With the growing $34 billion market for assisted living and memory care, there’s been an influx of real estate speculators seeking to capitalize on an aging population.
But a regulatory review and interviews with over 50 industry insiders exposed the dark reality in some of these facilities: medication lapses, unnoticed falls and bed sores, abuse, and seniors wandering away undetected, The Washington Post reported.
Industry leaders blame a nationwide labor shortage that was exacerbated by the pandemic, but data and interviews suggest that low wages are the real cause. Assisted-living aides, responsible for critical tasks like bathing and medication, earn an average of $15 per hour nationally, raising concerns about the sustainability and quality of care.
The surge in real estate investment in senior housing, aided by a 2008 law allowing tax-free status for certain investors, has led to a scenario where facilities are owned by entities pressured to produce profits for shareholders. Investors typically gain rental income without direct exposure to the challenges of caring for a fragile elderly population.
Real estate investment in senior housing has become an attractive venture, boasting nearly 9 percent average returns, double that of offices and hotels.
The corporate structure incentivizes REIT investors to replace management teams failing to meet profit expectations, according to the Post.
One example is Lavender Farms, an upscale assisted-living facility in the Boulder suburbs, which marketed itself as providing “24/7 on-site care.”
But internal documents and interviews revealed that the facility’s operating company struggled to keep elderly residents safe due to staffing issues. The push to address these concerns collided with the agenda of Welltower, a $40 billion investment firm that owned Lavender Farms.
Cost-cutting measures by corporate investors like Welltower left facilities unable to meet residents’ basic needs. Reports of neglect, missing individuals, and avoidable deaths have surged since Balfour sold its properties to Welltower in 2014.
— Ted Glanzer
