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The Memory Care Opportunity


by Alyssa Gerace for ALFA Update

The nation is gearing up for an impending “silver tsunami,” and part of that includes making sure senior housing communities are prepared to care for a growing number of seniors with memory impairments.

One trend that’s becoming increasingly common: assisted living communities that didn’t originally offer memory care services are now making moves to provide them.

But memory care is very different from assisted living care, and factors such as financing, loan terms, and structural design requirements for the best quality of care make renovations or expansions a very complicated process.

The need: Alzheimer’s by the numbers

The nation’s 65+ demographic, which currently accounts for 13% of the overall population, is expected to more than double by 2050 to more than 89 million (and 20% of the population), according to the U.S. Census Bureau.

The need for memory care programs is projected to increase substantially too, with the number of 65+ Americans diagnosed with Alzheimer’s disease expected to rise from 5.1 million in 2010 to 13.5 million in 2050, according to estimates from the Alzheimer’s Association.

That translates to more than 15% of the 65+ demographic having an Alzheimer’s diagnosis within the next forty years.

“[Memory care is] in huge demand,” says Dana Wollschlager, director of real estate development for Ecumen, a company based in the Twin Cities, Minn. area that owns, manages, and designs senior living communities.

Including memory care as a service offering is vital for Ecumen and the companies with which it works.

“Every one of our projects currently under development for third-party developers includes memory care units,” she says, listing projects in Tennessee, Nebraska, Michigan, and Washington state.

Converting or adding units to existing communities

Adding Alzheimer’s or dementia care capabilities to an existing assisted living building is a way to allow residents to remain in their community and age in place, and can be done in a few different ways.

Operators can choose to convert existing units to memory care, add an extra wing designated for memory care, or do ground-up development of a separate building located either on an existing campus or somewhere nearby.

An Ecumen-owned community that will re-open this summer, for example, recently transformed a two-story transitional care building by putting all the transitional care units on one floor, and converting the second floor to memory care.

But whether a senior housing provider chooses to go the conversion, expansion, or development route, adding these services is fast becoming a necessity, and Paul Mullin, vice president of development at Silverado Senior Living, a senior housing provider that specializes exclusively in memory care, estimates there are currently less than two or three thousand memory care units under development nationwide.

“The model of dementia/Alzheimer’s care is the future of senior care, because there’s a lack of supply,” says Trisha Kellogg, marketing director for Sunshine Gardens Senior Communities in Durango, Colo., and senior executive vice president of marketing for Trinity Innovative Group.

However, the way that it’s added is very important, Kellogg says. If senior living companies are looking to renovate to include memory care, it’s important that residents don’t feel like they’re in a locked, institutional-like community, which can potentially increase stress levels for those in advanced stages of memory impairment, she says. In order to be successful at caring for the resident, there needs to be a home-like model.

Long-term care is changing,” Kellogg says. “We’re not expecting the institutional feel any more. If it’s just going to be an addition, that addition had better be something special.”

But while it’s possible to add wings or convert a floor into a locked memory care unit, this isn’t always the best choice, says Mullin.

“Developers and operators need to be very cognizant of how they do it and how they operate it,” he says. “[Renovation] can be a limiting option, because many times, residents in locked environments get behavioral. The long-term viability of that resident staying in place and aging in place is not very realistic.”

What memory care should look like

Kellogg is seeing an emergence of stand-alone memory care communities, rather than just adding some units to an existing community, because it allows for a more purposeful design.

Her company has a 70-bed assisted living community in Colorado, with a smaller, 15-bed Alzheimer’s care building located about 15 miles away. When residents get to increased stages of Alzheimer’s or dementia, they tend to become overwhelmed by the large community, Kellogg says. 

At that point, they’re moved to the smaller, specially-designed building that’s easier to navigate and has a more home-like feeling.

There are many physical concerns when it comes to designing or repurposing a building meant for memory care, says Mullin.

“The layout of the building needs to lend itself to somewhat of an open floor plan that allows easy circulation—no dead-end hallways, no locked doors,” he says, pointing out two potential frustration-inducing triggers. “Our buildings are usually in the form of a large rectangle, with a circular path.”

Single-story buildings are preferable, as are properties with a few acres of land. “We look for available outdoor space, which could be an internal courtyard,” he says, as it’s ideal for gardens and walking paths.

Some companies, like Ecumen, design their memory care units primarily as studio apartments, but others, like Silverado, prefer a semi-private model.

Both agree that residents should be spending a majority of their time in common areas, not “holed up” in their rooms.

Because engaging in social programming and sensory activities is such a large part of memory care, these common areas are crucial, and should create a home-like, not institutional, environment, Wollschlager says.

Features of Memory Care Services

Caring for residents with memory impairments looks significantly different than assisted living care.

Memory care often requires a higher staffing ratio, says Mullin, and at Silverado the ratio of full-time employees to residents is about one-to-one.

“There needs to be commitment to staff on a level that’s appropriate for people that need a lot of care,” says Mullin. “It’s a huge commitment, and a huge expense in salary—and you have to charge a very premium rent.” He says Silverado communities charge anywhere for $5,000 to $7,000 a month for its semi-private rooms, with a “big chunk of that” going toward staffing.

“It’s important to create purposeful activity stations throughout those spaces so that residents can stimulate memories and the five senses,” says Wollschlager. “[Ecumen] tries to create an environment that encourages them to maintain their long-term memories; it can help keep residents less agitated and more engaged and focused.”

Ecumen activity stations include older-era dress patterns or recipes that can be sorted through, and small “activity kitchens” with laundry stations where residents can fold towels and other items.

At Silverado communities, residents have their own “memory boxes” that are located outside of their bedrooms, says Mullin. These contain mementos from a resident’s life and can include photos or items representing family, hobbies, and various other interests. They can help spark a resident’s long-term memory and can be used to identify bedrooms.

Outdoor space should include various walking path surfaces, says Mullin, such as cement, grass, or gravel that serves to stimulate leg muscles.

Financing for memory care renovations and expansions

As with most types of development, obtaining the financing to renovate assisted living to include memory care units isn’t the easiest process.

“Financing is tough right now. There are so many factors for getting loans,” says Wollschlager. “It’s tremendously complicated.”

Banks are looking for greater equity requirements, and in many cases require owners to come to the table with about 25-35% of the project’s funding in cash, she continues, and this can be “really tough.”

Still, people are getting it done, she says, and sometimes with the help of the Department of Housing and Urban Development (HUD), whose Section 232 program provides loans for memory care development, in addition to assisted living and skilled nursing.

Fannie Mae has been fielding several requests from borrowers via the enterprise’s lender-partners to convert existing units to Alzheimer’s care or expansion, says Christopher Honn, director of Fannie Mae’s senior housing group.

Borrowers with have an existing loan that’s been bought by Fannie Mae can request to make such a change, which must be approved by both Fannie Mae and the lender.

For the most part, these renovations or expansions are funded by borrower equity, and according to Honn, Fannie Mae has found a “very efficient way” to approve and structure these transactions.

In other cases where there’s a new loan request, and there’s enough cash flow and operating income from the property to potentially finance some of the costs of the renovation, then Fannie  Mae will look into financing it with a brand-new first mortgage.

However, it’s much more common—and efficient—for existing borrowers to formulate a plan for their lenders based on market demand that’s then presented to Fannie Mae, and funded with the borrower’s own equity cash, Honn says.

The future of memory care

The nation is facing a growing need for memory care, and many senior living communities are renovating, converting, expanding, or developing so they’re able to keep up with demand.

“[Adding memory care capabilities] is a big industry trend right now, and it has been for several months now,” says Honn.

For those who are planning on adding these services, senior care developers caution that the design, structure and available amenities of a community are crucial for properly housing and caring for individuals with memory impairments, and renovation projects need to reflect this.

Interested in learning more about Memory Care?  Join your peer executives at COMMUNITY 2012, the ALFA Conference and Expo.  Learn all about it

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