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

Black Swan: EMP

Chaos From Above

An electromagnetic pulse event triggered by the detonation of a low-yield nuclear device in Earth’s atmosphere triggers economic and societal chaos.
By: | July 27, 2017 • 9 min read

Scenario

The vessel that seeks to undo America arrives in the teeth of a storm.

The 4,000-ton Indonesian freighter Pandawas Viper sails towards California in December 2017. It is shepherded toward North America by a fierce Pacific winter storm, a so-called “Pineapple Express,” boasting 15-foot waves and winds topping 70 mph.

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Normally, Pandawas Viper carries cargo containers. This time she harbors a much more potent payload.

Unbeknownst to U.S. defense and intelligence officials, the Viper carries a single nuclear weapon, loaded onto a naval surface-to-air missile, or SAM, concealed below deck.

The warhead has an involved history. It was smuggled out of Kyrgyzstan in 1997, eventually finding its way into the hands of Islamic militants in Indonesia that are loosely affiliated with ISIS.

Even for these ambitious and murderous militants, outfitting a freighter with a nuclear device in secrecy and equipping it to sail to North America in the hopes of firing its deadly payload is quite an undertaking.

Close to $2 million in bribes and other considerations are paid out to ensure that the Pandawas Viper sets sail for America unmolested, her cargo a secret held by less than two dozen extremist Islamic soldiers.

The storm is a perfect cover.

Officials along the West Coast busy themselves tracking the storm, doing what they think is the right thing by warning residents about flooding and landslides, and securing ports against storm-related damage.

No one gives a second thought to the freighter flying Indonesian colors making its way toward the Port of Long Beach, as it apparently should be.

It’s only at two in the morning on Sunday, December 22, that an alert Port of San Diego administrator charged with monitoring ocean-going cargo traffic sees something that causes him to do a double take.

GPS tracking information indicates to him that the Pandawas Viper is not heading to Long Beach, as indicated on its digital shipping logs, but is veering toward Baja, Calif.

Were it to keep its present course, it would arrive at Tijuana, Mexico.

The port administrator dutifully notifies the U.S. Coast Guard.

“Indonesian freighter Pandawas Viper off course, possibly storm-related navigational difficulties,” he emails on a secure digital communication channel operated by the port and the Coast Guard.

“Monitor and alert as necessary,” his message, including the ship’s current coordinates, concludes.

In turn, a communications officer in the Coast Guard’s Alameda, Calif. offices dutifully alerts members of the Coast Guard’s Pacific basin security team. She’s done her job but she’s about an hour late.

At 3:15 am Pacific time on December 22, the deck on the Pandawas Viper opens and the naval surface-to-air missile, operated remotely by a militant operative in Jakarta, is let loose.

It’s headed not for Los Angeles or San Diego, but rather Earth’s atmosphere, where it detonates about 50 miles above the surface.

There it interacts with the planet’s atmosphere, ionosphere and magnetic field to produce an electromagnetic pulse, or EMP, which radiates down to Earth, creating additional electric or ground-induced currents.

The operative’s aim is perfect. With a charge of hundreds and in some cases thousands of volts, the GICs cause severe physical damage to all unprotected electronics and transformers. Microchips operate in the range of 1.5 to 5 volts and thus are obliterated by the billions.

As a result, the current created by the blast knocks out 70 percent of the nation’s grid. What began as an overhead flash of light plunges much of the nation into darkness.

The first indication for most people that there is a problem is that their trusty cellphones can do no more than perform calculations, tell them the time or play their favorite tunes.

As minutes turn to hours, however, people realize that they’ve got much bigger concerns on their hands. Critical infrastructure for transportation and communications ceases. Telecommunication breakdowns mean that fire and police services are unreachable.

For the alone, the elderly and the otherwise vulnerable, panic sets in quickly.

Hospital administrators feverishly calculate how long their emergency power supplies can last.

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Supermarkets and other retailers anticipating one of their biggest shopping days of the year on that Monday, December 23, instead wake up to cold homes and chilling prospects.

Grocery stores with their electricity cut off are unable to open and product losses begin to mount. Banks don’t open. Cash machines are inoperable.

In the colder parts of the United States, the race to stay warm is on.  Within a day’s time in some poorer neighborhoods, furniture is broken up and ignited for kindling.

As a result, fires break out, fires that in many cases will not draw a response from firefighting crews due to the communication breakdown.

As days of interruption turn into weeks and months, starvation, rioting and disease take many.

Say good-bye to most of the commercial property/casualty insurance companies that you know. The resulting chaos adds up to more than $1 trillion in economic losses. Property, liability, credit, marine, space and aviation insurers fail in droves.

Assume widespread catastrophic transformer damage, long-term blackouts, lengthy restoration times and chronic shortages. It will take four to 10 years for a full recovery.

The crew which launched the naval surface-to-air missile that resulted in all of this chaos makes a clean getaway. All seven that were aboard the Pandawas Viper make their way to Ensenada, Mexico, about 85 miles south of San Diego via high-speed hovercraft.

Those that bankrolled this deadly trip were Muslim extremists. But this boat crew knows no religion other than gold.

Well-paid by their suppliers, they enjoy several rounds of the finest tequila Ensenada can offer, and a few other diversions, before slipping away to Chile, never to be brought to justice.

Observations

This outcome does not spring from the realm of fiction.

In May, 1999, during the NATO bombing of the former Yugoslavia, high-ranking Russian officials meeting with a U.S. delegation to discuss the Balkans conflict raised the notion of an EMP attack that would paralyze the United States.

That’s according to a report of a commission to assess the threat to the United States from an EMP attack, which was submitted to the U.S. Congress in 2004. But Russia is not alone in this threat or in this capability.

Wes Dupont, vice president and general counsel, Allied World Assurance Company

North Korea also has the capability and the desire, according to experts, and there is speculation that recent rocket launches by that country are dress rehearsals to detonate a nuclear device in our atmosphere and carry out an EMP attack on the United States.

The first defense against such an attack is our missile defense. But some experts believe this country is ill-equipped to defend against this sort of scenario.

“In terms of risk mitigation, if an event like this happens, then that means the best risk mitigation we have has already failed, which would be our military defense systems, because the terrorists have already launched their weapon, and it’s already exploded,” said Wes Dupont, a vice president and general counsel with the Allied World Assurance Company.

The U.S power grid is relatively unprotected against EMP blasts, Dupont said.

And a nuclear blast is the worst that can occur. There isn’t much mitigation that’s been done because many methods are unproven, and it’s expensive, he added.

Lloyd’s and others have studied coronal mass ejections, solar superstorms that would produce a magnetic field that could enter our atmosphere and wipe out our grid.  Scientists believe that an EMP attack would carry a force far greater than any coronal mass ejection that has ever been measured.

An extended blackout, with some facilities taking years to return to full functionality, is a scenario that no society on earth is ready for.

“Traditional scenarios only assume blackouts for a few days and losses seem to be moderate …” wrote executives with Allianz in a 2011 paper outlining risk management options for power blackout risks.

“If an event like this happens, then that means the best risk mitigation we have has already failed … because the terrorists have already launched their weapon, and it’s already exploded.” — Wes Dupont, vice president and general counsel, Allied World Assurance Company

“But if we are considering longer-lasting blackouts, which are most likely from space weather or coordinated cyber or terrorist attacks, the impacts to our society and economy might be significant,” the Allianz executives wrote.

“Critical infrastructure such as communication and transport would be hampered,” the Allianz executives wrote.

“The heating and water supply would stop, and production processes and trading would cease. Emergency services like fire, police or ambulance could not be called due to the breakdown of the telecommunications systems. Hospitals would only be able to work as long as the emergency power supply is supplied with fuel. Financial trading, cash machines and supermarkets in turn would have to close down, which would ultimately cause a catastrophic scenario,” according to Allianz.

It would cost tens of billions to harden utility towers in this country so that they wouldn’t be rendered inoperable by ground-induced currents. That may seem like a lot of money, but it’s really not when we think about the trillion dollars or more in damages that could result from an EMP attack, not to mention the loss of life.

Allianz estimates that when a blackout is underway, financial trading institutions, for example, suffer losses of more than $6 million an hour; telecommunications companies lose about $30,000 per minute, according to the Allianz analysis.

Insurers, of course, would be buffeted should a rogue actor pull off this attack.

Lou Gritzo, vice president and manager of research, FM Global

“Depending on the industries and the locations that are affected, it could really change the marketplace, insurers and reinsurers as well,” said Lou Gritzo, a vice president and manager of research at FM Global.

Gritzo said key practices to defend against this type of event are analyzing supply chains to establish geographically diverse supplier options and having back-up systems for vital operations.

The EMP commission of 2004 argued that the U.S. needs to be vigilant and punish with extreme prejudice rogue entities that are endeavoring to obtain the kind of weapon that could be used in an attack like this.

It also argued that we need to protect our critical infrastructure, carry out research to better understand the effects of such an attack, and create a systematic recovery plan. Understanding the condition of critical infrastructure in the wake of an attack and being able to communicate it will be key, the commission argued.

The commission pointed to a blackout in the Midwest in 2003, in which key system operators did not have an alarm system and had little information on the changing condition of their assets as the blackout unfolded.

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The commission’s point is that we have the resources to defend against this scenario. But we must focus on the gravity of the threat and employ those resources.

Our interconnected society and the steady increase in technology investment only magnify this risk on a weekly basis.

“Our vulnerability is increasing daily as our use of and dependence on electronics continues to grow,” the EMP commission members wrote back in 2004.

But “correction is feasible and well within the nation’s means and resources to accomplish,” the commission study authors wrote. &

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