Blog: The Challenges and Rewards of Operating a Retirement Residence

January 18th, 2016 two generations holding hands in retirement residence

It seems everywhere you drive in the Greater Toronto Area, you cannot help but notice the number of cranes invading our skyline. There are commercial properties and residential condominiums being constructed, but lost in the shuffle are a number of new retirement residences being constructed either as standalone properties or part of multi-purpose buildings. With the Baby Boomers generation ageing, we are seeing what some call a “seniors tsunami.”  In its report on “Ontario’s Aging Population: Challenges and Opportunities,”[1] the Ontario Trillium Foundation stated that the number of seniors aged 65 or over will more than double from 2009 to 4.2 million or about 23% of the population by 2036.

Over the last several months, I met with several people involved with diverse backgrounds and experience in what has become a growing and competitive industry. What I learned was a lot more than I could have imagined. I gained a tremendous insight, not only about the challenges, but the rewards this industry has to offer. Throughout my deliberations, one common theme was quickly evident. Each person that I interviewed displayed passion: to help the residents and their families when they have to deliberate over the decision to move into a residence, and to help make it a new beginning or new home for a resident when they do.

My article will define “retirement residence” as a type of retirement housing that is subject to both the Residential Tenancies Act (RTA) and the Retirement Homes Act (RHA) with its administrative arm, the Retirement Homes Regulatory Authority (RHRA). Under the RHA, a retirement home is a residential complex or part of a residential complex that:

  • is occupied primarily by persons who are 65 years of age or older;
  • is occupied or is intended to be occupied by at least six or more people who are not related to the operator of the home; and
  • where the operator of the home makes at least two “care services” available to the residents, either directly or indirectly.

To have a successful operation, we must begin with an understanding from several perspectives:

  • the operator,
  • the resident and
  • the resident’s family, who may be involved in the decision-making process;
  • Government; and
  • the public.

Let us start with a look at some of the challenges and rewards of operating a retirement residence, and then see how these two can be tied together.

Challenges: Where do I begin?

Every business faces ongoing challenges and operating a retirement residence is no different. The list provided below are some of the key issues I garnered from my discussions. Don’t be surprised if you see some similarities with your own business, as the list is not necessarily industry specific. How you address them, however, is another matter.

  • Regulation – When I hear the word regulation, the first thought that pops into my head is administration. Regardless of the industry in which you operate, we have seen an unprecedented increase in regulation in the past five years, more than in the previous twenty-five. Whether it be the Privacy Act, Canada`s Anti-Spam Legislation, Accessibilities for Ontarians with Disability Act, and the like, this additional regulation has added more administration to the day-to-day operations of businesses. Clearly, retirement residences are covered under a number of regulatory regimes: the standard rules under the RTA, the rules governing the operations of Care Homes that are special provisions under the RTA, and the RHA. For example, there is a Residents’ Bill of Rights found in the RHA that covers ten specific rights, such as the right to have lifestyle choices respected. Addressing the merits of regulation is beyond the scope of this article; suffice to say additional regulation has added to the costs of operating a residence. From a resident`s perspective, it is about the right to consumer protection and resident safety. Both have valid concerns, and the question to be posed is whether finding the right balance is feasible?
  • Construction costs – With the following factors – a lack of serviceable land, higher development charges, rapid technological changes, the period from working on rezoning to having positive cash flow – this industry has now developed into a niche area that requires the marriage of the expertise in real estate operations, and hospitality and care management. The requirement to have hospitality experience with a focus on providing additional services to residents requires skills that are beyond the traditional skill sets (see next point).
  • Aging in Place – Mark Hager [2] describes this term best. He is an aging in place thought leader and advocate. He uses the term to describe a person living in the residence of their choice, for as long as they are able. “Aging in Place” covers being able to have any services (or support) a resident may need over time and as his or her needs change. It occurs in a senior’s life where they can have the things that they need in their daily life while they maintain their quality of life. As an operator, the “three C’s”[3] – Care (services), Cost and Choice – are mandatory requirements for a resident. A retirement residence cannot be one dimensional. The last thing a senior (or his/her family) wants is to keep moving even within the same residence. Once again, finding the right balance between the kind and number of services offered versus being one dimensional, will impact on the success of the residence.
  • Education – How many seniors do you know who planned to move into a retirement residence? Not many – exactly! In many cases, it is the children or relatives playing a large part in the decision resulting from a crisis. From the operator’s perspective, he or she will have to both educate and determine in short order if the prospective resident is a good fit. In an ideal world, the family would plan in advance, addressing location and the three Cs noted above. Many seniors don’t believe they can afford a retirement residence without actually undertaking a proper comparison. There are companies, such as Elder Caring Inc. run by Audrey Miller or Care Planning run by Fred Schleich that can assist in the education process.

Rewards

  • Financial – As referenced in the RHRA 2013-2014 business plan, retirement residences are market driven and attempt to tailor their offerings to the needs and means of the consumer. It is important to protect seniors without inhibiting the growth of a healthy, financially-sustainable retirement home sector.
  • Government Intervention – A viable private sector is a solution to Government concerns about providing long-term care that would lead to more intervention than presently exists.
  • Beyond the Financial Rewards – I can think of no better way to convey the intangible rewards in operating a successful retirement residence than by sharing some of the experiences I have had working with some of my clients. A few months ago, I attended the grand opening of one such residence. I felt as though I were walking into a hotel. I could see the variety and quality of the food were more than enough to satisfy everyone’s different tastes. Each of the speakers presenting that evening conveyed their sense of accomplishment and delight in overcoming the challenges they faced during the construction of the residence. But the pièce de résistance was my tour of the premises. The new residence is a beautiful building with all the amenities that you could want. However, it was the staff`s passion that struck me the most as we discussed the various aspects of the building during the tour. I felt the choice to live in this residence would be easy. They made you feel right at home.

Operating a retirement residence is a business with many challenges that do not end when you open your doors for business. Having the right mix of business acumen and compassion are two keys for success in this industry. It is a sector that is as diverse as the residents that choose to make these residences their homes.  As more of our society lives longer and healthier lives, they are demanding and expecting a better quality of life. The “three Cs” discussed above are simply three considerations. Addressing these challenges makes the rewards even more fulfilling and finding the right balance with a touch of the fourth “C” – compassion – is how you gain a competitive edge in an industry that continues to grow!

[1] Stacey McDonald, Ontario Trillium Foundation, Ontario’s Aging Population: Challenges & Opportunities,” Toronto, Ontario Trillium Foundation, 2011.

[2] Mark Hager, Ageinplace.com

[3] Audrey Miller, “When Staying At Home Is No Longer An Option – Make Sure You Plan The Right Move,” Elder Caring Inc., www.eldercaring.ca.

 

Connect with the Author

Alan WainerAlan Wainer, CPA, CA, CPA (Illinois), Alan Wainer Professional Corporation, Partner – Audit & Advisory

Alan is a partner with Crowe Soberman. He co-leads the firm’s Succession, Retirement and Estate Planning (SuRE) and Healthcare Groups. Alan’s particular focus is working with Owners and Managers of Residential Care Facilities.

Connect with Alan at 416.963.7121 or alan.wainer@crowesoberman.com.

This article has been prepared for the general information of our clients. Specific professional advice should be obtained prior to the implementation of any suggestion contained in this article.

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