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The Definitive Guide to Starting a Residential Assisted Living Facility

starting a residential assisted living facility

Residential assisted living facilities cater to the elderly and persons that cannot live independently. Though they have a setting similar to a retirement home, the RAL business model ensures they offer a wide range of options, levels of care, and diversity of services. RALs are not subject to federal regulatory oversight, and the type of service rendered is usually defined by the state and the provider. 

The residential assisted living industry is considered a part of the senior citizens’ housing service. It can be administered in stand-alone facilities or included as part of a multi-level senior living facility. The United States currently has over 22,000 assisted living facilities, housing an estimated 1.8 million persons. Ownership can be from profit, non-profit, or government-owned organizations.

Services provided include assistance with daily living activities, coordination of services by external healthcare professionals, and monitoring its residents’ activities to ensure their well-being, safety, and health. Assistance also includes personal care services and supervising/administration of medication.

What is a residential assisted living facility?

The actual definition of a residential assisted living varies from state to state in the united states. For example, in Pennsylvania, assisted living is a significant long-term care alternative that allows individuals to enjoy life as close to as they would at home. 

Residents receive the assistance required to maintain and develop maximum independence, exercise decision-making, and personal choice. At the same time, a personal care facility is defined as a place where food, shelter, and personal assistance with supervision are administered to people for a period exceeding 24hours. It is allowed for up to four adults per location who are not relatives of the operator and do not require the service of a long-term personal care facility.

In a residential assisted living facility, trained staff are always on-site to provide round the clock needed services. RAL staff help in sheet changing, laundry, food preparation, and serving. Other services may include medication administration and management, bathing assistance, dressing, toileting, insulin injection by a Registered Nurse, and on-demand access to nurses or medical personnel. Some amenities often provided include on-site beauty rooms, an exercise room, and a general living area. Some may offer private apartments that are generally self-contained or dormitory-like individual living spaces consisting of a semi-private living area with a common socializing area and a central kitchen and dining rooms. 

Things to Consider When Starting A Residential Assisted Living

Demographics

The residential assisted living facility is usually targeted at individuals who require assistance with at least one daily living activity. The resident could be an older adult male or female who prefers companionship and requires assistance with daily living.

A summary of the assisted living report from 2010 shows that 54 percent of residents are 85 years or older, 27 percent are between 75-84 years,9 percent are between 65-74, and 11 percent are below 64 years old. Further, it states that the female population stands at 74 percent while male 26 percent.

Managing needs

Facility residents usually assist in arranging the proper medical, health, and dental care service. Each Resident is responsible for choosing their medical and dental care professionals. Facilities are also built with an emphasis on easy use for the disabled. Kitchens and bathrooms are designed to be wheelchairs and walkers friendly; doors and hallways are wider to allow for easy wheelchairs. 

The facilities are designed to meet and be compliant with disability act or legislation.  The socialization aspect of residential assisted living is vital. It helps residents develop a sense of belonging and purpose, increased self-esteem and confidence, and improved physical and mental health.

There are three levels of residential assisted living care:

Low-level care: is for residents who are mostly independent but require reminders to perform daily activities such as medication, bathing, etc. There is generally a low level of supervision for residents registered to perform daily tasks safely.

Intermediate care level: these residents may require assistance with daily activities such as getting dressed but are independent with others such as feeding.

High-level care: these residents may have an impairment, preventing them from carrying out several daily living tasks and requiring a high level of supervision from multiple caregivers.

Starting a Residential Assisted Living Facility

There is a rise in demand for assisted care homes, and the demand is expected to get higher in the coming years. This is due to the cheaper cost incurred compared to a nursing home. Although starting a residential assisted living facility requires a huge cash outlay, it is a great business venture.

We will further discuss some of the requirements for starting one. It is noteworthy that requirements for starting-up residential assisted living facilities vary from State to State.  So, check with the appropriate local authority to ensure the right licenses are secured.

Start With a Business Plan

To achieve stability and profitability, entrepreneurs will have to create a plan with the following key points in mind. A properly written business plan ensures the entrepreneur explores the different business issues and seeks to manage each. Once written down, these ideas serve as a guide for appropriate action program to set up and manage the business.

Key points include:

  • Location – analyze the demand and supply for the market of interest
  • Select your level of operation
  • Use market analysis to determine your approach, structure the size of operation that will appropriate
  • Draw up cost estimates and create a project Pro-forma
  • Contact the necessary state licensing office and discuss the requirements to obtain a license and learn about the regulatory environment
  • Determine staffing your needs
  • Develop operating policies and procedures
  • Acquire the regulatory and licensing requirements, staffing needs, and facility requirements 
  • finalize the specific service you will provide

Knowing the keys to effective business

  • marketing is important 
  • to create enough awareness about your facility. Before and after start-up, meet up with residents and influence persons among the demographic you intend servicing.
  • Offer quality service: Providing personal care to aged and disabled persons is an increasingly competitive business. Entrepreneurs have greater chances of success if they understand the market and learn the areas with growth opportunities. Putting in the extra effort to ensure the quality of service in this industry will ensure continued business growth. 
  • Create value: you must clearly state how you intend to create value for potential clients and show why you can do it better than others.

Understand Operations

The Start-up Process:

  • Decide on your niche
  • Talk to state regulators on licensing and the regulatory environment
  • Analyze the market
  • Developing a comprehensive business plan
  • Search for the right location
  • Pencil out the start-up costs
  • Pro-forma the business
  • Analyze the labor pool
  • Policies and procedures

Providing Care:

  • 24 hr/7 day a week care
  • Behavioral challenges
  • Family needs and demands

Administration:

  • Dietary issues; menus, food costs, and kitchen management
  • Medication management
  • Staffing
  • Financial management; Billing management to maximize Revenue, Accounting, and Budget
  • Activity Management and Transportation

Financial considerations

According to an article by Forbes magazine on assisted living facilities, an 80-bed facility’s cost is estimated to be about $11 million. This implies between $130,00 – $145,000 dollars per bed. Although this figure may vary from place to place. Operating expenses of between 3-6 months should be part of the budgeted start-up costs. 

The level of operating costs will also depend on the facility’s type and size to be built. Considering the typical cost structure of the business and prevailing billing rates per Resident, the Forbes article (mentioned above) suggests building a 70 to a 100-bed facility to achieve good profitability. However, many investors new to the business usually start with a single renovated home caring for six residents. 

Typical operating costs include:

  1. Labor-related expenses (Salaries, Benefits, Taxes)
  2. Typically, about 30% of total revenues for all areas is spent on
    – Administrative
    – Nursing
    – Marketing
    – Activities
    – Payroll taxes
    – Benefits
    – Dietary
    – Housekeeping
    – Maintenance
    – Caregivers
    – Property
    – Liability
  1. Food 4%
  2. Insurance 3%
  3. Taxes 4%
  4. Utilities 3%
  5. Marketing/Advertising 2%
  6. Maintenance 2%
  7. Housekeeping 1%
  8. Care supplies 1%
  9. Management fees 5%
  10. Other 5%

The total operating expense can be around 70% of revenue.

Corporate and overhead expense categories include:

  1. Debt Service/Rent/Mortgage
  2. Replacement reserves

Revenue/income

Revenue of residential assisted living homes usually comes from fees paid by each Resident. The fees include:

  • All-Inclusive: this is the fee that residents are charged each month for all services provided; it is a fixed amount.
  • Tiered Pricing: This would include:
    • Base Fee
    • Fees for additional occupants
    • Care level fees (higher, intermediate, and low-level care). Residents at the time of their admission are assessed and at regular intervals after that. This is used to determine the level of care they need and placed under the appropriate tier.
  • Fees for Services: Charges for extra services.
    • Food
    • Physical Therapy
    • Transportation
    • Grooming
  • Deposit Fees: Some charge deposit fees.

report from the National Center for Assisted Living (NCAL) estimates the average cost for assisted living at $4,000 per month.

The financial options page of the PayingForSeniorCare website has the following estimates:

  • The national average cost of assisted living is $4,000
  • Add $800 to $1,200 to the above for memory care (Alzheimer’s and Dementia)
  • Costs vary from State to State. They range between $2,800 and $4,500 in the South and Midwest. And are in the higher range of $4,200 to $6,050 in Northeast and the West Coast.

Regulatory Authorities On Residential Living Facilities

Each State in the United States is responsible for overseeing residential assisted living facilities in their domain. Below is a link to each state’s regulatory agency.

Every aspect from meal to staffing requirement is regulated by each state and is different from State to State.

The role of NCAL (National Centre for Assisted Living)

Each year, NCAL publishes the “Assisted Living State Regulatory Review” to summarize key selected state requirements for assisted living licensing or certification. For every State and the District of Columbia, this report includes information on topics such as which state agency licenses assisted living, recent legislative and regulatory updates affecting assisted living, and requirements for Resident agreements, admission and discharge requirements, units serving people with Alzheimer’s or Dementia, staffing, and training.

States use several different terms to refer to assisted living, such as residential care and shared housing. This report includes requirements for those types of communities that offer seniors housing, supportive services, personalized assistance with assisted daily living, and some healthcare level. ​

Other Agencies

  • Assisted Living Facilities Association of America; A special combination of housing, supportive services, personalized assistance, and health care designed to respond to the individual needs of those who need help with activities of daily living and instrumental activities of daily living. Supportive service is available 24 hours a day to meet scheduled and unscheduled needs in a way that promotes maximum dignity and independence for each resident and involves the resident’s family, neighbors, and friends.
  • American Association of Homes and Services for the Aging; Assisted living is a philosophy/program that combines and coordinates housing, personal, and health-related services needed to help individuals maintain maximum independence and choice.
  • American Seniors Housing Association; A coordinated array of personal care, health services, and other supportive services available 24 hours per day to residents who have been assessed to need these services. Assisted living promotes resident self-direction and participation in decisions that emphasize independence, individuality, privacy, dignity, and residential surroundings.
  • National Association of Residential Care Facilities; Residential care facility means a home or facility of any size, operated for profit or not for profit. They undertake thorough its owner/s or management to provide food, housing, and support with daily living and protective care activities for two or more adult residents not related to the owner or administrator. Residential care homes are also known as assisted living facilities, foster homes, board and care homes, sheltered care homes, etc.
  • National Association of State Units on Aging; NASUA subscribes to a definition of assisted living, which acknowledges America’s elders’ desire to reside in their own homes or a homelike environment. Accordingly, the Association views assisted living as referring to a homelike congregate residence providing individual living units where appropriate supportive services are provided through individualized service plans. Assisted living is first and foremost a home in which residents’ independence and individuality are supported and in which their privacy and right to self-expression are respected. Contributing to its appeal is an emphasis placed upon maximum autonomy, costs that appear to be lower than those for nursing homes, and a track record of a high degree of consumer satisfaction.
  • The U.S. Health Care Financing Administration.
  • HUD (232 Program);

Comparing Models Used By States

While there is some confusion about the definition of assisted living, leading to frustration on the part of policymakers, providers, developers, and consumers. It is generally assumed to be different from board and care, and it is possible to identify characteristics that tend to differentiate assisted living from the board and care models. 

An examination of most American state policies suggests that several variables are used to compare assisted living models. The variables include the characteristics of the living unit, service range provided or arranged by the facility, the health, the functional and cognitive status of the residents, and the philosophy used to guide the model. Assisted living can be identified by one or more of the following components of the above-stated categories:

The living Unit

  • Individual apartments with a kitchen or individual rooms in a homelike setting, shared by consent.
  • Bathrooms.
  • Lockable doors.
  • The Resident controlled heat.

Provided or Arranged Services

  • Service package that includes some nursing services.
  • Service capacity is available to meet unscheduled needs.
  • Flexible staffing requirements.

Functional health and cognitive status

  • Admission criteria that allow people with a nursing need to be served.

Philosophy

  • A philosophy emphasizes each Resident’s independence, dignity, privacy, and participation in developing a personal care plan and service delivery plan. 

State policymakers begin their efforts to define assisted living for specific programmatic reasons. As residents in board and care settings become weaker and exhibit an increased need for health services, regulations have been amended in some states to allow a higher level of service to be provided. And admission/retention guidelines are relaxed to prevent further pressure to increase the supply of assisted living home beds.

Aging-in-place also has effects on residents in conventional elderly housing buildings. Several states have adopted assisted living policies to provide services to allow elders living in public housing to remain. Policymakers are also concerned about people who need a more structured and supervised setting but do not require extensive 24-hour nursing care. This group must move from their home or apartment because of the lack of 24-hour staffing to respond to needs that may arise during the evening when caregivers or service provider staff will not be available. 

Several states have developed assisted living as a form of the residential model, which allows a person who must move as an alternative to a nursing home. These programs set standards that are more residential and homelike than board and care facilities. 

Finally, states have seen similarities in the service needs of residents in multiple settings. They have focused on the service-rich nature of assisted living rather than the setting in which services are provided. 

As a result, state models can be grouped into three general categories:

  • board and care/institutional,
  • new housing and services model
  • service models.

Service models can be subdivided into models that allow assisted living services to be delivered in multiple settings and services delivered only in apartment settings. Presents state assisted living policies by the type of model. State models were developed to meet defined needs in different settings. A state’s policy may address needs in more than one setting. 

The upgraded board and care approach recognizes that residents are aging-in-place and need more care to prevent moving to a nursing home. State policies have allowed these facilities to admit and retain people who need ADL assistance and some nursing services. 

Mutually exclusive care criteria can blur, and people who qualify for admission to a nursing home might be retained. The model retains the building and units (usual bedrooms with shared bathrooms and tub/shower areas).

The “services in multiple settings” model also addresses aging-in-place in both board and care and larger elderly housing projects. Residents in both settings are aging-in-place. A higher level of service may be available in settings that were previously licensed as board and care. Also, similar services are provided in a supportive housing program to residents in conventional elderly housing. Some tenants may be independent in these settings and do not receive assisted living services, while others require assistance with IADLs, ADLs, and health care needs. 

This model includes settings which may be licensed and others which are not. States representing this approach include AlaskaFloridaMaineMarylandNewYorkNorth Carolina (proposed), Utah, and Texas.

Maryland provides assisted living services through its Medicaid Home and Community Based Waiver. The waiver was developed to support elderly (62 or older) residents in 150 small group homes and conventional apartment buildings, called Senior Assisted Housing, throughout the state. Projects are primarily federally subsidized. The program is administered by the Office on Aging through contracts with housing management companies or other community organizations to deliver services. 

The service delivery model licenses or contracts with the agency providing assisted living services that may be provided in housing settings. ConnecticutMinnesotaNew JerseyNorth Dakota, and Wisconsin (draft) are examples of this approach, although the program’s basis differs. Connecticut‘s program assists living regulation, while Minnesota‘s and North Dakota‘s programs are defined through a Medicaid HCBS waiver program. Regardless of the basis, local and state building codes or existing licensure rules sometimes govern the physical structure, and new regulations focus on the services provided. 

States which separate the housing and service components provide greater flexibility, encourage aging-in-place, and recognize important realities in the fragmentation of funding sources and the existing supply of “housing” types. However, these approaches do not address the institutional character of board and care programs, nor do they intend to do so. 

Yet, approaches that focus on services address one of the limitations in board and care models that exclude residents who require the level of care provided in a nursing home. It recognizes that residents in board and care facilities throughout the country may require more care than is allowed through original licensure guidelines. Though many states allow services to be delivered by community organizations, the “assisted living as a service” model can respond to the important dynamics in board and care facilities’ resident characteristics. In other settings (non-board and care), it is also a useful way to minimize state licensing, focus on meeting service needs, and allow residential building codes to address the housing structure.

Using Technology In Your Residential Assisted Living Facility

Keeping up with activities at a residential living facility can become a huge task, hence the need to deploy technology to assist in the smooth running of operations. Assisted living software is used to improve communication between residence, residents, and their families. It is also used to measure the quality of the services delivered. 

Assisted living facilities can also use it for personnel scheduling, resource allocation optimization, and documenting services. Assisted living software also ensures compliance with health care and safety regulations. Some solutions provide electronic health and medical record systems specifically designed for assisted living facilities. 

For optimal business results, assisted living software is usually integrated with back-office software like accounting or CRM. Most solutions also provide integration with electronic health records solutions to import patient health data. To qualify for inclusion in the Assisted Living category, a product must:

  • Assess the needs of each resident or resident groups (based on age, health situation, etc.)
  • Create standard service plans and agreements which can be customized for each resident
  • Track personnel availability and schedule care based on the needs of patients
  • Provide reports and documents to track the quality of services delivered
  • Deliver workflows to manage pre-admission and admission processes
  • Include electronic health records functionality or integrate with EHR software
  • Manage communications between caregivers and residents or their families

Instant Nurse Residential Assisted Living Scheduling Software

This staff scheduling software is designed to help assisted living facilities with all their scheduling needs. 

How do you go about choosing a staff scheduling software for your assisted living facility? Finding a software fit for your needs is crucial. This ensures you’re only paying for what you need and will use. 

Here are some things to keep in mind when researching software

Flexibility

Your software should be flexible enough to adapt to your changing needs. Some facilities schedule around patient schedules, whereas others schedule based on the facility’s overall needs. If your software is flexible, then you can build schedules as you need them.

You’ll also want software that creates schedules that can be cloned. That way, you don’t have to build from scratch every time you create a new one.

Useful features

Many scheduling software out there is full of features that you probably don’t need. When you choose any of this software with many features, you’ll often find yourself paying extra for features you won’t even use. 

Instant Nurse offers you the scheduling and overtime management feature, as well as a staff messaging system that allows you to send messages to your employee’s mobile telecommunication device quickly. It has all the features you need to manage your schedule and build team morale effectively, and none of the extras comes at a high cost.

Integration Friendly

The most assisted living facility already has processes in place for varying business procedures. These might rely on software outside of the staff scheduling tool. Facilities are sometimes worried that adding in scheduling software will throw off their existing tools. Instant Nurse is integration-friendly and won’t interrupt existing flows. 

You’ll save hours on creating your schedule and thousands of dollars on overtime. That means you have more time to spend nurturing employees and building relationships with residents.

Budget-Friendly

Many small and medium-sized assisted living facilities desire to have budget-friendly scheduling software. Instant Nurse is the most affordable yet robust option out. Our price includes set up and is charged monthly, without contracts.

Overtime Savings

One of the challenges of paper scheduling is that it’s easy to exceed the overtime budget. Instant Nurse allows you to offer open shifts to your lowest-cost options first, allowing you to save on overtime as shifts open up. 

The business of starting a Residential Assisted Living Facility is an excellent opportunity that will thrive in the current emerging demographic realities. An increasingly aging population suggests that more and more people will need assistance coping with daily living activities. This assistance cannot be provided by family members who are busy with their career and family commitments, as well as a lack of expertise to handle different conditions.

 One big advantage for prospective entrepreneurs is that resources for helping them get into the business are more developed and accessible than ever. Building models, financing, operational materials, consultants, national standards and statistics, and more are available. The time has never been easier to start an assisted living facility. Though challenging, this is a great business that provides a needed and great service. 

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