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Costs of Assisted Living
Communities may post their rates in different ways. It is not unusual for a community to charge what is commonly known as a base rate. The base rate may or may not include a specific level of personal service. Beyond the basics of room and board, housekeeping and activities, senior housing providers typically charge for care based on three different systems.
In all three systems, the intent is to charge each resident based on anticipated need for personalized care time from care givers and staff members.
(1) Levels of Care or Care Packages:
This type of pricing involves a health care provider or knowledgeable manager completing checkboxes of information, which then computes to an anticipated range of care, which will be needed. Most Assisted Living providers offer three to four levels of care.
| Basic, light, moderate, heavy | OR | Level 1, 2, 3, 4 | OR | Assisted Living Standard Assisted Living Plus Assisted Living Plus Plus |
Each provider selects what they name their levels of care.
(2) A La Carte or Point System
The second type of pricing system also involves an assessment of needs, but a range of time is associated to each individual task. Each anticipated task has a budgeted time frame associated with it. The tasks are tallied and a final figure is quoted.
(3) Personal Time Provided
The third type of pricing is based on actual personal time provided. This is a relatively new system, which involves the use of hand-held information devices (PDAs). Staff members input the tasks they complete for residents and information is stored in a computer system for billing purposes. As this system is new, and because consumers prefer knowing a specific monthly price for budgeting purposes, this system is rarely used to assess specific charges. This system is, however, being used to help management best use their time and resources and to help them define where time is being spent.
- Location
- Size of the senior care community
- Staffing levels
- Services offered
- Desired profit goals of the owners and managers
- Structure of the company
| Clallam | Grays Harbor | Island | Jefferson | King | Kitsap | Mason |
| Pierce | San Juan | Skagit | Snohomish | Thurston | Whatcom |
Base rates in King County are the highest rates. Rates in all other counties are approximately 20 per cent less than within King County.
Base rate ranges as of 2007:- Studio apartment $1700 to $3200
- One bedroom $2100 to $4500
In addition to base rates are care charges. Care can cost anywhere from $200 to $4000 a month in addition to the base rate.
Communities also may charge an initial move-in fee. Although most communities charge a flat rate of $1000 to $2000, some assisted living providers charge up to two months of base rent as an administrative move-in fee.
Additional costs exist, which are termed ancillary charges. Not all assisted living communities assess ancillary charges, but such costs can be:- Hair care
- Special entertainment
- Day trips
- Medical supplies
- Medical equipment
| No care Light care Moderate care Heavy care Dementia care | Monthly rate ranges: $1700 - $3100 $1700 - $3500 $2600 - $4200 $3500 - $10,000 $4000 - $12,000 |
The above rate ranges are typically 20 per cent less in counties other than King County, although Snohomish County is nearing the same price ranges.
An alternative to assisted living is the Adult Care Home. These are private homes licensed by the same regulatory agency that licenses and monitors assisted living communities; however, these homes care for only two to six individuals. Pricing within adult care homes (also called adult family homes) tends to be more favorable than within assisted living communities; however, pricing does vary based on the same criteria listed above.
Regardless of which community you choose, the provider is seeking a 10 per cent to 45 per cent profit margin. This is true whether the community is operated as a for-profit or as a not-for-profit business. Senior housing providers have to purchase equipment, make renovations, and even replace their physical building over time. They require this profit margin to remain in existence.
Not-for-profits don’t call this margin a profit, but instead call it a reserve. Most not-for-profits are seeking a 10 to 20 per cent reserve.
For-profit communities have varying levels of desired profitability. Some for-profit providers are pleased with a 20 per cent net return, which sounds like a lot, but this is the amount that is needed to maintain a building for the long term. Some national companies are interested in 35 per cent to 45 per cent profit margins, especially if stockholders are involved.
Over the past 10 years, we have seen a marked decrease in the profit expectations of senior housing and care providers. It is now rare for providers to yield a 40 per cent profit margin. Most providers are operating at a 10 percent to 30 per cent profit margin. In addition, unfortunately, because these businesses are so difficult to operate, many providers are operating at lower than desired net profit margins.
Assisted living is not an inexpensive option, but it does offer a tremendous opportunity of middle- to upper- middle- income people to live a life of independence with supportive services provided and emergency response services available.
Because assisted living is expensive to operate, it is unusual to find rates less than the rates listed above. Lower- income residents tend to live in different settings than assisted living.
When selecting an assisted living provider, there are dozens of pieces of information to consider. It is wise to speak with an Elder Care Advisor at CHOICE prior to visiting the communities. In this way, you can share your needs, obtain an overview of what is available, and receive a listing of two or three of the providers which best meet your needs. Further, CHOICE supports you in answering your questions and helping you make decisions and obtain resources along the way.
Call 800-361-0138 for our free guidance.
Last update: 2007-02-17 22:21
Author: Tech Support
Revision: 1.0
