Assisted Living Facilities: Trends, Growth, and the Future

Introduction to Assisted Living

A substantial number of older adults will experience a decline in independence and an increased reliance on caregivers. Today, of those people aged 80 or older, fully 25% will eventually become institutionalized because of needing assistance with day-to-day activities (Westburg, 2003). Assisted living facilities offer a relatively new way to care for seniors who can no longer manage on their own. A cross between an apartment building with services and a nursing home, these facilities offer residential units — which sometimes include a kitchen — along with housekeeping services, meals, transportation to doctors and activities, and various levels of personal assistance, all for a monthly rental fee. The promotional literature for assisted living facilities emphasizes independence, support, and communal activities for their frail and disabled elderly residents (Lieberman, 2000).

America is growing older, and there are going to be some difficult challenges ahead. As medical technology helps those with chronic illnesses live longer, these elders will require additional care, either at home or in some type of assisted living facility (Genovese, 1997). While definitions vary from state to state — the table in Appendix A provides a comparison of commonly used terms — assisted living facilities differ from other types of supportive housing options in certain key ways. Assisted living facilities tend to be larger, more expensive, and specifically designed to house the frail elderly or persons with disabilities, with an emphasis on independence and privacy (Mollica, 2001). The majority of such facilities provide their residents with private rooms or apartments along with large common areas for activities and meals.

Background and Overview of ALFs

According to Mollica (2001), "Assisted living and other forms of supportive housing are specifically designed for those who need extra help in their day-to-day lives but who do not require the 24-hour skilled nursing care found in traditional nursing homes" (p. 1). These facilities provide elderly residents with the freedom of living independently of relatives while also offering assistance with physically difficult tasks, such as food preparation and cleaning. The combination of independence and convenience has made assisted living facilities extremely popular (Goodman & Steadman, 2002).

The trends are clear: there can be no doubt about the expanding market for senior residential communities of all types, particularly assisted living facilities. During the period from 1988 to 2000, the population aged 75 and older increased by a full 33% (Goodman & Steadman, 2002). The 107% increase experienced during that same period in residential care facility employees also reflects broader social changes. Assisted living facilities became increasingly popular among the oldest demographic groups, and in 1998, an estimated 75% of all construction for seniors consisted of assisted living units (Goodman & Steadman, 2002).

According to Census Bureau projections, the number of people younger than 50 will decline between 1990 and 2020, while the 50-plus population will grow by 76% (Horvitz, 1990). Two of the main factors driving increases in healthcare demand are the development of new medical procedures requiring additional personnel and a growing proportion of elderly individuals (Goodman & Steadman, 2002). The 85-plus age group, which numbers 3.6 million, is already 29 times larger than it was in 1990. The need for senior housing is further reflected in the fact that 6.5 million Americans require help with daily tasks, and their number is expected to double during the next 20 years (Horvitz, 1990). According to Horvitz (1997), "The biggest trend in the senior-housing sector is assisted care. More than one million Americans live in 30,000 assisted living communities, some of which specialize in certain populations — Alzheimer's patients, for example" (p. 38). Major hotel chains such as Marriott have also established assisted living communities across the country, occasionally at the expense of lesser-known companies (Horvitz, 1997).

In 2002, expenditures for healthcare facilities represented the fourth largest component of nonresidential construction by value of construction starts. The $16 billion in healthcare construction during 2002 was exceeded only by education ($42 billion), store and shopping center ($19 billion), and office ($18 billion) construction. Even given the declines that occurred during 2003 and 2004, the industry remained the fourth largest sector by value (The Steady Pulse of Healthcare Construction, 2003).

Growth Trends in Assisted Living

Assisted living facilities (ALFs) represent the most rapidly growing type of residential care for elderly individuals in the United States. Fueled by the explosive growth of the elderly population and by demand for cost-effective alternatives to nursing home care, the assisted living industry is experiencing an annual growth rate of 15% to 20%, with some recent estimates indicating that over 600,000 elderly people reside in assisted living communities (Cummings, 2002). These facilities emerged in the United States during the late 1980s in response to shifts in demographics and economics. "The assisted living industry has emerged so rapidly that the states licensing assisted living facilities and the businesses developing these facilities have not reached consensus on a precise definition" (Cummings, 2002, p. 293). A consensus has evolved, however, that assisted living represents a special type of housing that is not necessarily licensed as a nursing home; such facilities generally offer supportive and health care services — both scheduled and unscheduled — for residents who require some level of assistance with their daily activities. As a result, assisted living facilities now represent fully 75% of all new housing construction for elderly people (Cummings, 2002).

According to industry analysts, Sunrise Assisted Living, Inc. is one of the nation's largest providers of assisted living facilities. Growth as reflected by construction costs as of the end of 2003 is provided for the top three providers in the table below.

Table 1. Construction Values for Top Three Providers of Assisted Living Facilities as of 2003 (Millions $):

1. Berks Heim Nursing — $35.0
2. Livingston County Skilled Nursing Facility — $31.0
3. Retsil Skilled Nursing Facility — $31.0

Source: The Steady Pulse of Healthcare Construction, 2003.

Conclusion

The research showed that as the American population continues to grow older, increasing numbers of alternative and assistive living arrangements will 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 nursing homes and other assistive living alternatives: they are more homelike and offer residents a wide range of services that make their later years more active and enjoyable. The downside remains the same as with other alternative housing arrangements for the elderly — they can be expensive, and many older Americans may not be able to afford them.