Assisted living centers court the family
(7/3/02 Wall Street Journal) By Ray A. Smith

ASSISTED-LIVING CENTERS increasingly are turning to kids -- adult kids, that is -- to help them fill space.

With a glut of assisted-living centers nationwide, owners and operators have been stepping up their efforts to reach adults with aging parents, who often help both financially and with the decision to move parents to such centers. It's a change from the 1990s, when owners mostly applied the build-it-and- they'll-come approach to attracting senior residents. Ads were directed at the seniors themselves, featuring warm, fuzzy brochures of happy elderly couples or groups of smiling seniors playing cards.

These days, more ads are showing happy family groups, where the senior is just one of a cast of characters. Soft-sell get-togethers at centers, called seminars or workshops by the industry, have become much more family-oriented. Dallas-based Capital Senior Living Corp. , which owns, operates and develops independent-living centers as well as assisted-living centers in 20 states, is in the process of expanding its seminars on estate planning and retirement to Indiana, North Carolina, and Ohio. They were launched last year on the West Coast, in the Southeast and in Dallas.

Some owners and operators have been pitching seminars to adult children as getting-to-know-you sessions. Brookdale Living Communities Inc. , Chicago, hosts "mother-daughter teas," and wine-and-cheese parties at some of its facilities. Chief Executive Mark J. Schulte says the company probably directed 15% of marketing dollars toward advertising to the adult children of seniors five years ago. Today, he says, that's as high as 30% at many locations and expected to keep growing.

The popularity of assisted living started rising in the early 1990s partly because it was seen as an alternative to nursing homes, offering seniors something closer to home living. They were designed to provide supportive services,

like help with daily routines such as bathing and dressing, to seniors who are unable to live on their own but don't require round-the-clock medical care. Tenants must pay for space in assisted-living centers, unlike nursing homes, which are partially government funded, so developers viewed them as more profitable. As perceived demand grew, so did construction.

But developers overestimated -- and overbuilt. Despite owners and operators offering concessions and amenities to lure residents, average occupancy rates have continued to fall, to 84% in the first quarter of 2002 from 85. 6% a year earlier, according to the National Investment Center for the Seniors Housing & Care Industries, Annapolis, Md.

There are about 531,625 assisted-living units, compared with about 433,000 in 1997, according to David S. Schless, president of the American Seniors Housing Association. Since 1997, 111,047 assisted-living units have been built. In 1998 alone, the number of units under construction peaked at 32,700. Recently, though, the number of units under construction has slowed, to 3,627 so far this year from 8,005 in 2001.

With the current glut, critics have alleged that pressures to boost occupancy have caused some operators to reduce staff, which has meant poorer service. They've also been accused of accepting frailer seniors who probably should have been in nursing homes.

Rick Stephan, of Rick Stephan & Associates, a Norristown, Pa. , senior-housing consulting firm, one of a number that have cropped up in recent years to help assisted-living owners and operators better market their properties, says the demographic of the assisted-living resident has evolved. "The assisted-living field did not have the kind of resident it has today that it did 10 or 12 years ago," he says.

As the profile of the resident has changed to people who needed more assistance, owners and operators have begun directing more of their marketing to the adult children of seniors. In a 1998 survey conducted by Margaret Wylde, president of Oxford, Miss. -based research firm ProMatura Group LLC, about 92% of 1,023 residents indicated that someone else was involved in the decision- making process. That someone else is usually a daughter or daughter-in-law, says the Assisted Living Federation of America.

Some owners and operators have begun adding telemarketing to direct-mail adult-children campaigns. "Telemarketing usually increases the response rate [of customers] three to five times that of direct mail alone," says Joseph L. Roche, president of Roche Associates Inc. , a Wilbraham, Mass. , marketing firm credited with being the first to use telemarketing in addition to direct mail in the senior-housing industry. Marriott Senior Living, a unit of Marriott International Inc. , Washington, D. C. , last year began sending life-planning themed e-mails specifically to adult children.

"When we started 10 years ago, we were targeting Mom and Dad," says Frank Ruffo, a co-founder of Emeritus Assisted Living Inc. , Seattle, which has boosted its Internet marketing efforts. "Today, we are focused on educating the adult children on options available to care for their parents. "

Sunrise Assisted Living Inc. says its strategy has been to build assisted- living centers in communities where many 45- to 60-year-olds live, on the assumption that many would have aging parents they'd want close by. "Where we locate our building is perhaps our most important marketing decision," says Thomas B. Newell, president, of the McLean, Va. , company.

David A. Smith, president of One on One, Service to Seniors, a consulting and marketing service, says one of the biggest problems is ineffective selling. "Now the market is oversaturated," says Mr. Smith, who also co-owns a full- service retirement community in St. Louis, "so the challenge is selling to people who are qualified for and would benefit from assisted living but are not yet in immediate crisis. "