that as the American population continues to grow older, increasing numbers of alternative and assistive living arrangements are going to be required. Assisted-living facilities now represent the most rapidly growing type of residential care for elderly individuals in the United States. These facilities are characterized by distinct differences from their nursing home and other assistive living alternatives by being more home-like, and offering is residents a wide range of other services that make their twilight years more active and enjoyable. The downside is the same as with other alternative housing arrangements for the elderly: they can be expensive and many elders may not be able to afford them.


Cummings, S.M. 2002. Predictors of Psychological Well-Being among Assisted-Living Residents. Health and Social Work, 27(4), p. 293.

Genovese, Rosalie G. 1997. Americans at Midlife: Caught between Generations. Westport, CT: Bergin & Garvey.

Goodman, B. & Steadman, R. 2002. Services: Business Demand Rivals Consumer Demand in Driving Job Growth; the Services Division, a Part of the Service-Producing Sector, Contributed More Than Half of U.S. Job Growth between 1988 and 2000; Rising Demand from Enterprises Was Key. Monthly Labor Review, 125(4), p.…

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