G P a i n s Come of age By dwigHt BArtlett And dAve Bond
The potential customer base for any CCRC generally is
defined by two criteria: age and financial qualifications. The
industry has benefited from the rapid aging of the U.S. population. According to the U. S. Census Bureau, the population aged
85 and older has increased from 4. 3 million in 2000 to 6. 1 million in 2010. This aged population is projected to grow further
to 7. 3 million by 2020 and to 9. 6 million by 2030. While the total
U.S. population is projected to increase 36 percent (from 2010
levels) by 2050, the population that is 85 and older is projected
to increase 241 percent.
Depending on their fee structures, CCRCs generally target
aging individuals at the higher end of the middle class and in
the upper class. The potential CCRC market varies dramatically
by geographical area. This has resulted in expanded development of CCRCs in areas in which the potential market far
exceeds a CCRC’s need for filling its independent living units.
Most CCRCs are organized as not-for-profits and see their
primary mission as serving the elderly. As a result, many CCRCs
receive contributions from religious, fraternal, community, and
other charitable organizations. This clearly differentiates them
from more traditional insurance organizations.
The typical CCRC offers independent living, assisted living, and nursing care. Many have expanded services to include
memory enhancement therapy and other specialty care arrangements. The pricing structure for most CCRCs is a combination
of an entrance fee, which may be refundable, and subsequent
monthly service fees paid during the length of the contract. The
amount of financial security that a CCRC provides to its residents varies not only with the financial position of the CCRC,
but also with the type of life care contract.
CCRC contracts have two critical components—the transfer
of health care risk and the refundability of an entrance fee. Under
