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Health Affairs_Assisted Living 10-01

Health Affairs_Assisted Living 10-01

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Published by: Stephen J. Latkovic, Esq., CPA on Jan 19, 2010
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By David G. Stevenson and David C. Grabowski
Sizing Up The Market ForAssisted Living 
Assisted living has emerged as an important housing and long-term care option for older Americans. To date, development of this sector has occurred largely without government financing or regulation. In thisstudy we used primary data that we collected on county-level assistedliving supply to gain a fuller understanding of this sector nationally.Reflecting their reliance on private resources, assisted living facilities arelocated disproportionately in areas with higher educational attainment,income, and housing wealth. As this sector evolves, policymakers willhave to contend with issues related to access to services, public financing,quality of care, and regulatory oversight.
ublic financing of the long-termcare market in the United Stateshashistoricallygonetothenursinghome sector. Since the advent of Medicare and Medicaid, federaland state policies and a range of political andpractical factors have contributed to an
institu-tional bias
in long-term care service delivery,favoring nursing home care over community-based alternatives.
Over the past two decades,however,awiderrangeofhomeandcommunity-based services have become available to older  Americans who need assistance with activitiesof daily living. Assisted living in particular hasrapidlyemergedasahousingandlong-termcareoptionforolderAmericans.Asof1999,one-thirdof facilities that called themselves
assisted liv-ing
had been in business less than five years,and60percenthadbeeninbusinesslessthanten years.
assisted living
isput forward by the Assisted-Living QualitCoalition, a group of providers and consumer groups. The coalition defines
assisted living
a congregate residential setting that providesorcoordinatespersonalservices,24-hoursuper- vision and assistance (scheduled and unsched-uled), activities, and health related services.
General agreement exists about the broadegoals of assisted living care, including accom-modating residents
changing needs and pref-erences; maximizing residents
dignity, auto-nomy, and independence; and encouragingfamily and community involvement. Yet thereis a great deal of heterogeneity in the range of services offered and the populations servedacrossfacilitiesandmarkets.Indeed,manyfacil-itiesfallshortoftheideal.
Importantly,themar-ket for assisted living has evolved over the pastdecade as facilities have come to serve a moredisabled resident population with an increas-ingly complex array of services, potentially im-plyingthatassistedlivingcouldbeamoreviablenursing home alternative than it initially was.
Growth in assisted living has been driven inlarge part by consumer preference. People whoneed assistance in performing everyday activ-ities such as bathing, eating, or dressing prefer toreceivesupportiveservicesintheleastinstitu-tional and most homelike setting possible. A general population survey found that peoplewould prefer to be cared for in an assisted livingfacility over a nursing home if they neededtwenty-hour care, by a margin of six to one.
Inaddition, for some people with less intensivecare needs, it may be possible to purchase as-sisted living care at lower prices relative to nur-sing home care. Although the cost of assisted
doi:10.1377/hlthaff.2009.0527HEALTH AFFAIRS 29,NO. 1 (2010): 35
©2010 Project HOPE
The People-to-People HealthFoundation, Inc.
David G. Stevenson
(stevenson@med.harvard.edu)is an assistant professor ofhealth policy at HarvardMedical School in Boston,Massachusetts.
David C. Grabowski
is anassociate professor of healthcare policy at Harvard MedicalSchool.JANUARY 2010 29:1HEALTH AFFAIRS
living can vary considerably depending on theamenities and services provided, industry sur- veys by Genworth Financial put the average an-nual cost of assisted living care at $34,000 in2009, compared to $74,000 per year for a semi-private room in a nursing home.
 An important point from a public policy per-spective is that the development of the assistedliving industry has occurred largely withoutthe influence of government financing or regu-lation. As such, there is no single regulatory or licensure category for assisted living facil-ities, which makes it difficult to estimate theindustry 
s actual size. With this caveat, one re-cent study estimated that there were approxi-mately 38,000 assisted living facilities and975,000 units nationwide in 2007 (a
may contain more than one bed, as in the caseof married couples).
In contrast, the nursinghome industry had approximately 16,100 facil-ities and 1.7 million beds nationwide in 2004.
Previous efforts to collect assisted living sup-ply data have largely been at the state level.
These studies have identified much variationin assisted living supply across states; however,examining potential within-state variation or correlations between assisted living supply andmarket-level characteristics has not been pos-sible. In this study we used county-level assistedliving supply data that we collected from indivi-dualstates.Specifically,wemergeda2007cross-sectionofassistedlivingdatawithothermarket-level data on nursing homes and populationsociodemographic traits, to gain a fuller under-standing of the distribution of assisted livingfacilities nationally.
Study Data And Methods
There are no national dataon assisted living facilities; however, there areseparatedatasourcesacrossstates,suchasstatelicensure registries. The authors collected de-tailed state-by-state supply data that includedfacilityname,location,andcapacity(units).Our data include a national cross-section for 2007.Reflectingitsimprecisedefinition,assistedliv-ing across states includes a wide range of licen-sure categories for congregate residential facil-ities beyond just
assisted living
(for example,residential care facilities, community living ar-rangements, and personal care homes). Simi-larly,statedefinitionsfor 
canvary.Somestates include only one bed per unit, and othersinclude more than one.To ensure comparability with previous find-ings and as a check for the comprehensivenessofourdatacollection,weusedpreviousNational AcademyforStateHealthPolicycompilationsof state-level assisted living supply data as a guideto data collection and as a basis for compari-son.
 We provide more detailed informationabout our data collection procedures and licen-sure categories included, by state, in an onlineappendix.
For the analyses below, we limitedour supply data to facilities with twenty-five or more units, in an attempt to focus on facilitiespurposely built to be assisted living and to ex-clude small group homes (for example, adultfoster care facilities).
 Weusednursinghomedatafrom the Online Survey, Certification, and Re-porting (OSCAR) system for all Medicaid- andMedicare-certified facilities (96 percent of allfacilities nationwide).Collectedand maintainedby the Centers for Medicaid and MedicaidServices (CMS), OSCAR data indicate whether nursing homes are in compliance with federalregulatory requirements and include facility-reported information about facility, resident,and staffing characteristics. Following an initialsurvey, states arerequiredto survey facilities nolessthaneveryfifteenmonths,andtheaverageisabout twelve months.Usingdatafrom2007andearlier,weincludedthe most recent survey observation for 15,792nursing homes in our analyses. For these facil-ities, we also merged information from the Nur-sing Home Compare database (available onlinefrom http://www.medicare.gov/NHCompare/)
in particular, the 5-Star quality rating foreachfacility, which is a composite measure based onstaffing levels, inspection results, and clinicaloutcomes.
We obtained data on var-ious county characteristics from the 2007 Bu-reau of Health Professions Area Resource File(ARF). This file contains data on a range of pop-ulation characteristics at the county level, in-cluding socioeconomic data, as well as availabil-ity of medical professionals and services.
All analyses used a 2007 nationalcross-section of data. Using the assisted livingsupply data we collected, we first described thesupplyofassistedlivingfacilitiesandunitsatthestate level, including the penetration of assistedliving units per 1,000 people age sixty-five andolder. For the county-level analyses, we mergedassistedliving,nursinghome,andARFvariablesinto a single county-level observation. Acrossthese analyses, assisted living penetration (thatis,thenumberofunitsper1,000elderlypeople)is the primary variable of interest.Our choice of the county as the
for assistedlivingwaspartlypragmatic,becausethe ARFdataarereportedatthecountylevel.Yetthisdistinction is also consistent with the previousliterature on the nursing home market.
addition to denoting counties without assistedliving, we divided counties into quartiles of as-sisted living penetration, from quartile 1 (low penetration) to quartile 4 (high penetration).
Usingourgeocodedcounty-leveldata,wefirstpresent a national picture of assisted living pen-etration. We next present cross-tabulations of  various county and nursing home traits, by as-sisted living penetration. Each of these analysescomparedthesetraits acrossassistedlivingpen-etration quartiles, testing for significant differ-ences from counties in the highest-penetrationquartile. County traits of interest include educa-tional attainment, median household incomeand other economic indicators, and racial/ethnic composition; our hypothesis was that as-sisted living facilities would tend to locate inrelatively urban/suburban areas with highesocioeconomic status. Nursing home traits of interest included total residents and beds per 100 people age sixty-five and older, mean occu-pancy rate, percentage of for-profit and chainfacilities in the county, mean activities of daily living score and acuity index of residents, payer mixofresidentsacrossfacilities,andmeanfacil-ityratingontheCMS5-Starsystem
thequality-rating system used on the agenc
s NursingHome Compare Web site. Inclusion of nursinghome traits was driven by the desire to gain agreaterunderstandingofnursinghomemarketsin areas with relatively high and low assistedliving penetration.Finally,weusedthesameapproachtoexamineselectedvariablesavailableonlyatthestatelevelby state assisted living penetration. These vari-ables include private long-term care insurancepenetration (active policies per person ages 45
65)andMedicaidspendingforalllong-termcareand for home and community-based services.Our hypothesis was that assisted living facilitieswould tend to be located in areas with a higher penetration of long-term care insurance andgreater home and community-based servicecapacity.
Exhibit 1 shows the supply of assisted living fa-cilities across states, including facilities, units,averagefacilitysize,andpenetrationofunitsper 1,000 elderly people. Nationally, there were11,276assistedlivingfacilitieswith839,746unitsnationwide (74 units per facility) in 2007. Thepenetration of these facilities varied greatlacross states: Connecticut, Hawaii, and West Virginia had fewer than 10 facilities per 1,000elderly, and Minnesota, Oregon, and Virginiahad more than 40. As noted above, our analysisincluded only facilities with twenty-five or moreunits. This restriction substantially lowers thetotal number of facilities nationwide (from39,562) and more modestly lowers the number of units (from 1,072,536). Our estimates of theindustry 
s size including all facilities are consis-tent with the previously published studies men-tioned above.Exhibit 2 depicts assisted living market pene-trationbycountyintermsofthenumberofunitsper 1,000 people age sixty-five and older.Exhibit 3 shows the correlation between as-sisted living penetration and a range of county-level sociodemographic traits. Countieswith higher assisted living penetration tend tohave greater educational attainment, medianhousehold income, and median home valuesandalowerproportionofminorities.Therewerefewsignificantdifferencesbetweenthetwohigh-est quartiles, but differences across almost alltraits were significant between the highest andlowestquartilesofpenetration.Countieswithnoassisted living facilities, disproportionately lo-cated in rural areas, are especially distinct fromcounties in the highest quartile of penetra-tion. In the counties with no facilities, rates of college educational attainment are much lower (13.8 percent versus 19.9 percent), medianhousehold incomes are much lower ($35,379 versus $43,034), median home values are muchlower ($69,560 versus $98,541), and rates of minorities in the population are much higher (17.1 percent versus 12.8 percent), comparedwith counties in the highest quartile.There werefewer significant differences in as-sisted living penetration across counties on arange of nursing home market characteristics(Exhibit 4). The most visible differences center onthepayermixoflocalnursinghomes.Relativetonursinghomesinmarketswithlowerassistedlivingpenetration,facilitiesinareaswithhigher assisted living penetration have fewer residentsrelying on Medicaid and more residents relyingon other (private) payer sources. For instance,the mean percentages of Medicaid and
other payer 
in high-penetration areas were 60.6 per-centand27.6percent,respectively,comparedto69.3 percent and 22.0 percent, respectively, inareas with no assisted living facilities.Exhibit 5 highlights the correlation betweenassisted living penetration and selected state-level traits, for which county-level data are notavailable. Penetration for long-term care insur-ance among people ages 45
65 was greater instates with higher assisted living penetration(10.0 percent and 5.5 percent across the highestand lowest quartiles, respectively). States withhigher assisted living penetration also spend agreaterportionoftheirMedicaidlong-termcaredollar on home and community-based services

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