Adapted from Conclusion to DisElderly Conduct: The Flawed Business of Assisted Living and Hospice (New Village Press, 2025)
In the spring of 2007, more than six years before I became a daily visitor to assisted living facilities, two colleagues, whom I’d known since our days as graduate students in the UW-Madison School of Business, asked me to assist in researching, writing, and editing a white paper on institutional investing in seniors housing. My co-editors had already submitted a proposal to the Real Estate Research Institute (RERI) illuminating the project’s objectives:
The elderly housing sector has expanded in response to changing demographics and the increased needs of an ageing population. The demand for real estate product that is designed with this elderly end user in mind is growing and risk/return profiles of these investments are shifting. Despite the incredible and expected growth, there has been little focused research on this alternative asset class from the perspective of an institutional investor. Research results will assist the investment community as they begin to invest in this unique real estate [classification].
Looking back, I realize how unaware I was of key physical and financial characteristics of assisted living facilities— either as a student of real estate investment or an adult child/potential consumer.
In 2009, the publication year of our work, the housing economy fell victim to the Great Recession that followed the financial crisis of 2007–2008 and the U.S. subprime mortgage crisis of 2007–2009. Investment resources were limited, and bank assets were collapsing—or threatening to collapse—until the financial sector was bailed out by the U.S. government.
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Within the seniors housing universe, the specific question was whether risks due to care, management, and service provision were too great to incentivize needed investments in assisted living and memory care—compared to the projected rewards of more familiar investments in independent living and age restricted (over- fifty-five) apartments.
In 2008, when my co-authors and I had engaged in our research, beds in Wisconsin nursing homes still outnumbered those in assisted living facilities. Over the next decade, as the demographic wave started to churn, skilled nursing homes became mired in increased costs and regulations—and less reliable Medicaid reimbursements—and assisted living broke through as a more attractive investment. As one officer of an association representing both nursing homes and assisted living facilities said, “It’s incredibly expensive to run a nursing facility these days.”
By the time my mother moved to her sixth assisted living facility, in March 2018, there was a proliferation of over one hundred assisted living options in Dane County and many more in the development pipeline. Countywide, only eighteen skilled nursing facilities remained, and additional closures or conversions to assisted living were being discussed.
Investment capital had found its way to assisted living—the segment of the long-term care sector that offers attractive, marketable activities; where financial risk (perceived as onerous in skilled nursing homes) is mitigated by the absence of federal oversight and relatively few state regulations; and where labor cost containment can be achieved by hiring Certified Nursing Assistants (CNAs) instead of licensed nurses, in many areas.
In April 2018, as my mother lay dying in a Wisconsin assisted living facility, a coalition of health care organizations reported that the state’s shortage of long-term care personnel continued to deepen—even after the Wisconsin Assisted Living Association (WALA) had issued a warning two years before.
Attributing the crisis to caregivers leaving jobs for higher pay elsewhere and retirements of licensed practical nurses (LPNs) and registered nurses (RNs), the study reported that one-fifth of
providers were experiencing staff vacancy rates of at least 30 percent. “84% of the time providers rely on overtime, double shifts, and other financial strategies to fill open hours—expensive options that can lead to caregiver burnout.”
For four and a half years, I experienced an adult child’s worst nightmares when I waited for help, performed difficult tasks—like transferring my exhausted mother into bed—or wandered anxiously through empty assisted living facility hallways, looking for caregivers.
Not quite two years after my mother’s death, a worldwide pandemic forced assisted living facilities to expand their role beyond conventional safety precautions, minimal health care, and social activities. The virus was more devastating for the elderly than for their children.
The seniors housing industry is bottom line-oriented, and the industry was caught unprepared. Going forward, investment in the long-term care industry will have to address previously unforeseen problems and estimate the economic fallout of ever greater risks. Consumers’ prices for long-term care will rise, and prices for the consistent quality care that should have been provided all along will rise even more. This story line does not end well.
Over the last few months, I’ve advanced from engaging in discussions on seniors housing needs to attempting to spark a public policy dialogue. Now, we need a national discourse on assisted living facilities that will address everything from post-COVID-19 room configuration to caregiver supply, both state and federal oversight, affordability, and industry consolidation. And, yes, we need to address the deleterious effects of private equity. The farther the corporate decision-makers are from our seniors housing communities and their inhabitants, the more unlikely we will be to achieve a consistent assisted living mission of compassionate care for the elderly.
Our obligation is to work together to create and advance a care plan that will honor the defenseless and protect our most vulnerable. This is a call for action, a call to the people who have the ability and responsibility to make changes and regulate a critical industry. We want and need safe, affordable housing for our aging friends and family members—and for ourselves.
Judy Karofsky was one of Wisconsin’s first women mayors. During her term of office in the city of Middleton, she established a now-thriving senior center.
