Assisted Living Facilities

Industry data about Assisted Living Facilities

There are approximately 390 assisted living facilitiesand approximately 160 known protected tenancy programs/institutions; of them, approximately 190 are licensed by the Ministry of Labor and Welfare as required. Most are located in central Israel (about 40%), Jerusalem and Haifa (about 30%) and the rest are disbursed throughout Israel. The number of beds in the industry is estimated at approximately 29,600, of them about 9% of beds for independent elders, 33% for feeble elderly, 47% for nursing elders, and 10% for the mentally ill. The protected tenancy plan includes approximately 18,000 housing units, meaning approximately 3 units for every 100 Jewish elders (the Arab community does not utilize these programs.)

Market Characteristics of Assisted Living Facilities

At the end of 2003, there were approximately 670 thousand residents aged 65 and up, composing 10% of the country's population. This number has doubled over the last 50 years. Israeli society is "aging", although the rate is slow in comparison to Western European countries, where elders over 65 comprise more than 15% of the population.1 The percentage of people aged 65 and up in the Israeli population is much higher than in Asia and Latin America (6% average) and Africa (3.2% average).

Types of protected tenancy homes:

Government protected tenancy- built and funded by the government through the Ministry of Construction and Housing and the Ministry of Labor and Welfare.
Commercial protected housing- offers basic and peripheral services at cost or cost plus price, and intended for wealthier populations.

Customers: Defining the Target Market and its Size, Market segmenting

Approximately 670 thousand of Israel's residents are over 65; almost 10% of the population. Of them, 45% are over the age of 75. Most people relocating to institute housing in Israel are 75 and over. The growth rate for elderly population is estimated at approximately 2% per year. This increase stems mainly from a general boost in life span, which is reflected in the increase of people over the age of 75. In addition, the number of disabled elderly persons is also growing. It is expected that in the year 2020 the number of people over the age of 65 will be greater than one million, and 200 thousand by 2025. They will then comprise 13% of the total population.
Independents - Do not receive any support aside from elderly pension.
Feeble - elders needing partial aid in their day-to-day operations, in addition to medical supervision.
Nursing - elders requiring aid in most basic activities.
Mentally ill patients suffering from a cognitive decrease (memory, judgment, and orientation) to such a degree that they need assistance for all daily activities.
Rehabilitative nursing patients, suffering from a significant decrease in operation due to a medical issue such as a broken hipbone, stroke, infectious disease, or post-operation.
Housing individuals in assisted living facilities requires a unique match for each of these groups.
The National Insurance institute of Israel compensates the elderly population according to the following definitions:

Old age pensions is provided to the elderly- men over 65 and women over 60 who have accumulated prerogatives due to their employment (women are entitled as housewives as well).

Nursing insurance pension is also provided to men over 65 and women over 60 who live at home and need aid in their daily activities (dressing, washing, eating and moving about the house), as well as to those needing supervision in the home for their own safety and the safety of those around them. Nursing insurance pension can be substituted for aid in payment for a protected tenancy facility.

Competition

The assisted living facility and protected tenancy industry is comprised of the following:

Public assisted living facilities and geriatric hospitals- they have approximately 15,000 beds in approximately 80 institutions.

Large/luxurious assisted living facilities- companies running up to six centers, each of them having 100-300 independent housing units and special care units for the needy.

Independent assisted living facilities: running institutions with 100-300 beds, intended mainly for independent elderly people.

Small assisted living: facilities with 30-100 beds.

Nursing homes: facilities focusing on caring for nursing or mentally ill customers, requiring constant supervision and medical care.

Kibbutz facilities- as part of the kibbutz's coping with the aging community, there is a tendency of establishing assisted living facilities in kibbutzim, offering beds to external clientele.

Marketing resources

Companies running assisted living facilities and protected tenancy homes focus their marketing resources according to their respective target markets:
Luxurious assisted living facilities use all types of media advertisment, including radio, television, internet, print, direct marketing and aggressive marketing in wealthy communities.
Public assisted living facilities and nursing homes advertise their services among employees of public services and welfare local authorities.

Small assisted living facilities base their marketing mainly on "word of mouth" information, reputation, yellow pages, and classified sections in national and local newspapers.
Most assisted living facilities also have an internet site detailing their activities and services.

Entry Barriers:

In Israel, all assisted living facilities are required to obtain a license and undergo an inspection process by the Ministry of Labor and Welfare and the Ministry of Health.
The Ministry of Labor and Welfare inspects only assisted living facilities intended for independent and feeble elders, as stated in housing inspection regulations (conditions of housing and caring for independent and feeble elderly at assisted living facilities), 2001.
The assessment is conducted by inspectors, social workers, and certified nurses and is inclusive to all activities taking place at the home.

Human Resources:

The number of staff members ranges between 30 to 300 workers in an array of positions, including doctors, social workers, nurses, matron, physical therapists, occupational therapists, cultural workers, caretakers, administration staff, technical staff, and night/weekend crews. Some of these positions are filled by part time staff, others on an as-needed basis.

Financing:

Required Investment
The investment required in construction and equipment is high.

Industry revenue and profitability

Revenue at assisted living facilities is composed of three factors:

Admission fee/security deposit- various contracts with various combinations exist that determine the rate of admission fee/security deposit. Usually the security deposit is returned without linkage or interest minus some amounts reflected in the length of the elder's stay. In some cases, and as demand grows, the rate of admission fee or deposit will be higher (sometimes up to the person's apartment's worth) and conditions may be tougher.

Monthly payment- derived from the rate of admission fee/security deposit, level of required services according to the person's condition, accommodation level, and the number of tenants to a room. The range of prices is big due to high competition, various home levels, and lack of supervision. Typical prices per month currently range from 3,000-5000 NIS at public institutions and unsupervised institutions and approximately 12,000-8000 NIS at luxurious institutions.

Income from additional services such as payment for medication, payment for nursing aids, return on payments and purchases which include phone and utility bills, social activity, etc.