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Health & fitness
July 2005
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Susan Olshan and her mother, Sally.
KNOW WHAT TO EXPECT
Who Susan Olshan and her mother, Sally, 75, at Crane’s Mill, West Caldwell, N.J.
Situation When her mom had a stroke eight years ago, Olshan chose Sunrise at West Essex in Fairfield, N.J. The experience didn’t live up to the sales pitch, she says, adding, “I expected them to do more than just cook meals. It’s called assisted living, but you have to pay extra for any real assistance.” Olshan paid for laundry, but her mom’s clothes turned blue after they were tossed into a washing machine without being sorted. Olshan moved her mom two years ago. Sunrise says it made its services and prices clear at the outset.
Photo by Ted Axelrod
The players

Assisted living is based on a Scandinavian model of "social" care, where residents live in private units within a larger community, much different from nursing homes whose patients need constant medical care. In the late 1980s, social-care facilities in the U.S. began referring to themselves as assisted living.

Marriott and Hyatt jumped into the business in the late 80s, seeing assisted living as a natural extension of their lodging business. Marriott built more than a hundred 70- to 90-unit facilities, but “they couldn’t fill them up,” says Steve Monroe, editor of The SeniorCare Investor, which tracks the mergers, acquisitions and financing of senior-care companies. Marriott sold most of its interest to Sunrise Senior Living in 2003. Classic Residence by Hyatt currently runs 17 luxury assisted-living residences and has 3 more under development.

In the U.S. there are two large publicly traded chains: Sunrise, with 364 facilities for 43,000 seniors in the U.S., the U.K., Canada, and Germany; and Emeritus Assisted Living, which can house 18,400 residents at 182 locations in 34 states. Most other providers, including the next three largest--Alterra Healthcare, Atria Senior Living, and Merrill Gardens--are private companies. Smaller companies tend to be regional chains.

The assisted-living business boomed in the mid-1990s, and some 15 companies went public. But by 2000, the intense overbuilding caught many providers short on capital. Several declared bankruptcy. The industry has since settled down, with mergers more common than bankruptcies. But independent facilities do go bust, and residents stand to lose any deposits or prepayments. At the very least, they have to find a new place to live.

Assessing the financial strength of an assisted-living company is anything but easy, however. Information on Sunrise and Emeritus, as well as Assisted Living Concepts and Manor Care, all public companies, is available to consumers on company Web sites. But most residents live in units operated by small private companies that are not likely to release financial data.