Part 1 is available here.
Jared: We've talked about costs, we've talked about just the industry. Lets talk briefly about the regulations imposed by the state of Utah on the Assisted Living industry.
Steve: Assisted Living industry obviously with it not being medical but more of a social type of care, the regulations are a lot less stringent, a lot less demanding than they would be for a skilled environment where medical procedures and things like that are happening. Medical professionals are treating and helping the people who are there, the patients there, like wise in a hospital. You know, you have very serious things going on, serious illness. And so, those regulations are very highly monitored and very stringent.Those medical type of facilities, surgical centers, things like that.
In Assisted Living again, with more of a social type of care, we do have enough regulations. If you ask us, we think that we have plenty. And are always trying to reduce some here or there that don't make sense to us anymore. Because our rules twenty years ago were based on the skilled nursing facility rules. And so, we have paired those and morphed those into things that fit with what we do a little bit more over the years.
What we have right now is a wonderful relationship with our state regulators though. At times, we have even found that they come to us saying, "You know we survey your facilities and we find that this is really hard for us to regulate because it doesn't make sense in your facility." So we can't really do anything when we see things like this happening and not that we even need to because they are just kinda like your course of day, sort of, events that happen. And so its great to have them come to us finally and say, "What do you think about changing this?" They actually ask us these things so its a great, new thing that you have a mix of statute and rule in the Assisted Living industry.
There are about 28 categories in our rules that pertain to Assisted Living facilities, care and administration. Twenty- eight areas and granted some of those are only half a page, or several pages. But ya, it is probably in a fifty page- I'll have to look it up- but you know, forty or fifty pages of rules that help us guide what we do. We always try to move in a direction of creating a rule to fix something that we feel needs to be fixed. As oppose to going statutory where the legislature needs to be involved because those things don't change very easily. Where when things change or if its in the category of care or building maintenance, its certainly easier to make a rule that fits all facilities and as that changes maybe with time. And that we can go back to the health department or the health facility committee and say, "How about in our industry, this doesn't fit very well anymore and can we change this rule? Then we would propose this." In that case, it's a much easier fix than going through the whole legislative session, you have to have committee meetings, you have to get a lot of legislatures on board and do a lot of work. Statutes are really difficult things to work with, especially when they don't fit your application.
Jared: So its better when the statutes are more general and the rules are in consultation with industry are defined. And it also sounds like, something struck me, it sounds like you have some regulators here in Utah who are doing a good enough job that they earned a little, did I hear praise?
Steve: Actually, a lot of praise from me! The last few years I've worked with our state health department people over the years and though we've had a good relationship with them, the people we have right now- our executive director and manager over the licensing. They are so amenable to listening to us and even bring things to us where they say, "We think this is a problem, can we change a rule with you on this and make something that is more appropriate." That was unheard of until the last four or five years.
Jared: I've never heard of something like that in any area of government, I'm impressed.
Steve: In that, they deserve our praise honestly. They listen, they call us when they have problems and say "How can you help us with these facilities?" Well we need to educate them better, We'll encourage them to be a part of our association because they're not. The people who are having problems aren't and if they were, then we would have more interaction with them and they would know what we are trying to accomplish.
Jared: We better make sure that small businesses in your line of work aren't listening to this is California or New York because they are going to be jealous, very jealous.
Steve: I think you're right.
Jared: Now what kind of penalties are associated with failure to obey state regulations in the Assisted Living industry?
Steve: Well like any regulatory body they are going to want to see perfection when they come in but don't expect it. As far as penalties go we have two types of deficiencies, when they come in and survey us, they have their places in the building that they will look. They will do a facility overview and inspection, they will also inspect resident files, employee files, they will interview our residents, they will interview some of our employees who are working. They'll watch our employees pass the medication making sure that they are doing that as pro rule and that it's safe.
So when it comes down to it, a class one deficiency in our industry means that is eminent danger to a resident. Hot water heaters being up at 160 degrees instead of 120 or less like they are suppose to be, things like that. Or a wall falling in when a resident is bed ridden, big stuff, things that could harm someone.
Those are class one deficiencies and those need to be taken care of immediately or within 24 hours if that's acceptable. Our health department surveyors usually wait to see if something is of eminent danger, fixed right then while they are still there. If its something that takes a little time to adjust, like lets say the hot water heater, we adjust it down while they are there but they will have to come back and check that temperature the next day or day after that to make sure its functioning properly.
Those need to be fixed and then you have class two deficiencies. Which are just about everything else, systemic problems. That could be anywhere from paperwork to policies and procedures that you do there to make sure the residents are safe from any harm or that we doing what we actually doing what we say we will do with them in their care plan, those types of things. Little tweaks on those are expected but the health department expects us to fix these things. So if they come back to do a follow-up survey to see if those six things in a class two deficiency realm still exist or if you've taken care of those that one class one deficiency. If you don't have those fixed, there are civil money penalties involved.
Jared: Are you talking hundreds, thousands?
Steve: In our industry usually hundreds. I've seen some up to about one thousand or a little bit more. But that is after usually several attempts at helping you fix those and getting you to fix those, filling out what needs to be done and us still not doing them. The civil money penalties are fairly few and far between but being on the Health Facilities committee, I do see the report every month and I do see one or two Assisted Living facilities somewhere in the more rural areas, most of them aren't part of our association, where some education could help them in situations like that.
These deficiencies, the other things they can do if not only will they give you a civil money penalty but usually if it goes that far that they have to fine you, they will give you a conditional license of some sort. Whether for a month, or three months or six months and then they will come back for another survey to see if its worth lifting that conditional license and putting you back on a permanent license.
Jared: Alright, I know some of the listeners are probably starting to have their eyes glass over so lets move past the regulation aspect of this industry and I realize you have a great relationship with Utah State Legislatures and regulators who deal with your industry. But for our listeners benefit, tells us, if you could send a message and they would all hear it-all the legislatures and regulators- and they would hear and understand it and incorporate it into the next legislative session or rule making session, what would that message be?
Steve: We talk to our regulators literally every month, if not more often than that, so they know what we are trying to accomplish and are trying to help us actually do that, believe it or not. Sorry California and New York as Jared mentioned but we do occasionally have a legislative issue that we want to be involved in because it affects our industry.
Jared: Well it sounds like you are saying things are great right now?
Steve: They're very good. Occasionally we have a maverick legislature though that tries to do something that we see as being pretty negative to our industry and so we will try to educate them on what we do and why we feel like that is not appropriate for our industry. Likewise you have sister industries who maybe have something going to them or they see something coming to be inflicted upon us and they know that they're next or we know that we are next so we will get together. We do have a relationship as good or bad as it is sometimes with the Health Care Association which represents the nursing homes in the state, but we occasionally work together on things and we see if there is an issue coming up and we'll go into committee with them with the legislature and sponsors of those bills. We will hash through those things with them and support each other, especially when we see that it is going to hit us next if it hits you. So lets avoid something bad happening.
Jared: If you could tell every single Utah family one thing about the Assisted Living Industry, what would it be?
Steve: Every family needs to understand one thing, this is my joke part that I have observed over the years that I like to say to the resident who is not keen on moving into a care environment like this, even though its very independent, as independent as they can or want it to be. Why is it that when you were raising your family you always wanted a big house with servants and now in your 80's or 90's you can have that and its a problem?
So the realistic thing that I would like to tell families is that we move throughout our life based on need, when we are first married we live in a little basement apartment and when we have a child or two then it might be a bigger apartment or a small house or starter home. If we have a larger family then we maybe beyond the starter home and we'll have a large home and live there for many years, thirty, forty, fifty years. Then the kids stop coming back with the grand-kids and we start thinking, "OK, maybe it's time to move into a condo?" Then, your spouse dies. All of a sudden, mom is left with a condo, in her eighties and for some reason there is something about how people were educated in the past in that a home is all I can go into, a convalescent home is the only place for me if I can't live in my own home.
Well, that's not it, there are many options, many type of Assisted Living options, very residential, wonderful environments, large or small, you name it. They are beautiful buildings, beautiful environments with people who really do an excellent job. Again, 92% approval rating in our industry.
Jared: How many legislatures would love to have that kind of approval rating? And Congressmen.
Steve: So we are very blessed to have done a good enough job that the people that have used our services feel that it's been worth it and that we have given a good high quality of living to our seniors. But just remember in our 80's and 90's we have different needs, physically we change. Even physically in our minds, our cognitive ability declines when our brain shrinks too and it does happen as we get older. The inside also has changed and not just the outside.
In those later years, we have different needs than we had when we were in our 60's or 70's. Still empty nesters but Dad and I were doing fine. Well you know, Dads gone and there is a little bit more need of companionship, there's a little but more need of help around the house, there's a little but more need of taking medicines if we take those at a given time in our life.
We move people into Assisted Living, we don't put them there, I hate the word "put" because we have never been put anywhere in our lives as we move, move, move six, eight or ten times. But now the last one is we "put." No. We moved mom in to an environment that can be her own home again and we can come visit. She doesn't live with us anymore, she has her own home.
It's a group home, its an Assisted Living facility but she is living there and we go visit her in her home. We take her out for a milkshake and bring her back to her home. We know when we leave at night that she has everything that she needs. It is a safe environment, it is a place where people love her and will watch out for her and give her everything that she may need. That's what Assisted Living is, it is to help people know that they are as independent as they can be or want to be. But that infrastructure is here and that when need some help in any facet of life, we are here to do that.
Jared: I hear a commercial in that response.
Steve: Or maybe a country song!
Jared: Finally Steve, What can Utah families expect going forward in the Assisted Living industry and of course I presume that cost will increase but what trends do you see forming for the future of the Assisted Living industry?
Steve: Well cost is going to be based on our macro economy. Honestly, there is nothing we can do about that. But hopefully it'll be relative to what types of wages people are making too and you know there is always that inflationary problem that we have because of our fiat currencies. You are going to see a lot more facilities built of all varieties, you are going to see a few more skilled nursing facilities build because there will be people with a very acute need.There will probably be more hospitals because we have a lot larger aging population, in Utah we have one of the youngest populations ironically. But still, we have nearly 5,000 people that live in Assisted Living facilities in our state. There are 32,000 people diagnosed with Alzheimer's disease in our state, only 3,000 of them live in a health care environment.
Jared: I can only imagine the burden on those families. They are just not getting the help that they need.
Steve: Or if they don't know where to turn for it or they think it's too expensive and that there isn't help for things like that. And so, I would say look for a lot more facilities being built because again if you look at that baby boom group of 76-78 million people that are going to be coming through the system. They are only in their late 60's right now and really there are 40 million people over the age of 65 right now in our country, that is only about 13%. In 2030, there is going to be a lot more than that, there is going to be 20% of our country that is over 65 years of age.
Jared: So your industry is just growing?
Steve: It is, and I worry more about the capacity that we'll have to care for the people that need it and that we have built out enough. There are about 11-12 million long term care beds from Assisted to skilled nursing beds and intermediate care beds in our United States. If you think about even a quarter of that baby boom group needing a care environment then you are talking about needing over 20 million beds. Right now we have just over half that many. This has been a trend where people are building more facilities but there is going to be a time where we are really going to have to jump on this.
What type of facilities are these going to be? They are going to be very different from what we have today because you have a different generation coming in. I am at the very end of that baby boom generation and we are a bunch of snots. You know, we are going to want everything and not be able to pay for half of that. We are going to have to increase the amenities for those people, the expectations will be much higher. But ultimately we are going to have to have more space for more people that are going to be going into their 80's, 90's. Maybe even coming in earlier into the system at 75 years old. Just because it is a care environment and it's maybe a pretty good deal to get everything you need.
Jared: Well as with anything, as long as there is a profit motive the private capital will go to where it needs to go.
Steve: That's right. And we see are seeing that right now actually. We see a lot of people not seeing their bank account not offering them an incentive to keep their money in there. We have a lot of people that are coming to our industry, the Assistant Living providers and they are asking us, "Hey I want to build one of these buildings- Can I build one for you?"That's really overwhelming more than it ever has been to find the right partner to do that with though. For me, I need a really specific partner because I will want to build a building in the near future that's a lot bigger than I've had before. It is a lot more beyond my capacity to finance than it ever has been before. I will find a partner someday but it'll be the right partner who wants to build a building and know that the building will give them a good income for many years to come and to know that I am the right provider for them. Likewise, I don't want them to be apart of my management team who's running the Assisted Living business because they don't know it and I don't want to have to talk them into everything everyday.
Jared: Now Steve, thank you so much for taking the time to sit down with us today and educate us about the Assisted Living and other options that are available to families here in Utah and the surrounding states where this broadcast is heard. I'm confident our listeners have found this interview to be very enlightening and helpful and have a wonderful week. Thanks so much for sitting down with us Steve.
Steve: Thanks for talking to me.
Part 1 is available here.