Financial problems have been mounting at a number of assisted-living and continuing-care communities, forcing some facilities into bankruptcies and inflicting new worries on residents and their families who thought their life plans were comfortably set.
In recent weeks, Erickson Retirement Communities, which manages 19 continuing-care retirement communities in 11 states, declared bankruptcy. Sunrise Senior Living Inc. posted a quarterly loss of $82 million and announced plans to sell off 21 of its assisted-living communities. Nationally, small retirement communities are raising prices, changing the way they operate, selling themselves off to bigger chains, or getting out of the business altogether. Many companies say they can’t make a profit—or even succeed on a nonprofit basis—in an environment that combines the high cost of caring for elderly residents, restrictive Medicaid budgets, tight credit markets and few residents willing and able to pay top dollar for their care.
When a facility fails, it can have myriad effects on its residents. The good news is that no one gets kicked to the curb—at least not right away, however, fees can skyrocket, making the facility unaffordable, at which point facilities can kick residents out for nonpayment.
In some cases, residents may find that the sizeable deposits they made to get their apartments in the first place have disappeared. (Continuing-care communities like Erickson’s typically charge deposits of $150,000 or more, and assure residents that they can stay on the campus for the rest of their lives regardless of how their needs change, and that the deposits will be refundable to themselves or their heirs when they leave or die. But residents typically also have to pay monthly fees for care, and those fees can continue to increase. Assisted-living facilities like Sunrise generally require no deposits but charge a monthly pay-as-you-go-plan.)
Erickson executives say that their bankruptcy filing will have no impact on residents. Erickson’s corporate organization is complex, with each community (and that community’s deposits) owned by a separate nonprofit entity that is not part of the bankruptcy filing. But residents could face disruptions. Newer communities that haven’t been completely built out yet may not have their assisted-living and nursing-home wings, so residents who need higher levels of care may end up being transferred to other facilities. Should various nonprofits not be able to resell units at the same price as the original buyer paid, those original buyers might not get their deposits back. And residents who run through their personal savings and their deposits paying for even-higher levels of care will have to depend on an optional “benevolent fund” to cover their expenses.
If you have any questions or concerns regarding the care an elderly loved one is receiving in a California nursing home or other type of California elder care facility, call Berman & Riedel, LLP today at (858) 350-8855. Our staff will happily provide you and your family with an initial free consultation to discuss with you the rights and monetary damages you and your family may be entitled to under California and federal law. To learn more about the firm, visit Berman & Riedel, LLP’s elder abuse and neglect website at www.preventelderabuse.com.
