Assisted living and other residential care facilities are looking more and more like nursing homes. About one in four provide skilled nursing services, between half and two-thirds offer case management, and– at least among larger facilities—two-thirds offer their residents physical or occupational therapy. More than one-third of residents will make an emergency visit to the hospital and more than one in four will be admitted to a hospital during the course of a year.

Almost 42 percent of facility residents have some form of dementia, and about one-third of them are being cared for either in specialty homes or in designated units of larger institutions. One-third have heart disease and half suffer from three or more chronic illnesses. These are just some of the findings from a recent study by the federal National Center for Health Statistics.

For consumers, this trend significantly expands their care options beyond moving to a nursing facility or staying at home. But it also means they need to be very careful in their choices: If they move into a residential care facility expecting high levels of assistance, they need to be very sure the operator is equipped to deliver that service. Wood paneling and flowers in the lobby are not enough.

Likewise, owners of care facilities need to recognize that a new generation of residents needs more assistance with activities of daily living and greater medical support. The days when assisted living facilities were run like hotels for old people are long over. However, operators must find a way to provide these additional services without slipping into the kind of medical model that consumers resist.  

Finally, Medicaid, which has been reluctant to finance stays in residential care facilities, needs to start thinking more creatively about the niche they serve. And government needs to find a regulatory middle ground that allows these facilities to operate creatively while protecting increasingly vulnerable residents.    

The new NCHS study looked at a wide range of facilities, from small homes with 4-10 beds to large 100+ bed institutions. In 2010, about 31,100 facilities owned about 972,000 licensed beds. However, they served only about 733,000 residents, for a vacancy rate of about 25 percent.

Until recently, these care homes have been largely financed by individuals paying out of pocket. But the recent expansion of Medicaid home and community based waiver programs is changing that mix. The study found that about 20 percent of residents are receiving Medicaid assistance for their long-term care services (but not for room and board).

About half of the care homes have 10 residents or less and only about 2,100, or 7 percent, have more than 100 beds. However, almost a third of all assisted living residents live in those big facilities. Residential homes are overwhelmingly for-profit (about 82 percent) and about four in ten are run by large chains.

With average fees running about half that of nursing facilities and with an environment that is often more attractive to seniors (and to their adult children), residential care facilities are become a more popular choice for consumers. But as their population of sicker residents in need of more assistance grows, operators must find ways to adjust their models of care. And consumers must learn what services these facilities can, and cannot, offer.