ProPublica had a sad and tragic story about the history of mistreatment, abuse, and neglect at a Emeritus facility in Oregon. "Two men have been jailed for committing sex crimes inside its walls. Residents of the facility have repeatedly assaulted one another. There has been at least one case of severe, near-fatal neglect." The history of the facility itself reflects a larger reality of the assisted living business. Hundreds of such facilities -- some exemplary, some deeply troubled -- change hands each year, many of them scooped up by the large chains that have come to dominate this swiftly expanding industry. In less than three years, the McMinnville facility came under the ownership of three different companies, including two of the most prominent chains in the country. The first, Sunwest Management, collapsed under nearly $2 billion in unpaid debt, a spectacular implosion that led federal prosecutors to label the company a Ponzi scheme and file criminal fraud charges.
The second was a three-way joint venture between Blackstone, the private equity firm, Emeritus Senior Living, the nation’s largest assisted living company, and a real estate company. As part of the deal, Emeritus took over the operation of the facility, dubbing it Emeritus at Osprey Court. The joint venture held onto the property for a few years before selling it in 2012 to a real estate investment trust with a vast portfolio of health care properties. That trust immediately leased the facility back to Emeritus. Today, Emeritus, under close scrutiny from Oregon regulators due to the continued problems in McMinnville, has decided to subcontract the facility’s operations to an outside firm.
Throughout all the changes, there has been one constant for the elderly people who call the place home: dubious living conditions. Just last April, citing the facility’s “chronic” inability to follow state laws, the Oregon Department of Human Services, which regulates assisted living in the state, moved to revoke its license and shutter it permanently.
The episodes of violence and neglect inside the facility are not particularly unique. Page through the regulatory records and court files of any state and one will come across such horror stories. Conceived as a humane alternative to nursing homes, assisted living facilities typically offer apartment-like rooms, meals, and help to people too ill or frail to live independently, most of them elderly. Over the past decade, large chains have become a major force in the assisted living business, which now houses some 750,000 Americans. There are at least 35 companies with 1,000 or more beds, many of them, like Emeritus, publicly traded.
Advocates for the elderly, frustrated state regulators, and academics who study the industry, say chains’ expanding footprint in assisted living has also come with serious downsides such as pressure to produce returns for investors and saddled with debt from acquiring facilities, cut backs on items that affect care, such as staffing, training and basic upkeep.
In just the past few years, one major player, Sunrise Senior Living, was purchased by a real estate trust in a deal valued at $4.3 billion; a private equity fund acquired another large company, Assisted Living Concepts, which had been embroiled in litigation with its former top executive; and Emeritus bought a mobile nursing firm and took control of facilities spread across eight states that had been run by a competing chain.
“Individual facilities may be unable to provide good care because the parent corporation isn’t giving them enough money,” Kaskie said. “It’s all spread-sheet driven.”
Regulators in many states are hesitant to permanently close assisted living facilities -- shutting down a troubled operation can sometimes cause even more trouble, in the form of costly litigation and scrambles to relocate seriously ill seniors. In Oregon, the human services department moved to shut down only one of the state’s 475 facilities during 2013.
While there are no national statistics, industry experts say it’s unusual for a facility owned by a major chain to be closed; it’s far more common for regulators to shut down establishments run by small companies. Larger chains often have the financial resources to challenge such actions in court, and they typically run facilities with many more residents, both of which give regulators pause when considering terminating a facility’s license.
Brian Lee recently reviewed three years of license revocation data for Florida. “I saw no corporate facilities,” said Lee, head of Families for Better Care, an advocacy group, and a former state ombudsman for assisted living and nursing homes. “They’re all small operators.”