Cypress Assisted Living Blog

POSTED: July 18, 2012

Here is part two of our continued saga of long term planning.

By Anne Tergesen in the Wall Street Journal

Scaling Back Bequests
Many parents, of course, won’t exhaust their savings.  The Center on Wealth and Philanthropy at Boston College estimates that baby boomers and their offspring could inherit as much as $27 trillion over the next four decades, with the progeny of the wealthiest pocketing much of the windfall.
But there are signs that expected bequests are under pressure.  According to Boston College’s Center for Retirement Research, from June 2006 to June 2010, falling asset values reduced projected inheritances for baby boomers and estimated 13%.  Stock prices have since recovered, although house prices in most markets have not.
Even the affluent are pulling back.  Among those with $250,000 or more in investible assets, only 41% said preserving inheritances was a top concern, down from 54% in 2009, according to a Merrill Lynch survey released earlier this year.  Due in large part to a 22% decline in projected future bequests of $500,000 or more, the amount individuals expect to transfer fell by 19% from 2008 to 2009, according to Michael Hurd, director of the Center for the Study of Aging at Rand Corp., a nonprofit research organization.
Just as telling is a recent study from Northwestern Mutual Life Insurance Co. in Milwaukee.  When asked how prepared they feel to live to various ages, one in three surveyed adults age 60-plus said they didn’t feel prepared financially to live to age 85; almost one in two said the same with regard to age 95.
Suffering in Silence
Not surprisingly, many families are loath to discuss these issues.
In addition to serving as a reminder of the older generation’s mortality, a conversation about inheritance of Mom and Dad running out of money can provoke anxiety in parents.  Many are uncomfortable disclosing the details of their finances in the first place, even more so when the’re worried about disappointing their children.
Adult children, in turn, aren’t eager to ask their parents about money for fear of coming across as greedy.  Some feel guilty for thinking about their own financial needs at a time when parents could be facing steep medical or long-term-care expenses.  “Due to the new realities of longevity, adult children—who have rightfully assumed they would inherit something substantial from their parents and have lived their lives accordingly—can no longer count on that,” says Lillian Rubin, a sociologist, psychologist and author.  Adult children, she adds, “often feel guilty for even thinking about” inheritance.
Nonetheless, financial advisers say, it is important for families to talk—if only to establish realistic expectations.
Peter Bell, 59, says he and his parents “have always been very open about talking about finances.”  That frankness has helped them through some tough choices in the past few years.
Mr. Bell, the president of the National Reverse Mortgage Lenders Association in Washington, D.C., “always assumed” his father, Jerry, 87, and mother, Florence, 88 would leave a substantial inheritance.
After his parents lent his brother money several years ago, Mr. Bell says, the “decided I would get the house and everything else would be split.
But when the elder Bells decided almost two years ago to move into a continuing-care retirement community, it became apparent they would need the proceeds from the sale of their home to finance the community’s $425,000 entry fee.  Worse, because the depressed Florida real-estate market hindered their efforts to sell their home in Delray Beach, the couple had to borrow the $425,000 entry fee from their son.
“We have always considered our money as family money,” says Jerry Bell, who anticipates repaying 85% of the loan from the proceeds of the home’s recent sale.  “When the kids needed help, we were there for them.  And when we needed help, they were there for us.”
Part 3 will finish this article tomorrow.

POSTED: July 17, 2012

Here is an article my dad sent me from the Wall Street Journal.  I thought it was very insightful about our current working generation.  Plan and save for yourself is basically the gist of the article but please read on and I think everyone will glean something from it.  Here is part 1.

By Anne Tergesen in the Wall Street Journal
Baby boomers:  Get ready for a double whammy.
Four years now, there’s been a lot of talk about boomers getting tremendous windfalls as their parents pass on.  Many boomers, in fact, have been lagging behind in their savings, betting on – hoping for – big bequests, especially since many of them suffered big losses in 2008.
But for a growing number of boomers, things aren’t going according to plan.  The postwar generation is living longer—and many are spending their savings along the way.  And, of course, many of them also took a hit in 2008.
The result is that, as a group, boomers likely won’t be getting as much of an inheritance as they hoped.  Even worse, far from receiving a bequest, a growing number are tapping some of their own savings to help their cash-strapped parents make ends meet.
For families, the result is often a lot of scrambling, dashed dreams, and conflict and angst as parents and children try to come to grips with the lean new reality—and divide up a smaller pie.
“There are way too many adult children I see who are looking at Mom and Dad’s estate as their ticket to a secure retirement,” says M. Holly Isdale, and estate planner in Bryn Mawr, Pa.  “But with people living longer, much of the money is likely to be spent.”
How much longer?  Thanks to medical gains, a 65-year-old man has a 60% chance of living to age 80 and a 40% chance of reaching 85.  For women, the odds are 71% and 53%, respectively.  All of this has made the 85-and-over age bracket the fastest-growing segment of the population.  In an era of low interest rates, volatile financial markets, and rising costs for health and long-term care, finding money to cover those years isn’t always easy.
Consider the case of Nancy Becker, the co-owner of a small business in Waterbury, Conn.  Her parents, Morris and Dorothy Stein, were diligent savers, “But they didn’t imagine living well into their 90’s,” says Ms. Becker, whose father died in 2006 at 92 and whose mother died in 2011 at 97.
Ms. Becker and her two brothers inherited a house in Vermont from their father.  But they spent about $180,000 of their own money—an amount that exceeds the value of the Vermont property—to cover living expenses for their mother in the final three years of her long life.
Ms. Becker, now 63, says she certainly doesn’t begrudge her parents for outliving their savings.  The Steins built a thriving plumbing and heating business that now employs Ms. Becker and her husband, among other family members.  Still, as Ms. Becker’s in-laws enter their 90’s, she worries that “their money is running out, too.”
Financial losses can also put a dent in the older generation’s reserves.  Donald Hoeller, 86, of Glendale, Wis., says he and his wife, Bernadette, 85, had hoped to bequeath “several hundred thousand dollars” to each of their six children.  But an office complex in which the couple invested 60% of their retirement savings recently landed in foreclosure and litigation.
So, Mr. Hoeller says, “I don’t know if they will get anything.”
His daughter, Mary Hoeller, 58, says that while she never counted on an inheritance, “times are tough”—and she now has the added worry that her parents may run out of money.  A divorcee who is paying college-tuition bills for the youngest of her three children and wants to help another child with medical-school tuition, Ms. Hoeller says her income has declined substantially since 2008.
“I am very frugal,” says Ms. Hoeller, a mediator in Indianapolis.  But “who wouldn’t want an inheritance from their parents?  It would be a good thing.”
Come back and read the next part in my next blog.

POSTED: July 12, 2012

Here is the third and final part of an analysis of the ObamaCare decision.  I saw this on and thought it provided some good points of view.  Only time will tell what the real pros and cons of the Supreme Court’s decision will be.  Read on. 

If you take a look at the comments under part two, you will see I took some shots, for my article listing the losers.  It is clear this is an issue that generates a lot of heat and with good reason, it will in one way or another, impact each of us.  Even when I get taken to task (and sometimes I even deserve it) I really appreciate the dialog and will continue to allow the comments to stand.

Healthcare Delivery System Under ObamaCare

In my mind, the biggest question we need to ask is, What will the healthcare payment and delivery system look like 10 years from now?  It seems that we are headed toward one of two scenarios:

1. Health Plans for Everyone  –  I think this is the more likely of the two scenarios.  Direct payment by the government to providers will cease to be.  Rather the government will pay those dollars to health plans, who will then manage the care of the people they are responsible for.  This will mean an end to Medicare as we know it today.  Essentially what will happen is everyone will be forced into an HMO type plan,  some will function like true HMO’s and others will look more like preferred provider networks.  I also see the Medicaid system moving in the same direction.

2. Medicare For All –  There are a significant number people who would like to see the Medicare system expanded to include everyone and this would be true universal care.  There are many barriers to this, not the least of which, is a formidable insurance political lobby. Probably not in my lifetime, but it would likely lead to an even more uneven distribution of services, and delays in getting appointments, treatments and procedures as measures to control costs.

Senior Housing

I see opportunities in these areas:
1.  Skilled Nursing (SNF) Costs less than an Acute Hospital –  Under the old system, hospitals caring for patients with Medicare, received a specified lump sum payment for a particularly diagnosis.  The faster the hospital could get that patient discharged the more money they would make.  As a result, patients got discharged to skilled nursing or or other levels of care earlier than what was optimal.
This is being changed so that if a patient is readmitted within 30 days of discharge, the hospital will be penalized financially.  Hospitals will be looking to create tight relations with SNF’s that will take extraordinary steps to make sure those readmissions won’t happen.

2.  Assisted Living Costs less and Skilled and Acute Care –  Assisted living stands to be the biggest winner of all senior housing options.  Assisted living communities need to build tight relationships with hospitals.  In order to develop those relationships they will need to demonstrate they can accept these post acute patients and provide for their medical needs at a lower cost and in a much better environment.  And most importantly, keep those residents from going back to acute care in that 30 period.

Along this same line, those assisted living communities that develop relationships with senior HMO’s will tap into another source of post acute care opportunities.  The big win here is that in effect, these HMO’s are allowed to spend money that formerly could only be used for skilled nursing.  The HMO’s have a single goal, getting their members better at the lowest cost.  If your assisted living community can do that, you will win.  While many of these residents will be relatively short stay, some will convert to longer term residents.

3.  Independent Living costs less than Acute, Skilled and Assisted Living  –  The reason independent living needs to pay attention is that there will be residents who can successfully return to an independent living setting if appropriate resources are made available.  This is why the management needs to have a good rolodex of these resources and be willing to work with the residents and the resident families to access these services.

What other opportunities do you see?  What risks do you see?

POSTED: July 11, 2012

I joke with my wife about my having Alheimer’s Disease every time I forget things.  While it’s common for us to forget things as we age, how do we determine if we may be developing the early symptoms of Alzheimer’s?  I saw these symptoms on the Alzheimer’s Association website and thought they were something everyone should see.  Enjoy.

10 warning signs of Alzheimer’s

1) Memory loss that disrupts daily life:  One of the most common signs of Alzheimer’s is memory loss, especially forgetting recently learned information. Others include forgetting important dates or events; asking for the same information over and over; increasingly needing to rely on memory aides (e.g., reminder notes or electronic devices) or family members for things they used to handle on their own.

What’s a typical age-related change? Sometimes forgetting names or appointments, but remembering them later.
2) Challenges in planning or solving problem:  Some people may experience changes in their ability to develop and follow a plan or work with numbers. They may have trouble following a familiar recipe or keeping track of monthly bills. They may have difficulty concentrating and take much longer to do things than they did before.

What’s a typical age-related change?
Making occasional errors when balancing a checkbook.
3) Difficulty completing familiar tasks at home, at work or at leisure: 

People with Alzheimer’s often find it hard to complete daily tasks. Sometimes, people may have trouble driving to a familiar location, managing a budget at work or remembering the rules of a favorite game.
What’s a typical age-related change? Occasionally needing help to use the settings on a microwave or to record a television show.
4) Confusion with time or place:  People with Alzheimer’s can lose track of dates, seasons and the passage of time. They may have trouble understanding something if it is not happening immediately. Sometimes they may forget where they are or how they got there.

What’s a typical age-related change? Getting confused about the day of the week but figuring it out later.
5) Trouble understanding visual images and spatial relationships: 

For some people, having vision problems is a sign of Alzheimer’s. They may have difficulty reading, judging distance and determining color or contrast, which may cause problems with driving.

What’s a typical age-related change?
Vision changes related to cataracts.
6) New problems with words in speaking or writing: 

People with Alzheimer’s may have trouble following or joining a conversation. They may stop in the middle of a conversation and have no idea how to continue or they may repeat themselves. They may struggle with vocabulary, have problems finding the right word or call things by the wrong name (e.g., calling a “watch” a “hand-clock”).
What’s a typical age-related change? Sometimes having trouble finding the right word.
7) Misplacing things and losing the ability to retrace steps: 

A person with Alzheimer’s disease may put things in unusual places. They may lose things and be unable to go back over their steps to find them again. Sometimes, they may accuse others of stealing. This may occur more frequently over time.
What’s a typical age-related change? Misplacing things from time to time and retracing steps to find them.
8) Decreased or poor judgment:  People with Alzheimer’s may experience changes in judgment or decision-making. For example, they may use poor judgment when dealing with money, giving large amounts to telemarketers. They may pay less attention to grooming or keeping themselves clean.

What’s a typical age-related change? Making a bad decision once in a while.
9) Withdrawal from work or social activities:  A person with Alzheimer’s may start to remove themselves from hobbies, social activities, work projects or sports. They may have trouble keeping up with a favorite sports team or remembering how to complete a favorite hobby. They may also avoid being social because of the changes they have experienced.

What’s a typical age-related change? Sometimes feeling weary of work, family and social obligations.
10) Changes in mood and personality:  The mood and personalities of people with Alzheimer’s can change. They can become confused, suspicious, depressed, fearful or anxious. They may be easily upset at home, at work, with friends or in places where they are out of their comfort zone.

What’s a typical age-related change? Developing very specific ways of doing things and becoming irritable when a routine is disrupted.

POSTED: July 2, 2012

This is the second part of three on Obama Care.  I am using it from the Senior Housing Forum.  While I believe in a free market system and I am dessappointed that the law was upheld, I know there should be some changes.  Fraud is rampant and with the increased healthcare rolls, I see more targets for fraud.  There should also be some way that medicines are kept at an affordable price.  I am currently taking one pill that costs about $60 per pill.  That is about $1,800 per month.  Now the drug company can charge whatever it wants but it is easy to see how many people choose between medicine and food.  I truley hope Obama Care isn’t as bad as I anticipate it will be.  Read below for some more info.

On Friday I talked about the winners, in light of the Supreme Court ruling.  Inevitably if there are winners, there are losers.  Thursday will close out the series talking about the specific implications for senior housing.

The Losers

1.  Taxpayers –  It has been said that, in effect, this is the single biggest tax increase ever implemented by the Federal government.  Hardest hit will clearly be the middle class.  Initially, it is clear the Affordable Care Act will add to the tax burden.  What is less clear is what savings, if any, will be achieved, when they will be realized and if they will save money for the middle class as promised.

2.  Drug Companies –  In the short term, the drug companies have created an agreement with the government that, in effect, protects their bloated profits.  The jury is still out on how long it will take for that agreement to crumble, but it will.  For consumers, this is a mixed bag.  Over time it will eliminate derivative drugs that are expensive but provide only marginal real benefits to patients.  On the other hand, it will likely dampen the innovation of new drugs that could radically improve life.

3.  Durable Medical Equipment Providers (DME’s) –  Several times each year a story on Medicare fraud splashes into the news.  Probably seven out of ten times, the fraud, involves DME providers.  One government study indicates more than 10% of all DME dollars paid out are for fraudulent claims. We can look forward to ObamaCare coming down hard on  DME.  If all they do is reduce fraud that is great, but look for real claims to also be denied and delayed.

4. Physicians –  There is ongoing pressure to reduce payments to physicians.  They are an easy target as the  general impression is that they are wealthy and by extension, overpaid.  There is no doubt that some specialities can still make practitioners wealthy, but in truth, being a physician generally means a very nice living but it is no longer a guaranteed path to wealth.

5.  Consumers –  A few weeks ago I had a significant allergy attack.  After a day of trying to push through it, I was nonfunctional.  First thing in the morning I called my primary physician and had an appointment for later that same day.  I got to my appointment on time and maybe 3 minutes after paying my co-pay I was ushered into the physician exam room and 3 minutes later the physician was there to see me.  This happens because there is competition and significant reimbursement.  I do not expect it to stay this good. There are already so many stories coming out of Canada and England of individuals having to wait weeks for a physician appointment for even serious (but not immediately life threatening)  problems and long waits when the appointment day finally arrives.

Too Early to Tell

1.  Skilled Nursing –  There is no doubt that skilled nursing communities must continue to fight to protect their funding.  Both Medicaid and Medicare dollars are at risk.  I predict that within 10 years every single recipient of government healthcare dollars will receive their benefits through an HMO like entity.  This will likely benefit top notch facilities and make life more difficult for the rest.
It is my view that, in reality, Skilled Nursing faces essentially the same problems with or without ObamaCare.

2.  Home Health –  This one is really difficult to predict.  It seems clear that Home Health actually provides the most bang for the buck and it feeds the instinctual desire people have to age in place.  The flip side is that, home is a pretty easy target.  Recipients do not speak as a single voice and providers are almost as equally fragmented.

3.  Hospice –  Ditto Home Health.

POSTED: July 1, 2012

I saw a blog in Senior Housing Forum that I thought was interesting and on target.  While I personally think we do not have a healthcare crisis I do believe we have a health insurance crisis.  We need to put our heads together to find a way for those with no insurance and/or pre-existing conditions can purchase affordable, quality insurance.  If anyone figures this out, please let me know.  Enjoy.

This is part one of a three part series, that will be published today (Friday), then on Monday and Tuesday of next week.

First Things First:  No matter what the other side says, life will go on!

–  If you are a fan and see this as a victory, you will end up thinking it was not good enough and did not go far enough.

–  If you are depressed, believing that, in one fell swoop, the Supreme Court eviscerated the constitution (an opinion I am somewhat sympathetic to); This is a great country and a few bad decisions will not crush the nation.  Even the Supreme Court has reversed itself over time.  Life will go on and America will continue to be a great country and a great place to live.

It will, ultimately, take years to fully understand the impact on senior housing but here is my initial analysis for whatever it’s worth.


1.  Hospitals –  At least in the short-term, hospitals are the first or second biggest winners.  They will go from having many non paying patients to having very few indigents overnight.  No one seems to be suggesting that payment rates to hospitals should be modified to reflect this new standard.
That being said, over the long term, their prospects may not be so bright.  They consume lots of dollars and so will become a natural target for cuts.

2.  Many Uninsured –  In truth this is the one bright spot in the whole sorry mess.  There are a bunch of people who did not have insurance who will have coverage. No matter how you slice it, this is a good thing for them and for society. Clearly people with no access to basic health-care can end up becoming very ill and requiring hugely expensive indigent care.

3.  Government Workers – The plan will require more government workers; those who administer and regulate the system and the IRS who will enforce the plan.

4.  Fraudsters –  Today the government healthcare plans are a favorite playground for fraudsters.  This plan will increase the size of that playground. It will increase the opportunities to steal the people’s money.

5.  Some Employers –  It appears the health plan will in effect provide incentives for employers to eliminate private health plans in favor the government “healthcare exchanges”.

6.  Health Plans –  At least in the short term they will be big winners.  The current thinking seems to be that it is more efficient to hand big buckets of money to private health plans and make them responsible for the healthcare of corresponding groups of people.

Recapping the Winners

While there are, in my view, at least six groups that will see huge benefits from the health plan, this does not mean it is good for society as a whole. Still to come, the losers and how it will impact senior housing.

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