You can negotiate with an assisted living residence? That is many people’s response to learning that the cost of assisted living is indeed flexible. However, this is not always the case and negotiating is not always an easy thing to do. There are two factors that help with negotiations. First is to understand when the assisted living residence is in a position of strength and when the family is. Second, is to understand assisted living fee structures and on which fees an residence will be willing to negotiate.
To understand when the assisted living community is in a position of strength, one must understand “occupancy rates”. An assisted living community’s occupancy rate is the simply the number of residents divided by the number of available slots. If a community can hold 50 people, and currently has 40 residents, then the community has an 80% occupancy rate. To operate profitably, most assisted living communities require a 90% occupancy rate. Most costs associated with running assisted living are fixed costs. Meaning, these expenses are going to be more or less the same for the community regardless of how many persons are living there. Therefore, communities with less than 90% occupancy are going to be much more willing to negotiate than communities with very high occupancy rates or communities that are full and have a waiting list.
So how does a family learn about an assisted living community’s occupancy rate? There are two ways. The first approach is to work with an assisted living placement agency. Placement agencies are free services that help families find assisted living residences that meet their needs. The residences will often share their occupancy rate information with the placement agency so that that agency can help fill those empty apartments. The second approach is more difficult. Families can ask an assisted living community directly what their occupancy rate is, but they are unlikely to receive an honest answer. A stealthier approach to gain this information can be undertaken when touring the community. Ask the tour guide to show you an unoccupied room into which your loved one might move. Then ask to see another room and so on until the tour guide says there are no more unoccupied rooms to visit.
An assisted living community is in a position of negotiating strength when they have high occupancy or are full and have a wait list. A family is in a position of strength to negotiate when they have time to wait (so start looking before there is an urgent need) and when they have multiple options. Therefore, though challenging to do so, a family should be willing to tour multiple communities and not put “all their eggs in one basket”. An assisted living placement agency can greatly facilitate the process of touring multiple communities. It is advantageous to the family to negotiate with multiple communities at the same time.
Knowing the different fees an assisted living community charges and those fees that the community is likely to compromise on, will also help to put a family in a stronger negotiating position.
- Room and Board Fees – because one has options of which room (board) to choose and because these are recurring monthly fees, an assisted living community is less likely to compromise these fees. That said, because they are recurring, even a small concession in the monthly cost can add up to significant savings over time.
- Entrance / Community Fees – these are one-time fees charged when a new resident move into the community. Be aware that the assisted living residence might refer to these fees by other names such as “move-in fees”. These fees are typically 1-3x the monthly rate, therefore Entrance Fees of between $5,000 – $15,000 are not uncommon. A community has very little justification for these fees as bringing a new individual into the residence does not significantly impact the level of work the residence must provide. These fees are also where most assisted living communities are willing to compromise. It is not uncommon for Entrance Fees to be waived entirely.
- Care Fees – Care fees represent direct hours performed by the assisted living community staff for hands-on assistance such as help with bathing and medications. Therefore, the community is very unlikely to compromise in this area.
Another option to strengthen the family’s negotiating position is to find recently opened assisted living communities. As they have just opened, their occupancy rate is near zero percent; they need to fill almost all their apartments and they need to do so quickly. Recently opened assisted living communities are in a double bind, because no one wants to move to an assisted living community without a community (meaning a community in which there are very few other residents). For these reasons, assisted living residences that have recently opened will be very willing to negotiate, especially with the first few residents. The added benefit is that the residence will be in perfect condition having just been built or just been remodeled and the resident will have their choice of apartments. How does one find newly opened assisted living communities? The best bet is to again work with an assisted living placement agency.
A final point on negotiating with assisted living communities is to make sure you read, in detail, the exit requirements. Many families have been put in an awkward situation of having to pay for 1-2 months of assisted living, after their loved one was no longer a resident. Make sure you are aware of the policy’s requirements and when your loved one is leaving be sure to plan for it in advance if possible.