How Do We Pay for Long-Term Care?

VIDEO (coming soon)

“I think it is a crisis,” said Randall Richardson, president of Vi, a national chain of senior living facilities formerly known as Classic Residence by Hyatt. “It is a huge issue, and one issue that I don’t have an answer for. But I recognize it as a social issue, and we are going to have to deal with it.”

One approach may be collaboration. Signature HealthCARE, which operates 72 retirement communities in seven states, is building public-private partnerships with universities, according to President and CEO Joseph Steier III. He hopes that together they can brainstorm innovations in senior long-term care. As part of that effort, Signature HealthCARE sponsored the panel discussion, “Supported Living Options and Innovations: Partnerships, Quality and Affordability,” at the University of Miami’s Global Business Forum, Jan. 12–14, 2011.

Panel: Supported Living Options and Innovations:   Partnerships, Quality and Affordability

Jennie Chin Hansen, CEO of the American Geriatrics Society and past president of AARP, spelled out some of the fiscal challenges of long-term care, listing a number of troubling statistics, including:

• 75 percent of the nation’s health care dollars is spent treating chronic disease.
• 82 percent of Medicare beneficiaries have at least one chronic condition.
• In 2010, there were 4.3 million documented cases of dementia in the United States alone.
• The fastest-growing demographic in the U.S. is people 85 years and older.

By 2050, she added, statistics predict an estimated 11.4 million people will have dementia, as 40 percent of people over 85 will develop some form of it, and most of them will require long-term care. The question of how to pay for that care looms large.

Aspiring to “affordable” long-term care just isn’t feasible, said Paul Klaassen, founder and chair of Sunrise Senior Living, which operates more than 400 senior living facilities in four countries. “Long-term care is expensive,” he said. And the fewer funds an elderly person has, the fewer long-term care options. “The middle class has more choices,” Klaassen said. “In Medicaid, the solution for long-term care … is staring at a fluorescent tube for the last two years of life.”

The decision many aging seniors make to stay in their own home rather than move to a senior community also has financial ramifications. One in five adults in the U.S. provide unpaid care for someone suffering from dementia or other disabilities, typically a relative. “Most of our caregiving will be done by family members or a spouse,” Hansen pointed out, estimating the annual in-kind value of this service at $94 billion. What’s more, unpaid, informal care has a $36.5 billion impact on the economy because caregivers are often forced to reduce their hours at work or retire early.

Richardson believes the few hundred dollars a month more in fees and living expenses for a senior community has an added value—socialization. People tend to become more isolated as they age, particularly after the death of a spouse. “The worst form of punishment is solitary confinement,” Richardson said. “[Senior] individuals living at home, alone, experience something similar to solitary confinement.”

But some programs aim to bridge that divide. Jeffrey Freimark, president and CEO of Miami Jewish Health Systems, said his organization participates in government-funded programs such as Project Independence, which provides day care from visiting caseworkers and social workers to people older than 87. Freimark claimed the program has been “life extending” for participants, giving them an extra three years on average, compared to 18 months in a typical nursing home environment.

Miami Jewish Health Systems also offers what Freimark described as far-from-typical care at its Douglas Gardens campus in Miami, which has  25 centenarians among its 700 residents. “We care for 4 percent of all centenarians in Miami-Dade County,” he said. “And they live longer, healthier and more enriched lives” because “a lot of social interaction takes place,” as well as therapy.

“There was a birthday party for a 102-year-old resident, and she left early because she had a [volunteer shift],” Freimark recounted. “It’s a terrific way to stay young and active.”

But to truly advance long-term care, Klaassen said, the U.S. should learn from the systems of other countries, including the Netherlands, which mitigates its costs by allowing seniors and families to determine how their senior care money will be used. “You can go to an assisted living facility and hire your granddaughter [as a caregiver],” Klaassen said.

He believes Americans need to make a significantly larger investment in the care of the elderly. “We have to decide as a nation that we are willing to pay for quality long-term health care,” he advised. “We don’t spend that much compared to other countries, and that is a tragedy.”

Signature HealthCARE LLC sponsored the session, which was presented by the School of Business.

By Erik Bojnansky