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A Growing Alternative for Seniors : Assisted Living Offers Home Away From Nursing Homes

May 31, 1996|BARBARA MARSH | TIMES STAFF WRITER

COSTA MESA — Two years ago, Ken Corum and his wife, Melissa, a Mission Viejo couple in their 30s, were juggling two jobs, caring for their two tots and scurrying regularly to Long Beach to visit Ken's feeble grandmother.

Unsuccessful back surgery had left Helen Corum frail, dependent on a wheelchair for getting around, and unable to live alone in her Long Beach home. The couple resolved the situation by moving her to a retirement home less than two miles from their residence.

"We visit once a week, sometimes more," Melissa Corum says. "I can take her to the store or the doctor. She is close to her great-grandkids.

"It's a tremendous burden off of us."

Helen Corum, 81, now rents a room at Villa del Sol, a two-story Spanish-style building that resembles a small hotel and overlooks a golf course. It's one of a growing number of facilities that several companies have built to accommodate senior citizens like Corum who need help with daily living but don't require around-the-clock care provided by nursing homes.

Villa del Sol's operator, Costa Mesa-based ARV Assisted Living Inc., is buying or building facilities like this across the country on the belief that rising numbers of the elderly will seek such accommodations as a lower-cost alternative to a nursing home.

"In five years, we anticipate having three times the number of facilities we have now," says Gary L. Davidson, ARV's chairman, who gained fame in the 1970s as a founder of several professional sports leagues. The company operates 37 facilities, mostly in California, and has 13 more under development around the country.

ARV is one of several companies that have gone public in the last 18 months to finance expansions plans in the "assisted living" market, but some major corporations also are in the field. Hospitality and food service giant Marriott International Inc., for example, recently expanded its assisted living operations by investing $600 million to buy the Forum Group, which operates a nationwide chain of these facilities and other retirement centers for seniors.

Marriott's ambitious expansion in the area can be traced largely to demographics. "The number of people over age 85 is expected to grow 42% by the year 2005," says Paul Johnson, executive vice president of the company's senior living services division.

But there are risks. Mark Banta, an analyst at Salomon Brothers, notes that while demographic trends are fueling the industry's growth, "there is the potential for overbuilding."

Although the flurry of stock offerings, favorable analysts' reports and demographics on the graying of America recently have whipped up enthusiasm for Wall Street investments in assisted living outfits, none of the newly public companies is making much money, if any. The problem, note analysts, is that it takes a while before newly developed facilities become occupied and cash flow turns positive.

ARV, for example, is expected to post its first quarterly profit--about $300,000--on revenue of about $11.5 million in the three-month period ended March 31.

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There's also the possibility that the industry's rapid expansion may spur government regulators to step up their scrutiny of the industry. Elizabeth Clemmer, manager of consumer policy research at the American Assn. of Retired Persons, notes that state regulators and consumer advocates are concerned about quality of care as the industry expands.

"This is an industry that's full of entrepreneurs, full of developers, many of whom have shareholders [to satisfy]," she says. She questions whether their facilities "will remain good places to live when they have to focus on what the shareholder wants."

ARV periodically has been cited by the Department of Social Services, which inspects residential facilities for senior citizens.

Last year, ARV's Villa del Obispo in San Juan Capistrano paid a $150 penalty for failing to supervise residents who tend to wander. An inspector reported that the facility called the Sheriff's Department several times to report that residents had wandered off.

ARV's Acacia Villa, in Fullerton, was cited for having a resident with a medical problem that required more care than the facility's license allows.

ARV officials say the company took immediate steps to respond to inspectors' concerns, and that all of the company's facilities are licensed. They also note that ARV can make money enough to satisfy investors only if it can maintain quality accommodations and high occupancy levels.

Various operators define the concept of assisted living differently, though it generally entails a variety of services offered to seniors, depending on need.

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ARV charges an average of about $1,500 a month for basic services, which include room rental, maid service, three meals a day, use of common areas, transportation and staff-run activities, such as book clubs, bingo games and parties.

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