Aging Is Risky Business: Considerations for Senior Living Providers
The senior living industry is growing exponentially as “baby boomers” hit retirement age. With Florida leading the nation in its percentage of residents 65 and older, projections indicate that by 2030 about 25 percent of Florida’s population will be seniors (according to data from Florida’s Office of Economic and Demographic Research and Department of Elder Affairs). As this population grows, the need for increased care options brings with it a variety of legal challenges for owners, operators, and board members at senior living providers. They will face the effects of industry consolidation, workforce/staffing, and regulatory compliance to name just a few.
Fortunately, the demand for senior living units is expected to be strong well into the future due to positive factors including demographic trends and the strong U.S. economy combined with record-level stock market valuations. As the residential real estate market continues to be healthy, many retirees are foregoing downsizing and instead of moving directly into senior living facilities that offer a continuum of care all in one location (e.g. independent living through skilled nursing).
How will these challenges impact the industry?
For the foreseeable future, consolidation among senior living providers including assisted living, memory care units, skilled nursing facilities, and the like will continue. Post consolidation, a new business faces the daunting legal challenges of coordinating operations, finances, and compliance efforts among multiple care sites. Recent trends suggest that greater emphasis will be on regional consolidation. Providers who have not operated in states where they seek to expand should be aware of laws and rules that regulate the industry in the new state(s). Regulations differ dramatically from state to state, and from facility type to facility type even within the same state.
Most senior living providers regularly use subcontracting, outsourcing, and staffing agencies to inexpensively scale up and scale down their labor needs (including for licensed professionals), without the extra hassle and liability of adding payroll. Such staffing practices introduce a whole host of legal issues. Contracts for temporary staff must clearly describe the services to be provided, set out the minimum levels of service which are acceptable, and provide the senior living facility with remedies and/or rights to terminate in the event that such standards are not met. Additionally, agreements for subcontracted staff must be carefully reviewed and written to address key risks including a poor performance by the outsourced service providers, unforeseen fees or charges, property damage, data loss, and potential liability arising out of acts or omissions of the subcontracted staff.
As hurricane season approaches, one critical issue for Florida operators is compliance in the wake of Governor Scott’s emergency generator rule. The rule mandates that operators install generators with enough fuel to power 96 hours of air conditioning. In late 2017, many operators obtained waivers from the Agency for Health Care Administration to have more time to install the emergency generators at their facilities.
It appears that the emergency generator rule is here to stay, having survived legal challenges over the past year. Before the 2018 hurricane season begins, existing operators need to be sure they are following this rule. Operators can be certain that the state will begin to enforce compliance with the generator rule in hopes of avoiding another tragedy like the one in 2017 where the loss of power to a Florida nursing home during Hurricane Irma directly led to the death of 14 seniors from heat-related causes.
This article was published in the May/June 2018 issue of Florida Medical Business.