- March 28, 2014
Development came to a halt when the real estate market collapsed in Southwest Florida, but no one got any younger.
The result is that demand has continued to increase for facilities that can care for people with Alzheimer's disease and other forms of dementia while the supply of special housing for them hasn't kept pace.
Consider Terracina Grand, a 154-bed independent and assisted-living facility in Naples. It now has a waiting list for its 33 memory care units, so it is spending $18 million to build a 55-apartment memory care facility on its campus near Davis Boulevard and County Barn Road in Naples.
“When we study the demographics, in 2013 over 5 million people were diagnosed with Alzheimer's,” says John Goodman, chairman of The Goodman Group, the Minnesota-based owner and operator of Terracina Grand.
Goodman is not alone. Assisted-living and other senior-housing communities are rushing to build memory care facilities that will accommodate the swell of people they expect will need dementia care as they live longer.
Note some recent developments:
-Discovery Senior Living based in Bonita Springs is spending $30 million to build a 120-unit retirement community in Naples where it plans to devote 30 units to memory care;
-Cypress Cove at HealthPark Florida in Fort Myers is building an $18.5 million memory care facility with 44 private rooms;
-Autumn Senior Living is building a $65 million assisted-living facility in Sarasota that will include 80 memory care units;
-Comfort Cove of Miami plans to build an assisted living facility in Bradenton with 14 units for memory care;
-Tampa's Aileron Holdings acquired land in Cape Coral on which it plans to build 120 to 160 senior-housing units, including some devoted to memory care;
-CC Devco Homes plans to build a memory care center in the upscale Grey Oaks community in Naples for a new retirement enclave there called Moorings Park at Grey Oaks;
-LandSouth Construction of Jacksonville recently started building American House in Bonita Springs, which will include 40 one-bedroom memory care residences in the development's second phase.
Meeting the demand
The statistics of Alzheimer's disease alone are staggering. The Alzheimer's Association forecasts that by 2050 as many as 16 million people could have the disease, up from more than 5 million today. One in nine Americans over the age of 65 and one in three over the age of 85 has Alzheimer's, and it's the fifth-leading cause of death among Americans over the age of 65.
But the challenges of financing new developments during the real estate collapse kept new facilities from being built. Even today, financing remains a challenge.
For the Terracina Grand project, for example, Goodman says it took 22 months and “a substantial amount of equity” to obtain long-term financing backed by the U.S. Department of Housing and Urban Development. Goodman says he might have had an easier time getting shorter-term financing, but he says he didn't want to have to refinance the project in five or seven years at likely higher interest rates.
Lenders want to see developers meet the current demand, not necessarily the swelling statistics of the baby boomer generation. With the first boomers turning 65 now, it will be about a decade before significant numbers of them start showing signs of dementia. “Better research will put a damper on overbuilding,” says Robert Ross, chief development officer with Autumn Senior Living in Largo.
Often, the question isn't how many people are afflicted by dementia but how many of those can pay for the care. The monthly cost of living in a memory care facility ranges from $4,000 to $5,000, a figure that could amount to double what it might cost in an assisted-living facility. “I don't know anyone who is building free or subsidized memory care units,” says Tom Harrison, CEO of Discovery Management Group in Bonita Springs.
Two keys to success: a good balance sheet and speed. “We've been the first to market in most circumstances,” says Ross, who is developing assisted-living facilities throughout the Gulf Coast.
New housing designs
Developers and operators of assisted-living facilities have to create separate housing for dementia patients because they have special needs. “The physical environment makes a difference,” says Eileen Poiley, director of education at USF Health Byrd Alzheimer's Institute in Tampa.
Poiley, who consults with senior-housing developers, says memory care facilities are adapting to new research that helps patients manage the diseases. “We're now trying to create a more home-like atmosphere,” she says. “They're getting away from that institutional look.”
For example, a living room might replace a nurse's station in the center of the facility. Televisions, mirrors, abstract art and other distractions are eliminated. Contrasting colors and visual clues help residents find their way around the secure facilities.
While the costs of construction of memory care facilities are roughly equal to assisted living, Poiley says redevelopment of existing facilities could be costly. For example, long hallways increase the likelihood that residents won't be able to find their rooms. Instead, rooms are now spread in small clusters around a central living room that makes it easier for memory impaired people to navigate.
Still, once residents can't take care of themselves or have other complications, they have to move to skilled nursing facilities. “It's not always memory care that pushes someone to the next level,” says Rita Southern, director of assisted living at Shell Point Retirement Community in Fort Myers.
Shell Point is a continuing-care retirement community, so memory care residents in assisted living can move to the skilled nursing facility called Larsen Pavilion if they need more intensive care. A floor of Larsen is dedicated to patients with memory care issues.
Because patients with Alzheimer's and other forms of dementia need more intensive care than assisted living, the staffing ratio per patient is significantly higher. A memory care facility typically has a staff-patient ratio of about seven to one, while assisted living might have 15 to one.
Some developers acknowledge that a higher monthly fee for memory care doesn't necessarily overcome significantly higher labor expenses. For example, memory care at a Discovery community costs about an average $4,300 a month compared with $3,600 a month for a one-bedroom apartment in assisted living.
“One of the things we decided as an organization was to have affordable, quality care,” says Discovery's Harrison. “You have to resign yourself that it's part of the spectrum of care and the margins are lower.”
At Cypress Cove in Fort Myers, where the community is building a 44-room memory care center, the staff is trained to do more than manage a resident's medical needs. It calls its employees “universal workers” because they also handle personal care, housekeeping, laundry, food preparation and activities.
Traditionally, separate people have handled these tasks. “Shifting the roles of staff can accomplish economies of scale,” says Joel Anderson, acting executive director at Cypress Cove.
In addition to that, residents afflicted with memory care issues will interact with one person, reducing confusion. “We want to make sure the resident feels that for whatever issue they have, we have people right there to resolve them,” says Anderson.
The universal role helps the staff, too. “What we get out of it is a much more satisfied employee who understands the resident,” Anderson says.
Still, Anderson acknowledges that training staff to perform multiple tasks can be challenging, especially those who have been trained at other facilities where tasks are handled by separate people. “Sometimes it's best not to hire people who come out of that health care model,” he says. “We have to break them down and help them understand the concept.”