Senior Living And The Placement Dilemma
Senior living options are ubiquitous these days. But how does the average consumer faced with needing to place a loved one go about finding the best place? And how do senior living companies influence consumers without their knowledge? Let’s take a deep dive into this first segment for consumers.
You just found out the hospital has determined it is time to discharge your mother from acute care. She has been having episodes of forgetfulness, but they have gotten worse recently. The hospital recommends you look for assisted living. But, her discharge is imminent, and you don’t have time to research and arrange for her to move in. COVID-19 makes this even more difficult with all the restrictions on visiting and touring communities. Where do you turn for help?
Since time is limited, you decide to get on the internet and search for assisted living or senior living options. You try a few different search terms, and a few consistent companies come to the top promising you help. They claim to help you find the right options, advice, help find financing options, and more. There is A Place For Mom, Senior Advisor, Caring.com, and others. Some say they offer expert advice at no charge to you. They are there to help.
Time is running out, and you need to find a placement. These all look like good places to start. They do the leg work, and once you narrow down the options with their help, you can make the right choice. But can you rely on their seeming objectivity and expert advice?
How Do These Senior Living Advisors Help You For Free?
Before we answer that question, let’s look at how the agencies that claim to help our seniors find the right placement option. Most organizations are anything but impartial. They are beholden to the people they refer to, not the people they pretend to be working for. And the representatives who work with families are hardly qualified to know the best choice for the seniors or their families. These are glaring deficiencies, and there is no incentive for these referral services to rectify them. As long as the corporations keep giving the referral agencies money to place residents with them, keep doing it.
This all about money. It has nothing to do with helping the seniors find the best place to live. Here is how it works. Care providers that want to reap the benefits of referrals from these ‘advisers’ agree to pay them for each referral. It is a system where the care provider pays the referring company every time they send someone that moves in. It is sometimes referred to as payment for heads in beds. It requires a contract to be executed between the referring agency and the senior living provider. That contract requires the provider to pay the referrer for every move-in they send. If there is no agreement, there is no referral. It does not matter if a community provides the best care in the state, the referral agency will not refer to them.
Further, the fee structure can be set up in a variety of ways. Usually, it is based on some percentage of the first month’s rent or a set payment per move-in or some variation. The adviser helping you usually works on a commission as well. Do you think there might be an incentive to refer to the provider that pays the most?
The Conflict Of Interest
This referral system creates an inherent interest conflict. The conflict is so concerning that the Federal government felt they had to make regulations to address it if government funds are involved. Anti-kickback statutes make it a criminal offense to give or receive payment for referring a patient when Medicare or Medicaid pays for the services. The regulators call it Medicare or Medicaid fraud, and it carries severe penalties, including imprisonment.
The government created safe harbors that allow a few referrals that will otherwise run afoul of the anti-kickback statutes. But none of these referral schemes fall under the protection of these safe harbors.
Unfortunately, for assisted living, memory care, and independent living services, it is rare for Medicare and Medicaid to be part of the equation. The result is they leave the consumer to fend for themselves. As commonplace as it is, there are only two winners when this referral system is in play. The advisor gets paid, and the provider gets a head in the bed. What did the consumer get?
It is not uncommon for the referral company to let the consumer believe they are working on behalf of the consumer when they are not. These referral companies get paid by receiving a percentage of the first month’s rent or a set rate depending on the agreement between the referring organization and the company where the family places their loved one. But any way you slice it, there is a built-in incentive to refer to the companies that pay the person making the referral.
So, Who Is Responsible
The Three Parties Involved
There are three parties to these transactions. The consumer, the provider, and the referring agency or ‘senior advisor.’ They all bear some responsibility, but the consumer is the least culpable. Providers and referral agencies are the real culprits. Referral agencies could hire qualified case managers or social workers to upgrade the services, but that would cost money. They could also refuse to take money from the providers, but who would pay them? They will argue that they are just providing a needed service. One that is illegal when it involves Medicare or Medicaid funding. I wonder why?
Then there are the senior care providers. They fund the agencies in question because it is the easiest way to get referrals. If the senior care industry stopped funding third-party referral services that don’t put seniors first but cater to the company that pays them, this system would stop. The practice has gone on for years, but senior care companies continue to put their interests first at the expense of potential residents. They have even created a third-party referral agency of their own through their trade organization.
If you ask any senior living company executive, they will tell you the priority is meeting the residents’ expectations. You will hear all about how they put the resident first, or they might tell you they put people first. One thing you won’t hear is, we care more about our profit than our residents. Why do they pump money into the third-party referring agencies that do anything but put the resident first?
Follow The Money
It’s the money, and it is always the money. The industry does not want to pay a third party for sending them referrals. Dropping third-party referrals cuts into their bottom line. They keep the referral system alive because they fear that not getting those referrals would hurt the bottom line and help the competitors. I am not an attorney, but a system that overregulates the senior care industry has likely created this dilemma. Possibly the act of providers coming together for a discussion about ending the use of third-party referral agencies could be considered collusion or an anti-trust violation. Even if this were not the case, the lawsuits would be expensive and prolonged. That leaves us with some companies reaping the benefits of other companies stop using the referral companies.
So What Can You Do?
First, don’t accept the marketing hype that the senior living companies put out, saying how the resident and the people caring for them are their highest priority. If that were the case, they would stop perpetuating a system that is fraught with inherent conflicts. It is a racket, a legal racket, but that doesn’t make it right.
At the same time, please don’t make the mistake of seeing all senior living companies as big corporations that do not care and only want to profit at the expense of seniors they care for. If they did not face potential liability for coming together to stop a practice that is not helping the consumer, they might correct the system. I was part of this for over 40 years. I worked with some outstanding people. They are not all out to hurt seniors to make a buck.
That said, they need your help. If you want to change the system, write to your congressional representative and your senator at both the federal and state level. Don’t ask for more regulation to prevent the abuses. That is why we are in this situation. Instead, give the senior living providers a safe harbor to fight the abuse. That would be a narrow exception to anti-trust or other potential liabilities as long as they act in good faith to protect our seniors.
If they get that leeway and do not take action, then you can go after the providers. But give them a chance first. It is about time we stop looking for the worst in everyone and start looking for the good. Good people exist, but we won’t find them if we never give people the chance to show they will do the right thing if given an opportunity.