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Developing Assisted-Living Facilites
The marketplace drives rapid proliferation
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Business New Haven
11/17/1997
By: Kirah Ramage
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Stephen Ronai is chairman of the health care department at the law firm Murtha, Cullina, Richter & Pinney, which has offices in Hartford and New Haven.
How do you define an assisted-
living facility?
Assisted-living facilities, unlike nursing homes, are not licensed to offer medical care. What they have are nurses who supervise the delivery of medication, and determine whether the individual needs home health care or anything to supplement the services of the facility - eating, bathing, dressing, ambulation and continence services. It is a residential facility that assists those who do not need full-time nursing care or full-time health care.
How many of these facilities are operating in Connecticut now and are they meeting the current need?
I would say 25 to 35 are in operation with at least a dozen or more in the planning stages. Yes, the current need is being met. There is still room to grow, but the market is not limitless. It's determined by the ability of the people to pay for the services, which generally run around $2,000 per month and higher.
How difficult is it to start an assisted-living facility?
It's capital-intensive. It's a real estate development as opposed to developing a nursing home which is health-related. It requires the ability to access capital, zoning and land use. You need approval from the [Connecticut] Department of Public Health [DPH] to create an agency that services the residences. Before that you need to test the market and research demographics.
How much capital is needed to start a facility?
The startup begins with investigative costs such as determining whether you have an appropriate site, and doing a feasibility study. Ultimately, you need about $200,000. Then there's the actual acquisition and construction of the facility.
What are the most important permits?
Local zoning, environmental approvals and, when the facility is built, an Assisted Living Service Agency (ALSA) license from DPH. It's the license for the agency that will deliver the assisted-living services. Then you need a designation from the health department - Managed Residential Community (MRC).
How long is the development process?
It can be two to three years.
Who regulates the facilities?
Once the facilities are up and running, the residences are not regulated. Only the service agencies that monitor the residents and deliver the assisted-living services are regulated.
What are the major issues in developing a facility?
Market feasibility and financing. Banks have been slow to understand these facilities. There is no financial support from the government. It is a totally private-pay market.
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