[Congressional Record (Bound Edition), Volume 147 (2001), Part 1]
[Extensions of Remarks]
[Pages 1556-1558]
[From the U.S. Government Publishing Office, www.gpo.gov]



  INTRODUCTION OF HOUSE JOINT RESOLUTION REGARDING QUALITY OF CARE IN 
                       ASSISTED LIVING FACILITIES

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                      Wednesday, February 7, 2001

  Mr. STARK. Mr. Speaker, today I rise with Mr. Waxman, Mr. Coyne, Mr. 
Frost, Mr. Lantos, Mr. Miller, Ms. Schakowsky, and Mr. Strickland to 
re-introduce a joint resolution calling for a White House conference to 
discuss and develop national quality of care recommendations for 
assisted living facilities (ALFs). Between 800,000 and 1.5 million 
American seniors currently reside in ALFs and these numbers may double 
in the next 20 years. Until recently, the industry has been almost 
entirely private-pay. But times are changing and ALFs increasingly seek 
and receive federal funding through Medicaid's Home and Community-Based 
Services waiver. In fact, overall spending for this waiver swelled 29% 
between 1988-1999, due in part to growing numbers of ALF placements.
  In many states, industry expansion has not been accompanied by a 
tightening of quality standards or accountability measures. Instead, 
the definition and philosophy across ALFs varies from state to state 
and their is little consistency in state regulatory efforts. 
Furthermore, a 1999 General Accounting Office report found that 25% of 
surveyed facilities were cited for five or more quality of care 
violations between 1996-1997 and 11% were cited for 10 or more 
problems. Frequently cited problems ranged from providing inadequate 
care, particularly around medication issues, to having insufficient and 
unqualified staff.
  I'd like to call attention to an article entitled, `` `Assisted 
Living' firm prospers by housing a frail population,'' published on 
January 15th in the Wall Street Journal. This article discusses 
industry trends and carefully details the business practices and 
policies of Sunrise Assisted Living, Inc., one of the country's most 
successful ALF companies. At a time when many of its competitors are 
posting large operating losses, Sunrise earns millions of dollars in 
profits each year. How do they do it?--by accepting elderly applicants 
with serious health conditions and collecting extra-care fees, 
sometimes as high as $1640/month (on top of regular monthly fees) for 
very sick or cognitively impaired residents. Paul Klassen, Sunrise's 
chief executive, makes no bones about this marketing strategy. At a 
recent orientation for new Sunrise managers, he urged that ``the 
frailest of the frail'' be considered as candidates for assisted 
living.
  Although originally developed as an alternative to nursing homes, 
this article makes abundantly clear that ALFs are now recruiting the 
same frail seniors that might otherwise be served by nursing homes. Yet 
the average Sunrise facility (housing 90 residents) maintains only one 
registered nurse on duty for 8-

[[Page 1557]]

12 hours per day. Nursing homes of that same size average four to five 
nurses on duty at all times. Furthermore, nursing homes must comply 
with federal quality regulations, but ALFs answer only to states, where 
there is considerable variation in terms of regulation and oversight.
  This regulatory variation can have deadly consequences. As reported 
by the Wall Street Journal, staffing issues contributed to the death of 
a visually-impaired Sunrise resident in Georgia, who was awaiting 
delivery of a liquid herbal supplement. At the resident's request, a 
substitute concierge delivered a package that was not specifically 
addressed to the resident. After drinking what they thought was an 
herbal supplement (but was really caustic bathroom cleaner), both the 
resident and his wife became critically ill and she died several days 
later. Perhaps as disturbing as the incident itself, is the fact that 
the facility's only penalty to date has been a paltry $3000 state fine.
  Closer to home, last August in my district, an elderly woman passed 
away in an assisted living facility due to hemorrhaging from her 
dialysis shunt. Two times, she pressed her call pendant for help, but 
no help came. Instead, the ALF staff cleared the alarms and reset the 
machines both times. The facility did not place a 911 call for 
assistance until 1 hour and 34 minutes later. There was no nurse on 
duty, and all four resident aides in the facility at the time have 
denied responding to the calls or clearing/resetting the call system. 
This situation is still under investigation, but it highlights the 
seriousness of inadequate quality of care in these facilities.
  I believe that ALFs that receive federal funding should be required 
to meet reasonable, commonsense quality standards to protect residents. 
This joint resolution presents a valuable opportunity for policymakers, 
industry stakeholders, and consumers to discuss and debate how best to 
develop these needed quality standards. Frail, elderly ALF residents 
must be protected and sub-par facilities must face real consequences. I 
look forward to working with my colleagues on both sides of the aisle 
to protect frail seniors in ALFs throughout our country.
  The resolution has been endorsed by the Consumer Consortium on 
Assisted Living. California Advocates for Nursing Home Reform, National 
Association for HomeCare, and Elder Care America, which are 
organizations active in protecting consumer interests in assisted 
living and other settings. The January 15, 2001 article by Ann Davis of 
the Wall Street Journal appears below:

    ``Assisted Living'' Firm Prospers By Housing a Frail Population

                             (By Ann Davis)

       Atlanta.--Early last year, Tom Spiro, the director of a 
     Sunrise Assisted Living Inc. home here, warned his boss he 
     might lose another resident.
       It wasn't welcome news. The home's 71% occupancy was 
     already far below the corporate target of 95%. But the 
     resident, an 82-year-old woman just out of a hospital, could 
     no longer walk, took a battery of medications and was being 
     fed from a tube. Mr. Spiro felt that his assisted-living 
     facility--a nursing-home alternative that provides less 
     care--was in no position to accommodate someone so frail.
       He was told he was being too cautious. ``There was pressure 
     to take everybody,'' he says. Ultimately, Mr. Spiro retained 
     the resident, along with several others he considered too 
     infirm. Even so, with the home's performance still lagging a 
     few months later, he was asked to resign.
       Linda Selvidge, who was his boss but has also since left 
     the company, says it made sense to keep the elderly woman as 
     a resident because her husband was in the facility. But Ms. 
     Selvidge acknowledges urging Mr. Spiro to accept residents 
     despite his reservations. ``Being frail is nothing to be 
     nervous about,'' she recalls telling him.


                              The Mission

       Why such eagerness to enroll clients whose care would seem 
     sure to mean extra cost, complexity and risk? One reason is 
     the company founders' longtime commitment to offering a 
     homelike alternative to nursing homes. But accepting 
     residents who are infirm also helps to fill beds, at a time 
     when the assisted-living industry is burdened by 
     overcapacity. And Sunrise, more so than its competitors, has 
     figured out how to make serving such clients a profitable 
     business.
       The assisted-living industry is at a crossroads, two 
     decades after springing up amid dissatisfaction with nursing 
     homes. Its mission was to offer attractive housing--for those 
     who could afford it--where the elderly could get help with 
     daily routines like bathing and dressing, but no intensive 
     nursing care. Yet while the initial target was the relatively 
     healthy elderly, providers have increasingly targeted frailer 
     and frailer people since a capacity glut developed in the 
     late 1990s.
       Sunrise's founders, Paul and Terry Klaassen, make no 
     apologies for housing ailing seniors. The couple, who own 
     13.2% of the McLean, Va., company, refer to shunting old 
     people into nursing homes as ``the dreaded act of our 
     society.'' At a recent orientation session, Mr. Klaassen, who 
     is Sunrise's chief executive, urged new managers to see ``the 
     frailest of the frail'' as candidates for assisted living.
       Meanwhile, Sunrise facilities have higher operating-profit 
     margins than those of other public assisted-living companies 
     that disclose this information. A key reason for its success 
     is occupancy. A rule of thumb in the business is that 
     facilities don't produce much profit till they reach about 
     90% occupancy, but can throw off rich profits above that 
     level. Sunrise averages 91.4% occupancy at homes open at 
     least a year; most competitors are below 90%.
       Sunrise credits its customer service. In addition, says 
     David Schless of the American Seniors Housing Association in 
     Washington, some other companies ``have had much shorter 
     resident stays'' because they ``haven't ever been willing to 
     provide some of the supportive-care services to care for the 
     truly frail elderly'' that Sunrise does.
       Sunrise doesn't just enroll more people--it also charges 
     them more. The company ``has figured out how to price its 
     services better than its competitors,'' Mr. Schless adds.
       Sunrise makes the business pay by charging hefty premiums 
     for care beyond assisted living's basics, which are help with 
     dressing, bathing and getting around. Competitors do 
     something similar in pricing, but Sunrise collects extra-care 
     fees from a larger percentage of residents, about 60%, than 
     most. Extra-care fees average $517 a month per resident at 
     Sunrise; they come to about $200 a month at one major 
     competitor, Alterra Healthcare Corp.
       And despite the industry overcapacity, Sunrise manages to 
     raise fees. It has increased the base rent about 5% a year 
     (now an average of $2,700 monthly). And lately it has made a 
     concerted effort, when residents grow frailer, to reassign 
     them to higher-care, higher-price categories. In typical 
     homes, residents' monthly bills are $677 higher than they 
     were in 1998, figures supplied by Sunrise show. The company's 
     costs for resident care have risen just $180 a month per 
     resident, the same figures show.
       Mr. Klaassen says fees went up because local Sunrise 
     managers realized they weren't charging enough, given the 
     costs and staff time that frailer residents require. The CEO 
     also says Sunrise spends more to run its homes than others 
     do, and that the key to success is offering consumers such 
     high quality that it contrasts sharply with a nursing-home 
     environment. ``Competitors that are not as full charge 
     less,'' Mr. Klaassen says, ``and that's their problem. Most 
     assisted-living communities do not charge enough and do not 
     spend enough.''
       Sunrise earned $15.5 million the first three quarters of 
     2000, including gains on the sale of several properties it is 
     managing under contract. Rival Alterra had a $35 million net 
     loss in the nine months, and another big competitor, the 
     Marriott Senior Living Services unit of Marriott 
     International Inc., had a $6 million operating loss. 
     Sunrise's stock is up about 50% from a year ago, making the 
     Klaassen's stake worth about $60 million.
       Sunrise's methods have been put to a severe test in 
     Atlanta. The city seemed an ideal market when Sunrise was 
     launching a big expansion in the 1990s. It targets 
     metropolitan areas ``with dense rings of relatively affluent 
     people,'' says the company's president, Tom Newell. Sunrise 
     ultimately built or acquired six assisted-living facilities 
     in the Atlanta area and two more elsewhere in Georgia.


                       Targeting Elder Daughters

       Its marketing focus isn't the elderly themselves but their 
     grown children. The target customer is a 45-to-64-year-old 
     eldest daughter who is deciding how to care for an 
     octogenarian parent. The chain adapts ideas from other 
     franchises, setting out to emulate, as Mr. Klaassen puts it, 
     the pleasant environment of the Ritz-Carlton and the 
     personalized customer service of Nordstrom.
       Many Sunrise buildings resemble sprawling Victorian 
     mansions, with curving staircases. They have hair salons, 
     libraries and small kitchens in rooms, whose doors have locks 
     for privacy. To avoid an institutional feel, handrails in 
     hallways look like molding Signature touches include ice-
     cream parlors with jukeboxes that play Sinatra and exhibits 
     of antique wedding dresses to stimulate memories.
       Peggy Farris of Atlanta jumped at the chance to put her 
     mother in a special Sunrise unit for Alzheimer's patients 
     rather than in a nursing home. Now her mother is taking part 
     in flower-arranging and music programs and ``seems to be 
     flourishing more than she was in my home,'' Ms. Farris says. 
     A great many other customers are similarly pleased.
       Sunrise was part of a building boom that added about 3,700 
     assisted-living beds in Atlanta in four years, quintupling 
     the supply, according to market-research firm AZ Consulting. 
     The facility Mr. Spiro managed was half-empty and losing tens 
     of thousands of dollars a month for parts of 1998 and 1999, 
     Sunrise records show.
       Competitors resorted to price wars. Sunrise experimented 
     with discounting, too, but mostly it threw its energy into 
     recruiting residents. Marketing directors at five of its

[[Page 1558]]

     homes were asked to log 20 face-to-face meetings, 100 phone 
     calls and 200 mailings a week to potential customers and 
     medical professionals, some recall. One incentive: a 
     commission of about $250 whenever a new customer made a 
     deposit.
       Chris Boyce of Atlanta says that after Marriott expressed 
     reluctance in 1998 to take his mother, who was incontinent, 
     the Sunrise in Decatur, Ga., accepted her, along with her 
     husband. ``Sunrise told us they would handle my parents until 
     they died,'' Mr. Boyce says. Nonetheless, he eventually moved 
     them to a nursing home when their health declined further.
       Sunrise also scored points with hospitals' ``discharge 
     planners,'' making it easy for them to place patients needing 
     too much care to go home. With Sunrise, ``we can make a call 
     in the morning and by the afternoon it's taken care of and 
     the patient is moving in,'' says John Dornbusch, a planer at 
     DeKalb Medical Center in Decatur.
       In handling health needs, Sunrise facilities are quite 
     different from nursing homes. Despite nursing homes' chronic 
     problems with short staffing, those the size of Sunrise's 
     homes--about 90 residents--average two registered nurses and 
     two or three licensed practical nurses on duty at all times, 
     according to federal data. Sunrise says it usually has one 
     registered nurse on duty the eight to 12 hours during the day 
     and none the rest of the time. Nursing homes also have to 
     have an on-call medical director. Assisted-living homes rely 
     on residents' own outside doctors.
       While nursing homes are supposed to meet numerous federal 
     requirements, assisted-living homes face only state 
     regulation. In about half of the states, they come under 
     antiquated rules covering ``board and care'' group homes. 
     Such homes, which fell out of favor in the 1970s provided 
     meals and minimal assistance, often in private houses and for 
     just two or three residents. While many states have 
     strengthened the regulations, there is still lots of leeway.
       Medication is a particularly knotty issue. A key function 
     of nursing homes is administering medicines to residents, 
     whether pills, IVs or injections. Not so at assisted-living 
     facilities, in most states. Georgia's rules say that with a 
     few exceptions, notably insulin shots, assisted-living homes' 
     staffs are allowed only to prompt residents to take their 
     medication. Putting a pill in a resident's mouth and helping 
     him or her hold a glass of water to swallow it isn't 
     permitted.
       But some aides feel they have no choice. Sharon Thompson, a 
     former caregiver on the Alzheimers' floor at Sunrise at East 
     Cobb (County) says that if she merely left a pill on a table, 
     the resident, often wouldn't take it. While the rules said 
     that in such a case she should simply note on the resident's 
     files that the person refused the medication, she says she 
     routinely placed pills to people's mouths and got them to 
     swallow. Otherwise, ``in an Alzheimers' unit, they'll never 
     get their medications, I know you're not supposed to 
     administer medicine, but what are you going to do?''


                            Admissions Rules

       Tim Cox, a Sunrise senior vice president, says there are 
     various ways around this problem, including asking the family 
     to give the medicine and developing an eating or drinking 
     routine that gets the resident accustomed to taking medicine 
     at a certain time. ``It is never appropriate to administer if 
     the regulations to do not permit us to,'' he says. A Georgia 
     regulator says the medication issue is one of the reasons for 
     restricting whom assisted-living homes can admit.
       Georgia bars assisted-living facilities from taking certain 
     kinds of residents, such as people too weak to propel a 
     wheelchair or walker in an emergency evacuation. In six 
     months, the state has cited Sunrise's six Atlanta-area homes 
     for accepting 27 residents who needed more care than the 
     homes were licensed to provide, Alterra and Marriott, which 
     together have seven Atlanta homes, were each cited just once. 
     David Dunbar, Georgia's top long-term-care regulator, calls 
     Sunrise's number of citations ``unusual.''
       Yet the state has never asked Sunrise to discharge a 
     resident, he says. When cited, a facility can simply apply 
     for a waiver to keep the person. The state routinely grants 
     one if it is the resident's
       A government ombudsman wasn't so lenient in 1998, when 
     Sunrise at East Cobb sought to admit a man to its Alzheimer's 
     unit who couldn't communicate, dress, feed himself or walk. 
     Laura Formby, who had been notified of the case by a social 
     worker, says she found the man ``totally unacceptable'' for 
     assisted living and contacted the facility, which canceled 
     the admission.
       Sunrise President Tom Newell says Sunrise tries to 
     ``balance risk'' against the preferences of residents and 
     family. It sometimes asks the relatives of people who want to 
     remain, despite worsening health, to supplement the care at 
     their own expense. ``We work with the regulators to explain 
     how we will be able to care for them,'' Mr. Newell says. 
     ``Part of the plan that's developed to allow them to live in 
     assisted living would be private-duty aides they would bring 
     in or home-care agencies.''
       Gwen Birchall says she paid Sunrise $930 a month in extra-
     care charges for her aged mother but still felt obliged to 
     hire an aide. She says she also did certain chores that 
     Sunrise staff had promised to handle, and her husband 
     routinely washed dishes after meals to free up frazzled 
     Sunrise caregivers. She moved her mother to a nursing home in 
     January. Told of the case, Tiffany Tomasso, Sunrise's 
     president of resident-care operations, says such an 
     experience is ``unfortunate'' but when the company is made 
     aware of these concerns, it addresses them right away.


                              Fine-Tuning

       Sunrise calibrates its staffing levels precisely with 
     residents' ``acuity level''--how medically needy they are--
     and facilities quickly adjust workers' hours when the 
     resident mix changes. Sometimes, Sunrise appears to cut it 
     too close. After a Dec. 5 inspection of Sunrise at Huntcliff 
     Summit in Atlanta, Georgia regulators said the facility ``has 
     consistently operated with fewer employees than needed to 
     properly safeguard the health, safety and welfare of all 
     residents.'' Muriel Flournoy, an 87-year-old resident of the 
     facility, says, ``If you need help at night, it can be almost 
     impossible to get an answer.''
       Ms. Tomasso says Sunrise's review of its hours at that home 
     indicates staffing was ``well within the parameters of our 
     model'' and exceeded minimum state staffing ratios. She adds 
     that Sunrise increases staff hours when a resident is 
     reassessed at a higher-care level. ``It's a very fluid 
     process,'' she says. As for Ms. Flournoy's complaint, ``We're 
     never happy when customers don't feel their needs are being 
     met,'' Ms. Tomasso says. A company spokeswoman adds that 
     Sunrise has recently taken steps to improve response time at 
     night to address her complaint.
       In 1999, Sunrise rolled out new, more-expensive pricing 
     tiers, such as ``Plus Plus'' for extra-sick residents and 
     ``Reminiscence Plus'' for those with later-stage dementia. 
     Such care levels can add as much as $1,640 a month in fees. 
     Families say they were told that residents placed in higher-
     care categories would get more staff time. But Carla Neal, 
     former head of the Alzheimer's floor at Sunrise at East Cobb, 
     says her boss told her she was ``overstaffing'' her floor and 
     should stick more closely to the staffing formula. She says 
     she wound up giving residents less attention than before, 
     even though they were now paying more. ``There wasn't any way 
     we could deliver the care needed,'' says Ms. Neal, who left 
     Sunrise.
       Rick Gagnon, who was her boss but who also has since left, 
     terms the staffing guidelines ``quite appropriate.'' 
     Caregivers, he observes, ``tend to err on the side of the 
     person whom they're caring for.'' But also important, in his 
     view, are managers with ``the corporate mentality to make the 
     system work.''
       Staffing issues contributed to a death at Sunrise at East 
     Cobb last July. A volunteer was filling in at the front desk 
     for an absent concierge when a visually impaired resident 
     asked for a package he thought contained a liquid herbal 
     supplement he was expecting. Though the box was addressed to 
     Sunrise, not to the resident, the volunteer delivered it to 
     the man's room, a state ``complaint narrative'' says. The 
     liquid was a caustic bathtub cleaner. The man and his wife 
     each drank some. He became critically ill and she died a few 
     days later.
       The state fined the company $3,001 after alleging that it 
     had failed to provide the care these residents needed. 
     Sunrise's Mr. Cox says the facility erred in not training the 
     volunteer to safeguard all packages in the mailroom. Since 
     Mr. Cox was interviewed, the surviving husband has filed suit 
     against Sunrise.


                          Fighting an Eviction

       Some of Sunrise's rivals have also drawn regulatory 
     scrutiny. For instance, Michigan regulators cited Alterra 
     last summer for accepting a number of patients the state 
     deemed too sick for assisted living.
       Alterra helped two of the residents find an attorney, and 
     the residents then sued the state of Michigan, alleging that 
     their eviction would violate federal laws barring housing 
     discrimination against the disabled. The suit is pending, but 
     in the meantime, Michigan has enacted a law saying regulators 
     must let a resident stay in an assisted-living facility if 
     the resident, the family, the resident's doctor and the 
     facility all agree the person can remain. It isn't clear 
     whether the new law applies to the two who sued.
       In the Atlanta area, Sunrise's efforts to recruit and 
     accommodate increasingly infirm residents finally paid off. 
     Its facilities there now have occupancy and operating-profit 
     rates in line with company averages. Meanwhile, marketing and 
     pricing efforts continue. To interest younger seniors in its 
     facilities, Sunrise is testing a new service, Sunrise At 
     Home, which sends aides and nurses to private residences. It 
     is also casting about for new ways to cater to the oldest and 
     frailest of Americans. Internally, the initiative is dubbed 
     ``Plus Plus Plus.''





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