The growing $34 billion market for assisted living and memory care is inundated with real estate speculators looking to take advantage of an aging population.
But a regulatory review and interviews with more than 50 industry officials revealed a dark reality at some of these facilities, The Washington Post reported. These include lapsed medications, undetected falls and bedsores, abuse, and elderly people wandering unnoticed.
Industry leaders blame a national labor shortage made worse by the pandemic, but data and interviews suggest the real culprit is low wages. Living aides, who perform essential tasks such as bathing and administering medication, earn an average of $15 an hour nationwide, raising concerns about the sustainability and quality of care.
A 2008 law that granted tax-exempt status to certain investors led to a surge in real estate investment in senior housing, creating a scenario in which facilities were owned by corporations under pressure to generate profits for shareholders. Investors can typically earn rental income without being directly exposed to the challenges of caring for vulnerable seniors.
Real estate investment in housing for the elderly has become an attractive business, boasting an average return of nearly 9%, double that of offices and hotels.
The paper said this corporate structure encourages REIT investors to replace management teams that fail to meet profit expectations.
One example is Lavender Farms, a high-end nursing facility located outside of Boulder. The facility advertises that it offers “24/7 on-site care.”
However, internal documents and interviews revealed that the company operating the facility was having trouble keeping seniors safe due to staffing issues. Efforts to address those concerns have clashed with plans by Welltower, the $40 billion investment firm that owns Lavender Farms.
Cost-cutting measures by corporate investors like Welltower have left facilities unable to meet residents’ basic needs. Since Balfour sold its properties to Welltower in 2014, reports of abandoned, missing and avoidable deaths have skyrocketed.
— Ted Glanser