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Elder Care’s COVID Disaster

Assisted living elder care facility in Tequesta, Florida.
photo by jalexartis Photography, licensed under CC BY

COVID-19 has been a disaster for the senior living industry, but we will not know what sort of disaster until long after the pandemic ends.

Is it a disaster like a train wreck or car crash, after which life will go on more or less as before for the survivors? Or is it a Hindenburg-style terminal event for the industry as a whole?

It may have been terminal for at least one project. A few weeks ago, my Fort Lauderdale, Florida condominium board reported that it was approached by the developers of a proposed senior living project next door, for which ground had not yet been broken when the pandemic arrived. The developers told our board that they would seek permission to abandon the elder care aspects of the high-rise project, converting it to a conventional luxury rental apartment tower.

This news did not come as a surprise. COVID-19 has taken a horrific toll on elderly residents of congregate care facilities in this country, and in much of the rest of the world. The Wall Street Journal put the death toll in the United States alone at over 125,000 by the end of 2020. That was well over one-third of the nation’s total fatalities attributed to the new coronavirus. An analysis published in November in the Journal of Post-Acute and Long-Term Care Medicine demonstrated that the mortality rate among long-term care facility residents was more than 20 times higher than the rate for people the same age living elsewhere. Beyond the deaths, and the incalculable suffering of residents who contracted the disease but recovered, the pandemic has also caused loneliness, anxiety and depression through months of isolation. Practitioners are reporting a significant increase in diagnoses and prescriptions for treatment of various kinds of emotional distress.

Industry leaders expect the pandemic to leave big changes in its wake. But as you might expect, they don’t see it (or portray it publicly) as the end of the line for communal elder care. One emerging stream of opinion instead sees senior living moving away from the “hospitality model,” in which assisted living is portrayed as a long-term stay at a luxury resort, and more toward a “health care model” in which the availability of medical support is the primary rationale for having the elderly move out of their longtime (and typically paid-up) homes to keep facility beds full.

Packaging elder care as a hospital-lite alternative within the health care system would, not coincidentally, make it easier for these facilities to tap the deep river of medical spending at all levels of government. But I am skeptical of this approach, not least because that river of money is finite. Medicare’s Hospital Insurance Trust Fund is expected to exhaust its financial reserves just five years hence, in 2026 – and the Trustees of Social Security and Medicare developed that projection in April 2020, before data for COVID-related costs was available. Medicare currently pays for only a small fraction of elder care costs, generally for skilled nursing following hospital stays.

Being old is not the same thing as being sick. Obviously some chronic conditions manifest, and some become progressively worse, as people age. Yet most people can manage these conditions at home with self-administered medications, supplemented as needed with help from visiting nurses, traveling physicians and outpatient care.

Institutional elder care is a pricey bundle of services, ranging from housing and meals to social activities and varying degrees of medical support. COVID-19 attacked the rationale that is the industry’s foundation: that a resident is apt to be safer and happier in an institutional setting than at home. Exposing vulnerable residents to an assortment of caregivers who commuted from communities where the virus was spreading proved deadly.

But that was not the pre-pandemic state of the world, and it won’t be the post-pandemic state of the world, either. My guess is that as memory of the pandemic fades, the financial and social exigencies of aging will reassert themselves.

If assisted living and nursing home facilities become more like hospitals, with augmented nursing and infection-control requirements, they will become even more expensive. There will still be a market for them, but it will be smaller. Citizens will press governments to expand essential service deliveries in other venues, mainly at home. Communities may expand their own services to seniors and offer activities to provide them with social outlets, probably with state and federal financial support. It will cost money, but less than it would cost to place more people into congregate care settings.

I have a personal preference toward keeping the elderly in their familiar, less-expensive surroundings when possible. I discussed why in more detail in “Assisting Aging Parents,” a chapter I contributed to our firm’s recent book aimed at younger professionals. But there is no right or wrong answer across the board. A severely compromised individual may need constant supervision that family members are unable to provide. Reliable, round-the-clock in-home care is hard to find, and expensive when you do find it. Family members need to keep a close eye on in-home situations and be prepared to make changes when warranted. If capable relatives are not available to provide care, sometimes a well-run institution can indeed be the best answer.

Dirigibles did not disappear because of the Hindenburg wreck. They disappeared because faster ships and fixed-wing air travel provided better alternatives, even though they also can have disastrous accidents.

COVID-19 was the care industry’s disastrous accident. It will probably bring changes to the industry, but I doubt it will wipe it out. For that to happen, we would need to make better options much more widely available than they are, or are likely to become any time soon.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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