American elder-care entrepreneur believes retirement communities are a better alternative to nursing homes
NEWS that Singapore plans to build several nursing homes to cater to its rapidly ageing population draws sputters of outrage from American eldercare entrepreneur Paul Klaassen.
Despite an ageing population, the United States as well as countries like Sweden and Norway have reduced the number of beds in nursing homes, which he says commits 'medically stable' folk into 'dreary' health-care environments.
Countries such as Australia, meanwhile, have faced declining occupancy rates as people use nursing homes only for very complex care.
In their place, retirement communities have mushroomed, which he maintains are a more humane, attractive and efficient way to care for people as they age.
But one might argue that the 53-year-old has quite a vested interest. He is the founder of Sunrise Senior Living, one of the largest retirement living providers in the world, and was in town recently to address an ageing conference.
With an annual turnover of US$1.5 billion (S$2.1 billion), Sunrise is among the biggest companies worldwide serving those in their sunset years. It has nearly 40,000 clients in close to 400 communities in the US, Canada, Britain and Germany. It has no Asian presence yet - though it has done some consultancy and training in Japan - and has no plans to set up here.
He protests with much vehemence: 'It's sad that you are building more nursing homes here, when there are no retirement living facilities. I hope you stop.
'It will be worth all 60 hours of flying here and back if I can just make someone reconsider that decision,' he adds for good measure.
The Sunrise boom coincided with an explosion in demand for retirement communities, where older folk live in home-like surroundings and have access to caregivers who can look after their daily needs. More than two million Americans live in such communities today.
Even as assisted living communities grew, nursing home beds in the US have registered a decline, shrinking from two million in the early 1990s to 1.7 million today.
While Singapore has no retirement living communities yet, at least five new nursing homes will begin operations over the next two years. The homes are fully funded by the Government and are expected to cost between $15 million and $25 million each.
While these nursing homes will provide complex care for low-income patients, some of them will also be equipped to handle people with dementia who cannot do simple things like dressing or eating.
Mr Klaassen, whose company is the largest provider of dementia care in the US, has made a living out of opposing precisely this kind of service. 'Most care in nursing homes is not health care, but supportive services, just like what any mother would provide a child,' he says.
Would you, for instance, admit an infant or a two-year-old into a nursing home simply because he needs to wear diapers and cannot bathe or feed himself?
'Why put an elderly person in a nursing home for reasons you would never institutionalise a child? It's ageist - and totally unnecessary,' he says, his voice rising. 'We should be screaming about this.'
The personal mission he has set himself these days is to prevent other countries from making what he believes is the 'biggest' elder-care mistake in America: Over-reliance on nursing homes.
The problem began in 1965, when 'in a terrible, fateful decision', then President Lyndon Johnson's administration began stimulating, through subsidies, the demand for nursing homes as a key way to provide care for frail old folk.
'This basically meant putting two to four people in a room, harsh fluorescent lights, little curtains and long corridors which often ended in locked doors.'
The US built 20,000 facilities with two million beds over the next two de-cades. 'They became accepted by society, but seniors hated them and for good reason.'
It was while volunteering in such dorms of doom in the Washington, DC, area that Mr Klaassen and his wife Teresa hit upon the idea of setting up retirement communities, where people could age in home-like surroundings, while being looked after by care professionals.
He started the first Sunrise home in 1981, fresh out of Georgetown University. The facility, in McLean, Virginia, was modelled on European retirement homes that the son of Dutch immigrants visited as a boy. His grandparents used to live in such homes in the Netherlands.
He was 23 then; his clients mostly 75. His idea spread like wildfire. Unlike nursing homes, his communities, he says proudly, were driven not by government policy but by public demand.
'The first community opened and filled immediately and a second one and a third one,' says the man who made his first million at 25.
'Before you knew it, we were opening two or three a year, then 20 a year and the assisted living movement was born.'
But minus the fancy packaging, one has to ask, aren't retirement communities also institutions that isolate the elderly into greying ghettos?
Not at all, he says. 'If that were the case, we would never have grown so phenomenally.'
Rather than being shunted from home to hospital to nursing home and so forth, residents in these continuing care retirement communities can opt for progressive levels of care in their new 'homes' as they age.
A Sunrise home can be built in a mansion or high-rise block and typically consists of groups of 100 people sharing chefs, drivers, nurses and caregivers who provide help with feeding, bathing or medication for two hours a day and people who coordinate a range of activities, from painting to cards.
'All of which will be too expensive for any one person to afford at home,' he says. 'On top of that, they get a healthy dose of social interaction, which keeps them happy.'
Unlike nursing homes, which have regimented routines and an institution-like environment, these communities have home-like settings - complete with living rooms, dining rooms, pantries and parlours.
There are two types of units. 'Independent living' apartments - which vary in size from 700 sq ft to 1,100 sq ft - are for older folk who are relatively healthy, choose to live on their own and generally require fewer meals and care services.
Those who opt for assisted living get to live in smaller 'suites' - between 400 sq ft and 600 sq ft, but get three meals and up to two hours of personal care every day. Residents can opt for independent living and then pay more to get advanced nursing or even hospice care on their premises, when their health worsens. Or they could move to smaller suites and pay roughly the same rates for more care.
The comfort, camaraderie and conveniences of such homes, however, come with a price. The vast majority rent units at an average of US$3,000 to US$4,000 a month. Mr Klaassen admits that his communities occupy the 'top tier' of retirement living in the US and cost around 30 per cent more than some others.
But that has not stopped demand. Despite a crippling recession, occupancy rates at Sunrise remain strong, at about 87 per cent.
Once described as the bellwether of the American assisted-living fraternity, the company has run into stormy waters these past couple of years.
Emboldened by high occupancy rates, the company went on a construction spree over the past decade - building up to 20 communities per year. When the sub-prime crisis hit, it had construction projects worth hundreds of millions of dollars in the pipeline.
As credit lines dried up, it had to write off some projects. A new experiment involving the sale instead of rental of retirement condominiums was badly timed. 'Given the crisis, it was simply the wrong time for anyone to buy retirement condos, when they could not sell their existing homes,' he says.
On the brink of bankruptcy last year, it survived by selling some of its properties, and has managed to narrow losses since.
While he admits that Sunrise made mistakes - by growing too fast and entering into the ill-judged condo-ownership project, for example - he maintains that the retirement community model is still economically sound.
But renting rather than owning - a practice that is not at all popular in Singapore which has long prided itself on its culture of home ownership - is the way to go, argues Mr Klaassen. About nine in 10 clients at Sunrise rent their units.
This is largely because by the time people are ready to move into Sunrise communities, they are in their late 70s - an age when no one really wants to buy a new home.
'Billions of dollars have been lost by developers who think the vast majority who will be attracted to senior living communities are 65-year-olds,' he says.
While baby boomers will eventually require retirement accommodation, that phase in their lives is still a decade or two away. Most of those who spend on retirement homes currently, he says, are baby boomers' parents.
'Sixty-five-year-olds are not old. Unless someone has dementia, the real market is really in the 78- to 88-year-olds.'
So hear ye, all ye marketers jostling for the silver dollar.
Source: Straits Times, 28 Apr 2010