Spurred by the continuing shortage of skilled labor in senior living, the costs to reside in assisted living in 2018 are nearly double last year’s rate, according to the latest Cost of Care Survey from insurer Genworth Financial (NYSE: GNW).
Assisted living costs rose 6.67%, the highest spike among all care segments. AL costs increased 3.36% from 2016 to 2017. The national median cost for a one-bedroom unit in a private-pay assisted living community is now $4,000 per month, or $48,000 per year. The five-year annual growth rate for assisted living costs rose to 3%, according to the survey.
National median costs for home health aide services rose 2.33% in the past year, to $22 per hour, while the cost of homemaker services inched slightly upward to $4,004 per month.
Labor shortage, higher wages driving up costs
The main pressure point in the rising costs is a shortage of skilled labor. The low national unemployment rate, higher minimum wages, changes in overtime pay rules, and difficulty in attracting and retaining qualified workers have shifted the supply/demand dynamic in favor of workers, Genworth Senior Brand Marketing Manager Gordon Saunders told Senior Housing News.
“The businesses we reached out to for the survey said this is a recurring theme,” Saunders said. “Workers want placement, steady hours and compensation, because they have skills that are in demand.”
That lack of skilled labor has operators paying more in overtime charges, putting a tighter squeeze on already razor-thin operating margins and making it more problematic for operators to balance care quality and costs.
The costs for in-home care have remained relatively stable over the course of Genworth’s surveys. Only recently have costs risen at a higher pace, as the demand for skilled home health aides is now impacting that service area.
Seniors are waiting too long for specialized care
Another factor driving costs higher is a tendency for seniors to wait too long to receive specialized care to the point where chronic illnesses are emerging and more intensive levels of care are necessary, once they do see a physician.
“That is placing pressure on agencies, and they have to charge accordingly,” Saunders said.
There are more incidences of people living longer with Alzheimer’s disease and other forms of dementia, along with a growing number of seniors having accidents and illnesses requiring care, Saunders said.
Compounding matters, many seniors, unaware and uneducated of the expensive nature of longterm care costs, are faced with a dose of reality when they realize federal and state programs do not fully cover their costs, and they either dip into savings or rely on relatives to pay the balance. A new poll released by the Associated Press and NORC Center for Public Affairs Research at the University of Chicago revealed that only 54% of adults surveyed have a plan in place for who would provide care for them, should they no longer be able to care for themselves. Eight in 10 of those surveyed pay for costs associated with caregiving out of their own pockets.
“Longterm care expenses can be a surprise,” Saunders said. “There’s an expectation that these programs will be covered.”
Written by Chuck Sudo