How to Select and Negotiate for Long Term Care

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By Mary Harris; Founder of Lifelong Wellness Advocates, LLC- Denver
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To ensure that you are selecting a long term care community that meets the needs of your family it is worth the time to conduct due diligence on the community, its ownership, and care process. Basic reconnaissance can be accomplished by contacting the local Ombudsman who is assigned to that specific residential community. In addition, there is a lot of fundamental information that can be obtained by visiting the community unannounced during different times of the day and week.

Health facilities and residential care communities are regulated by the state and must meet minimum standards established by state and federal laws to receive licensing as well as federal funding if they are serving Medicare/Medicaid residents. The Colorado Department of Public Health and Environment has a web site that enables you to view inspection and occurrence reports. The web site also allows you to view training that staff completed which may be relevant to your selection process (i.e. dementia care certification).

Some families may opt to utilize the services of a referral agency to locate the most appropriate care community. Keep in mind that many of these agencies promote that they are a free service. They typically receive their payment directly from the residential care community as a referral fee/commission. Many times that fee equals one month of rent. As a family member, you want to ensure that you are not being steered toward a community that offers a higher referral payment. Usually if the referral agency does not have a fee/commission contract in place with a community, they will not recommend the community even if it is more appropriate for your needs.

Unfortunately, many times families do not have the luxury of time to conduct thorough research during the selection process due to a health crisis. Time is limited and stress levels are increased. Families may not completely read or understand all of the language contained in the admissions contract. It is critical to have proper time allocated to review the contract or have an advocate review and negotiate on your behalf. The admission process is when you have the most leverage over the type and quantity of care services, their corresponding cost and negotiating limits on rent/fee increases.

Be aware of so called “standard” language that may be included in your admissions contract some of which may be prohibited by the federal Nursing Home Reform Law. For example, a family member or friend can not be personally liable for all nursing home charges. Financial guarantees are prohibited by law. Most contracts state that all disputes will be handled through an arbitration process instead of the court system. The arbitration process may be in the favor of the long term care provider. It usually is in your best interest to negotiate removal of that clause from your admissions contract so that you will have the leverage of the court system if ever needed. Make sure you understand their eviction process and the language that is stated in your contract gives your family the flexibility you need. The excuse that a behavior is too difficult or care needs are too time-consuming may be improper reasons for evictions depending on the specific circumstances. By law, nursing homes are obligated to provide the level of care that the resident requires.

A consideration that will affect how care is implemented and fees charged is how the business is structured. Broadly defined there are 4 major designations in terms of the business structure: 1) A large national corporation sometimes structured as a REIT that owns the properties and contracts the management out. Typically the management is contracted out on a long term basis to the previous owner of the properties. For example, Ventas Corporation has acquired the Atria and Sunrise properties nationally and taken management contracts with the previous owners. 2) National or regional corporations that own and operate their properties. 3) Nonprofit or not-for-profit organizations often owned by religious or other charitable organizations. 4) Individual group care homes usually structured as a small LLC or corporation.

When assessing option 1, a large national corporation, keep in mind that they are primarily driven by maximizing profits and managing to their shareholders/investors expectations vs. managing to optimize the needs of their residents and their employees. They can at times manage to minimally acceptable legal standards and possibly fall below. This typically leads to high employee turnover, management lapses and stretching existing employees up to and past the point of diminishing returns. In the case of a large REIT, they often expect and push increased rents/fees and cut amenities to maximize their financial valuations/stock price. This can result in fluctuating service and care levels on the front line.

Option 2, a national or regional corporation that owns and manages their properties sometimes will have many of the issues of option 1 as they are posturing towards being bought by a bigger player. This may fluctuate from facility to facility within the portfolio as the corporate processes and mandates that cause these problems are not always formalized and may vary. Often individual properties may operate very well, but this can change if they are sold.

Option 3, a Nonprofit or Not-for-profit organization is often a good choice for people who do not have long term care insurance or significant funds. While they may experience challenges with service at times, this structure if the community has a standing reputation for stability, tends to operate consistently with minimum issues or rent increases. Many of these organizations because they have sponsorship will not evict a resident if they run out of money. This is rarely true of large national or regional corporations.

Option 4, a locally owned and small organization group home offers an intimate setting with a staff to resident ratio typically higher. Management tends to be more flexible with care needs and the all-inclusive pricing is typically less than the other options. However, some of the social benefits of a larger community are lacking.

For any of these options it is wise to take a thorough tour of the properties and interview management/care employees. Ask how long the existing director has been in place and how much turnover there has been for key positions. Read reviews online about the facility and their ownership. Interview a random selection of residents. This type of upfront diligence can make a big difference.

 

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