(This article appeared previously on MarketWatch.com.)
Many families who chose the Prospect Park Residence, an assisted-living facility in Brooklyn, N.Y., thought they had found the place where their loved ones could live out their days.
The handsome prewar building sits at the edge of a big park, close to cultural attractions and vibrant street life—and most important, close to relatives of the residents, who can no longer live on their own.
But now the residence is set to close—the victim, operators say, of rising costs. In March, the facility’s 120-some residents were given 90 days’ notice that they’d need to find another place to live, sending families into a panic.
(MORE: How Safe Is Your Parent's Retirement Home?)
“It’s a very traumatic situation,” said Donald J. Curry, partner at Fitzpatrick, Cella, Harper & Scinto, a law firm that, along with The Legal Aid Society and MFY Legal Services, is representing some elderly residents in a lawsuit related to the closure.
t’s rare for one of the nation’s 31,000 assisted living facilities to close outright, experts say. But the situation in Brooklyn highlights the sometimes-unstable nature of assisted living, which experts say isn’t always apparent to families navigating the country’s fragmented long-term care system. Indeed, even when a facility is in good financial shape, it can often decide to essentially evict an elderly occupant—leaving families scrambling for a Plan B.
Assisted living facilities are a step between independent living and nursing homes. Designed for people who may need some help with activities of daily living, such as bathing or cooking, but who don’t need the round-the-clock medical care that a nursing home provides, these facilities generally have a more homelike, less institutional feel than nursing homes. The privacy and level of independence they promise can be very appealing to residents and their families.
(MORE: A Starter Guide for Assisted Living)
Some assisted living facilities are connected to nursing homes, but many are stand-alone. About one million Americans live in assisted living facilities, according to estimates by industry groups. (The facilities are known under different nomenclature in some states—Washington state, for example, uses “boarding homes,” while New York state has “enhanced” housing as a subset of assisted living.)
Big Differences in Financing, Regulation
The difference between assisted living facilities and nursing homes goes well beyond appearance. Most nursing homes accept government payments in the form of Medicaid—which pays the bulk of this country’s long-term care costs—and in more limited circumstances, Medicare. Consequently, nursing homes fall under federal oversight.
Assisted living facilities, for the most part, rely on residents’ private payments. Regulations are at the state level and are “very loose,” said Richard Mollot, executive director of the Long Term Care Community Coalition, a New York City-based nonprofit advocacy group. Most states require assisted living facilities to be licensed, but licensure alone isn’t indicative of quality care, experts say.
(MORE: The Basics on Assisted Living)
State regulations often set broad parameters about what types of residents assisted living facilities can safely accommodate, but there’s plenty of discretion at the facility level, said Howard S. Krooks, an elder-law attorney with offices in Rye Brook, N.Y. and Boca Raton, Fla., and president of the National Academy of Elder Law Attorneys.
While people who require 24/7 medical care generally cannot be admitted to assisted living, there’s a large gray area between the fully independent and the bedridden. “They reserve in their contracts a lot of discretion on whether you’re allowed to stay,” Krooks said.
For these and other reasons, families’ due diligence should extend well beyond the marketing tour when they shop for assisted living. Ask management, for example, if there’s a registered nurse on the premises. Not all states have that requirement. Mollot said that some assisted living facilities overrely on emergency services and dial 911 frequently, since they don’t have trained staff to handle medical problems that aren’t true emergencies.
Not only is this approach stressful for frail residents, but it’s also costly. Medicare pays for hospitalizations, but patients bear significant out-of-pocket costs up to the point where they reach their deductible.
It’s also important to ask under which conditions residents can be asked to leave. Depending on how the facility operates, those who develop serious dementia, or significant trouble moving around, could be told to find another home. Of course, it could ultimately be in a resident’s best interest to move to a facility with more intensive support, and it could also make some elderly patients eligible for help form Medicaid. But families need to understand that the need might arise, and have a backup plan to implement if it does, experts say.
Nonmedical factors can also influence management’s decision to terminate a resident’s residency agreement if the resident’s health status changes, said Helene Bergman, a geriatric care manager in New York City. For example, a facility with a waiting list of prospective residents may be quicker to ask someone to move than one without a wait list. A facility’s operators may be more willing to accommodate a family when they like the resident and her loved ones, Bergman added.
An En Masse Eviction
The situation in Brooklyn is different, a matter of residents being evicted en masse. Facility spokesman Paul Larrabee said the closure is taking place because the operators experienced a rapidly escalating property tax bill, along with additional costs to comply with New York state building codes and maintain the building’s external facade.
Jennifer Stock, a Brooklyn resident, had moved her father Jack, now 89, from his home in Indiana to the residence at the beginning of last year. Jack, who has Alzheimer’s disease, adjusted well to the new environment and enjoys going to the nearby farmer’s market and walking in the park, Stock said. Stock feels she was misled by the facility. “They really sell you on aging in place,” she said. “I feel very embittered.”
The Prospect Park Residence has operated under current ownership since 2006, and the building’s recent history has been rocky: The facility has been the subject of lawsuits in the past, including one that accused it of wrongfully holding itself out as a state-accredited facility when it wasn’t. The residence was only granted an assisted living license in late 2012, following a review period that lasted more than three years.
In a statement on the website of the facility, executive director David Pomerantz said, “Since 2009, Prospect Park Residence’s ownership and management have taken extraordinary steps to ensure a stable and predictable environment for its residents and staff by absorbing escalating costs.”
Watching for Distress Signals
The kind of growing financial distress that Pomerantz describes would likely be evident in the company’s financial statements, said Jim Holtzman, a financial adviser with Legend Financial Advisors in Pittsburgh. Holtzman said he always requests the financial statements of the long-term care facilities his clients are considering. While he hasn’t reviewed those of the Brooklyn facility, he said any signs of an escalating cost burden could serve as a red flag for potential customers.
Some residents and their families, including the Stocks, have filed a lawsuit against the facility’s owners, its operators and the state department of health, alleging that the company’s closure plan is inadequate and shouldn’t have been approved by the state. Among other allegations, the lawsuit says that residents have not been given adequate personalized help in relocating to other, comparable facilities and that services within the residence have deteriorated in the months since the closure announcement. The lawsuit seeks to keep care from deteriorating further and to force the state to reconsider the residence’s closing plan, Curry said.
Larrabee said that, in addition to offering individualized relocation assistance, the facility has brought in counselors to help residents deal with the closure. In a statement, Larrabee said, “The operators of Prospect Park Residence are in full compliance with the state’s closures requirements…Despite concerns to the contrary, the closure plan and the transfer of residents to alternate living arrangements has been compliant and seamless.”
A spokesperson for the New York State Department of Health said in an emailed statement, “The State Department of Health’s priority is the safety and well being of the residents at Prospect Park Residence. DOH will continue to work closely with the administration and staff of Prospect Park Residence to ensure the health of residents is protected.”
For her part, Stock is looking for apartments where her father can live with home health aides. She hasn’t told her father he will likely have to move: “It just seems cruel to tell him and let him forget.”
Elizabeth O'Brien is a retirement healthcare reporter for MarketWatch. Contact her at Elizabeth.O'Brien@dowjones.com
This article is reprinted with permission from MarketWatch.com. © 2015 Dow, Jones & Co., Inc. All Rights Reserved.