Care at Home

REVIEW SUMMARY
Company. Gulf Care Inc.
Industry. Health care
Key. When law gets in the way of your business growth, change it.

Kevin Ahmadi wrestled for more than four years to alter the retirement-community business, but only a change in the law could make it happen.

Ahmadi is the executive director of Gulf Coast Village in Cape Coral, a retirement community that provides lifetime care for its residents. But this sort of business is highly regulated, and Ahmadi couldn't offer the same kind of service for people who would rather remain in their homes.

Instead of accepting the status quo, Ahmadi and industry colleagues persuaded lawmakers to approve the expansion of the business beyond the walls of the retirement home. At one point in the process last year, more than 200 elderly people harangued lawmakers to force the bill onto the legislative calendar.

Fortunately, the industry benefited from a more business-friendly regulatory climate in Tallahassee. As a result, the trade group that represented these retirement communities even gave its highest award last year to insurance regulators.

Continuing care at home
For many older people, aging at home is either physically impossible because they need special medical care or it's prohibitively expensive because hiring a private nurse is too costly. Some older people decide to move into campuses such as Gulf Coast Village, which is known as a continuing-care retirement community (CCRC).

In a CCRC setting, residents pay a large sum up front plus monthly fees in exchange for the promise that they will receive care for the rest of their lives, from independent living to round-the-clock nursing care. While the entry fees can total hundreds of thousands of dollars, residents trade that for peace of mind that they will receive the care they need if they become incapacitated in old age. Because CCRC contracts are akin to insurance policies, the Florida Office of Insurance Regulation oversees and monitors the business.

But prior to the law change in 2011, CCRCs could only provide care on a residential campus, not in peoples' own homes. About four years ago, Ahmadi began discussions with Gulf Coast Village's board of directors: “What can we do to help initiate legislation to get approval to deliver this model outside the facility?”

Letting older people age at home is a hot issue in the retirement industry. Research shows that most people prefer to grow old in their own homes than in an institutional setting. Of the people who could move into a CCRC, only 15% actually do.

Ahmadi reasoned that providing care to people in their homes would save Gulf Coast Village the huge capital expense of having to build more of its own living facilities. “We took the same model and carved out the capital dollars for structures,” he says.

What's more, Ahmadi says that the pool of prospective customers would be much larger since most people prefer to age at home, at least until they need intensive care. The lower cost of entry would be more appealing, too, especially during a recession.

For example, it costs $46,000 plus $400 a month for a 76-year-old person to receive care at home from Gulf Care, the not-for-profit that runs Gulf Coast Village and now offers Senior Choice at Home. That compares with $150,000 to $250,000 entry fee plus $3,000 a month for the same person to move into a home at Gulf Coast Village in Cape Coral. (Although Gulf Care is a not-for-profit organization, some CCRCs are for-profit.)

This wasn't a new idea. Gulf Care hired Cadbury Consulting of Cherry Hill, N.J., which specializes in helping CCRCs offer care-at-home contracts. Cadbury's own CCRC in New Jersey was among the first in the nation to offer such a plan after lawmakers there approved it in 1998. Several other states now allow this kind of contract, including Pennsylvania and Ohio, says Susan Hawkins, executive director of Cadbury Consulting.

But lawmakers weren't very receptive when industry lobbyists approached them to put it on the legislative agenda last year, says Janegale Boyd, president and CEO of the Florida Association of Homes and Services for the Aging, the trade group.

Fortunately, Boyd's organization had worked closely on the bill with the Florida Life Care Residents Association, a group of CCRC residents. More than 200 elderly members started calling state lawmakers on the phone, urging them to give the bill priority. “No one wants to hang up on a nice old person,” Boyd laughs.

Boyd's organization had also worked closely with regulators, allaying their concerns and seeking their insights. “We gave our annual award to our regulators for thanking them for their salient points,” Boyd says.

All that preparation paid off. Legislators approved the bill and the governor signed it last year even though it had been introduced well into the session.

Growth projections
Once a person pays for Gulf Care's home-care program, called Senior Choice at Home, Gulf Care assigns a personal-care coordinator who will help assess the situation. If that person can't perform an important activity, such as grooming or dressing, she is eligible for assistance. That can include live-in assistance, meal delivery or light housekeeping and errands.

A CCRC contract for home care is somewhat like a long-term-care insurance policy, except that the program takes a more proactive approach by doing such things as a home inspection and making sure participants get an annual physical exam to prevent small problems from getting worse, says Geri Spaeth, executive director of Senior Choice at Home.

In addition, Gulf Care already has experience and staff it can leverage because it has operated a fee-for-service home-health agency in the area for nine years with 40 employees who take care of 130 people. It has 330 employees on its Cape Coral campus who care for about 300 residents. Revenues have grown from about $13 million to $20 million over the past seven years.

To be sure Gulf Care can fulfill the terms of its contract, its own actuaries calculate the price people should pay. Actuaries calculate the likelihood that participants will use the service, based on longevity and other assumptions.

In the event that a participant needs care in a nursing home because it's no longer possible to live at home, the contract allows that person to move into the Gulf Coast Village nursing home or another similar facility. “Our goal is to provide this product from Sarasota to Marco Island,” says Ahmadi.

Gulf Care is the first to offer this service now that the new law permitting CCRC contracts to apply to home care was approved by the state legislature last year. Because of the large number of older people in the area, Ahmadi acknowledges that Gulf Care could one day be caring for more people outside its campus.

For now, though, Ahmadi and Spaeth are planning for conservative growth. “Our goal is 24 members this year,” says Spaeth.

Correction:This story was updated to show that Cadbury Consulting's CCRC in New Jersey was one of the first to offer the new service discussed throughout the article.