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Memory Care

The Dying Light

Millions suffer from Alzheimer’s and other forms of memory loss. Memory care is a fast-growing field, but residents in memory care facilities are fragile and difficult to care for. The risks are formidable.
By: | August 31, 2016 • 10 min read

Consider first these numbers.

There are 5.2 million people in the U.S. suffering from Alzheimer’s, the chief form of dementia that is invariably fatal, usually within eight to 10 years of diagnosis.

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With age being the chief risk factor, and the baby boomer generation crossing over the age of 65 by the thousands every day, the number of people with Alzheimer’s and other forms of dementia in this country is expected to grow to between 14 million and 16 million by 2050.

Ten to 15 years ago, the sector of health care referred to as memory care was barely known. Now, those that own and manage long-term health care facilities say it is the fastest growing segment in their industry.

“It’s off the charts,” is how Tim Goux, the founder and CEO of CareRise, a New Orleans-based post-acute-care risk management company, described the growth in the construction of memory care wings and stand-alone facilities.

Frank Russo, senior vice president, risk and legal affairs, Silverado Senior Living

Frank Russo, senior vice president, risk and legal affairs, Silverado Senior Living

“The need for quality memory care communities is unprecedented,” said Frank Russo, senior vice president, risk and legal affairs at Silverado Senior Living, an Irvine, Calif.-based company that devotes itself exclusively to the care of patients with Alzheimer’s and other forms of dementia.

Lancaster Pollard, a privately held investment banking firm based in Columbus, Ohio, conducts an annual survey of C-suite executives in the long-term health care space.

Steve Kennedy, a senior managing director with the company, said that 61 percent of those executives surveyed feel that memory care will be the fastest growing segment in the senior living space in 2016.

Kennedy said construction investment in the space ran about $4 billion in 2015 and is ticking up at about a 5 percent pace annually.

“There is enormous and continuous demand for stand- alone memory care communities and as a result we are witnessing more construction of new memory care facilities than we have ever seen before,” said Silverado’s Russo.

“It’s a disease and a condition that is expensive and unfortunately, there is no current cure,” said Kennedy. “It’s sad what’s driven the growth of this.

“But on the positive side, having a significant number of facilities that can meet the very specific and unique needs of dementia and Alzheimer’s patients is a blessing that didn’t exist five years ago.”

Bank lending has gotten tighter, but there are enough private and public sector lending sources to build facilities.

The demand, the need, is certainly there. And insurance capacity, while cautious, is ample in long-term health care.

A Formidable List of Risks

This all brings us to the risks, and the risks in memory care are formidable.

To begin with, we are talking about a patient population that is losing and will completely lose one of the most important tools a patient can have: the capacity to cooperate and take an active role in their health care and well-being.

“Let’s say you are on a liquid diet. They have a swallowing issue. But they see a cheese Danish sitting on a plate somewhere and they eat it. That compromises their airway and that can lead to death.” — Barry Weiner, managing director, health care, Aon

“Among many other medical diagnoses there is a very significant progressive morbidity,” said Patricia Hughes, a senior vice president for healthcare with OneBeacon.

“This is such an awful disease that in the final stages people will become bed-bound, needing around-the-clock care. With that immobility comes a number of other issues, pressure ulcers, etc.,” she said.

As in all senior care, the most frequent loss occurrence in memory care is falls. But the most severe risk in memory care is elopement; that patients with no memory and a penchant for wandering will escape a facility and be at the mercy of either the natural elements or predatory humans.

“When a family entrusts you with the care of their memory-impaired loved one, this also includes safety,” Russo said.

“Elopements are a very realistic threat to all memory care communities and an elopement gone wrong can be nearly indefensible from both a licensing and litigation standpoint,” he said.

“If a provider does not put in the time, effort, training and education required to handle this kind of care, insurance costs, negative PR or litigation can quickly and easily put them out of business.”

Ten years ago, according to CareRise’s Goux, assisted living in Texas and Florida was overbuilt and thus heavily marketed. That resulted in patients in need of overall skilled nursing care, including memory care, who were not always being properly screened for assisted living facilities.

Because of some improper screening, some of those assisted living facilities experienced elopements and in some cases, people lost their lives.

Tim Goux, founder and CEO, CareRise

Tim Goux, founder and CEO, CareRise

“That’s an easy courtroom judgment, and in many cases, quick settlements of a million dollars are the norm,” Goux said.

“There is a hit to reputation, to trust,” said OneBeacon’s Hughes.

“Now the other families are concerned. ‘That could happen to my mother or father.’ ”

The full list of risks in memory care is very long and for family members, it can be emotionally wrenching.

Dementia patients lose inhibitions. Patient-on-patient aggression occurs. Patient-on-caregiver violence happens.

“Residents with dementia and Alzheimer’s can be very challenging to care for if you aren’t well trained and educated on the disease process,” said Russo.

“An Alzheimer’s resident can demonstrate difficult behaviors including physical aggression [to both staff and residents]. Care staff must be able to recognize triggers for these behaviors and understand the appropriate corrective measures, which may include repositioning or redirecting. Due to these types of behaviors, typically not found in a traditional AL [assisted living] or SNF [skilled nursing facility] setting, the risk for workers’ comp claims and elder abuse can be elevated,” he said.

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The flip side of that risk is an allegation of neglect or abuse by the caregiver. It takes a special and a specially trained person to care for someone who might hit them or abuse them in some other fashion.

Sexual relationships may develop between memory care residents. Determining whether both parties consented is very difficult to do. Imagine breaking that kind of news to a daughter or son.

Medication issues, and adherence to medical treatment become much more complicated. Remember, any cooperation from the patient is out the door.

“Let’s say you are on a liquid diet. They have a swallowing issue,” said Barry Weiner, a managing director with Aon’s health care practice based in Philadelphia.

“But they see a cheese Danish sitting on a plate somewhere and they eat it,” he said. “That compromises their airway and that can lead to death.

“Every challenge is amplified in memory care,” Weiner said.

Now let’s add another layer of risk. Given all the difficulties in taking care of patients with memory care, there is now and will continue to be a shortage of qualified staff and management to care for this patient population.

“The risk is supplying the HR to meet the demand,” said Goux. “It’s not technology. It’s not bricks and mortar.

“The real issue is the lack of clinical caregiving human resources to meet demand irrespective of whether the building is 30 years old or the Ritz-Carlton.”

Burnout and turnover in geriatric care is severe. Goux estimates that 50 percent of the head nursing talent in general senior care living turns over every year.

“It is a very specialized management and personnel workplace,” said Lancaster Pollard’s Kennedy.

“… We are witnessing more construction of new memory care facilities than we have ever seen before.” — Frank Russo, senior vice president, risk and legal affairs, Silverado Senior Living

“By nature your supply of staff and management is going to be a little less fertile than those forms of care that have been around longer,” he said.

“When I go to association meetings in Wisconsin, the biggest topic is how do we recruit staff and keep staff at a competitive wage?”

“There is a tremendous amount of turnover and burnout in this industry,” said Hughes.

“One of the biggest risks to these facilities is who you hire and background checks,” she said.

“Do they have experience and if not do I provide training for this very specialized type of care?”

Setting Expectations and Other Best Practices

Given the high litigation exposure in this sector, and the emotional pain the family members of memory care patients must invariably be in, clear, documented communication and setting reasonable expectations are key risk mitigation tasks.

“Communication with authorized family members is extremely important,” said Hughes.

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Part of that means being clear with family members about the stages of degeneration their relative is going to experience. That includes being frank about such touchy subjects as elderly sexual relationships, aggressive behavior, the near-certainty of falls and the threat of elopement.

“As the experts in memory care, it is our responsibility to educate our families on the disease(s) and the progression of the disease,” Russo said.

“Seeing their loved ones in this condition can be a very scary time for families. Especially ones who have never experienced this before. We’ve experienced this thousands of times and hopefully we can provide families with the proper knowledge and understanding to better accept the difficult realities associated with it.

“When you don’t have reasonable expectations, that is when you have lawsuits,” he said.

Barry Weiner, managing director, Aon

Barry Weiner, managing director, Aon

“Many of my clients do a very good job of this,” said Aon’s Weiner. “They start having those discussions very early on.”

Having processes in place, documenting them and communicating clearly and professionally with your insurance carrier is also very important.

“A facility can protect themselves by having protocols in place and continually following them,” said Alicia Marsiglia, a vice president and allied health care product head for Hiscox.

“Even if a fall does happen, we can point to all the things they did right to try and prevent that so that negligence is harder to prove,” she said.

Marsiglia said underwriters view more kindly organizations that deliver coverage applications that are clear and very well organized.

“When I see an application that is concisely completed, that there seems to be thought behind the plans and protocols that are in place, I feel like that is always going to be a better risk,” she said.

“It’s just an offshoot of what they are doing in their risk management,” she said.

According to Silverado’s Russo, regular inspections of memory care facilities to examine and prevent the dire threat of elopements, and regular assessments of residents to gauge the progression of this dread disease are two such protocols.

There are hopes that foreign-trained nurses and aides can help ameliorate the staff and management shortage that is so acute in memory care.

But whether foreign-trained staff can come to the rescue or not, CareRise’s Goux said making the best of human resources in this area means taking the time to know what is really important to staff members. Listen to them authentically, he said, and you have a much better chance of keeping them.

“You don’t know what matters to people unless you bring them in and talk to them,” said Goux, whose family has been in the senior care business for generations.

“It needs to be a truly focused group effort within an organization to ensure that the ownership is aware of what matters to those employees,” he said.

That may mean free meals on campus; top-notch health care coverage; or making sure that if one employee group, say the nurses, has a special outing, that the nurses’ aides get their own day out.

Constant mini-focus groups (weekly) with the facility team, ensuring their needs are being met, coupled with rewarding good customer-based performance is a solid way of retaining staff within the marketplace, Goux said.

Russo said stringent testing of prospective hires is one way to avoid litigation, to in fact determine whether an individual is right for a very challenging work environment.

“We take that all the way from the initial hiring process. We even conduct an integrity test for every new associate and if they don’t pass then they don’t work for Silverado,” he said.

“We take a lot of measures to make sure that we have the best people in place that can handle the unique issues and challenges that come with Alzheimer’s and dementia care,” he said.

Those not trained in this area will probably react the wrong way when struck or otherwise abused by a resident. That could well lead to a charge of elder abuse.

“That’s a huge risk to providers when caring for this type of vulnerable and impulsive resident,” Russo said.

With this need and this type of demand, investment money is pouring into this space.

“It’s a disease and a condition that is expensive and there is no cure.” —Steve Kennedy, senior managing director, Lancaster Pollard

But OneBeacon’s Hughes said companies need to decide whether this is the right business for them.

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Does a company have the will and the ability to iron out uncertainty and create consistency in its memory care operations?

“By using an enterprise risk management approach you really decide whether this is a business you want to be in,” Hughes said.

Communicating your mission, your values, and why you will succeed is also very important in the conversation with insurance carriers, Russo said.

“I have the CEO and the CFO meet with the underwriters and explain the purpose of our organization. If we can explain what we do, that we’re not just in this business to make a profit, that we actually are in it to change lives and affect the world, that makes them more comfortable.” &

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Report: Manufacturing

More Robots Enter Into Manufacturing Industry

With more jobs utilizing technology advancements, manufacturing turns to cobots to help ease talent gaps.
By: | May 1, 2018 • 6 min read

The U.S. manufacturing industry is at a crossroads.

Faced with a shortfall of as many as two million workers between now and 2025, the sector needs to either reinvent itself by making it a more attractive career choice for college and high school graduates or face extinction. It also needs to shed its image as a dull, unfashionable place to work, where employees are stuck in dead-end repetitive jobs.

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Added to that are the multiple risks caused by the increasing use of automation, sensors and collaborative robots (cobots) in the manufacturing process, including product defects and worker injuries. That’s not to mention the increased exposure to cyber attacks as manufacturers and their facilities become more globally interconnected through the use of smart technology.

If the industry wishes to continue to move forward at its current rapid pace, then manufacturers need to work with schools, governments and the community to provide educational outreach and apprenticeship programs. They must change the perception of the industry and attract new talent. They also need to understand and to mitigate the risks presented by the increased use of technology in the manufacturing process.

“Loss of knowledge due to movement of experienced workers, negative perception of the manufacturing industry and shortages of STEM (science, technology, engineering and math) and skilled production workers are driving the talent gap,” said Ben Dollar, principal, Deloitte Consulting.

“The risks associated with this are broad and span the entire value chain — [including]  limitations to innovation, product development, meeting production goals, developing suppliers, meeting customer demand and quality.”

The Talent Gap

Manufacturing companies are rapidly expanding. With too few skilled workers coming in to fill newly created positions, the talent gap is widening. That has been exacerbated by the gradual drain of knowledge and expertise as baby boomers retire and a decline in technical education programs in public high schools.

Ben Dollar, principal, Deloitte Consulting

“Most of the millennials want to work for an Amazon, Google or Yahoo, because they seem like fun places to work and there’s a real sense of community involvement,” said Dan Holden, manager of corporate risk and insurance, Daimler Trucks North America. “In contrast, the manufacturing industry represents the ‘old school’ where your father and grandfather used to work.

“But nothing could be further from the truth: We offer almost limitless opportunities in engineering and IT, working in fields such as electric cars and autonomous driving.”

To dispel this myth, Holden said Daimler’s Educational Outreach Program assists qualified organizations that support public high school educational programs in STEM, CTE (career technical education) and skilled trades’ career development.

It also runs weeklong technology schools in its manufacturing facilities to encourage students to consider manufacturing as a vocation, he said.

“It’s all essentially a way of introducing ourselves to the younger generation and to present them with an alternative and rewarding career choice,” he said. “It also gives us the opportunity to get across the message that just because we make heavy duty equipment doesn’t mean we can’t be a fun and educational place to work.”

Rise of the Cobot

Automation undoubtedly helps manufacturers increase output and improve efficiency by streamlining production lines. But it’s fraught with its own set of risks, including technical failure, a compromised manufacturing process or worse — shutting down entire assembly lines.

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More technologically advanced machines also require more skilled workers to operate and maintain them. Their absence can in turn hinder the development of new manufacturing products and processes.

Christina Villena, vice president of risk solutions, The Hanover Insurance Group, said the main risk of using cobots is bodily injury to their human coworkers. These cobots are robots that share a physical workspace and interact with humans. To overcome the problem of potential injury, Villena said, cobots are placed in safety cages or use force-limited technology to prevent hazardous contact.

“With advancements in technology, such as the Cloud, there are going to be a host of cyber and other risks associated with them.” — David Carlson, U.S. manufacturing and automobile practice leader, Marsh

“Technology must be in place to prevent cobots from exerting excessive force against a human or exposing them to hazardous tools or chemicals,” she said. “Traditional robots operate within a safety cage to prevent dangerous contact. Failure or absence of these guards has led to injuries and even fatalities.”

The increasing use of interconnected devices and the Cloud to control and collect data from industrial control systems can also leave manufacturers exposed to hacking, said David Carlson, Marsh’s U.S. manufacturing and automobile practice leader. Given the relatively new nature of cyber as a risk, however, he said coverage is still a gray area that must be assessed further.

“With advancements in technology, such as the Cloud, there are going to be a host of cyber and other risks associated with them,” he said. “Therefore, companies need to think beyond the traditional risks, such as workers’ compensation and product liability.”

Another threat, said Bill Spiers, vice president, risk control consulting practice leader, Lockton Companies, is any malfunction of the software used to operate cobots. Then there is the machine not being able to cope with the increased workload when production is ramped up, he said.

“If your software goes wrong, it can stop the machine working or indeed the whole manufacturing process,” he said. “[Or] you might have a worker who is paid by how much they can produce in an hour who decides to turn up the dial, causing the machine to go into overdrive and malfunction.”

Potential Solutions

Spiers said risk managers need to produce a heatmap of their potential exposures in the workplace attached to the use of cobots in the manufacturing process, including safety and business interruption. This can also extend to cyber liability, he said.

“You need to understand the risk, if it’s controllable and, indeed, if it’s insurable,” he said. “By carrying out a full risk assessment, you can determine all of the relevant issues and prioritize them accordingly.”

By using collective learning to understand these issues, Joseph Mayo, president, JW Mayo Consulting, said companies can improve their safety and manufacturing processes.

“Companies need to work collaboratively as an industry to understand this new technology and the problems associated with it.” — Joseph Mayo, president, JW Mayo Consulting

“Companies need to work collaboratively as an industry to understand this new technology and the problems associated with it,” Mayo said. “They can also use detective controls to anticipate these issues and react accordingly by ensuring they have the appropriate controls and coverage in place to deal with them.”

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Manufacturing risks today extend beyond traditional coverage, like workers’ compensation, property, equipment breakdown, automobile, general liability and business interruption, to new risks, such as cyber liability.

It’s key to use a specialized broker and carrier with extensive knowledge and experience of the industry’s unique risks.

Stacie Graham, senior vice president and general manager, Liberty Mutual’s national insurance central division, said there are five key steps companies need to take to protect themselves and their employees against these risks. They include teaching them how to use the equipment properly, maintaining the same high quality of product and having a back-up location, as well as having the right contractual insurance policy language in place and plugging any potential coverage gaps.

“Risk managers need to work closely with their broker and carrier to make sure that they have the right contractual controls in place,” she said. “Secondly, they need to carry out on-site visits to make sure that they have the right safety practices and to identify the potential claims that they need to mitigate against.” &

Alex Wright is a U.K.-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at [email protected]