Richard
I don't know if I missed the state that your for-profit large national corporation is located in. If so I am sorry. I would refer you first of all to your individual contracts to see what is included therein as to resident rights and providers obligations. Additionally there are items contained throughout your individual contract as to the Provider's obligations to the Residents for which you pay your MCF (Monthly Care Fee-rent).
I live in a for profit LLC located in CA. The Health and Safety state statutes in CA contain the Residents' Bill of Rights in H&S Code Sections 1771.7. as well as all the statutory language needed for the interpretation and enforcement of Resident CCRC Contracts by the Department of Social Services, (DSS) the licensing arm for CA. Our provider has incorporated that complete listing of the Resident Bill of Rights in our individual resident contracts.
In CA we also have Residential Care for the Elderly (RCFE) Statutes that governs the assisted, memory care and skilled nursing facilities. As a CCRC our units also come under these RCFE Statutes as residents can "age in place" for many conditions that require Care in their independent units that are also licensed as assisted units with RCFE requirements .
I believe that your individual Resident Contracts along with the Licensing Arm in your State as well as any and all of the State Statutes is also a great source of information to ensure you are asking some of the correct questions and headed in a productive direction.
Listed below are 10 specific questions taken from the Forum yesterday to be utilized and information was queried from the NaCCRA Website regarding the financial and management health of a CCRC:
Part 1: The Money (Financial Stability & Contracts)
1. "What are the specific differences between Type A (Life Care), Type B (Modified), and Type C (Fee-for-Service) CCRC contracts, and which carries the most financial risk for the resident?"
- Why ask this: The contract type dictates whether your monthly fees will skyrocket if you move from independent living to skilled nursing. Type A creates a predictable flat fee; Type C exposes you to market rates for healthcare.
2. "What are the industry benchmarks for 'Days Cash on Hand' and 'Debt Service Coverage Ratio' for a healthy CCRC, and how do I calculate them from an audited financial statement?"
- Why ask this: These are the two "vital signs" of a CCRC. If a community has less than 150 days of cash on hand or a debt ratio below 1.2x, they may struggle to pay bills or refund entrance fees.
3. "Explain the different CCRC entrance fee refund structures (e.g., 90% refundable vs. declining balance) and the tax implications for each regarding the medical expense deduction."
- Why ask this: Many people don't realize that a portion of the entrance fee and monthly fee may be tax-deductible as a prepaid medical expense, but this varies wildly by contract structure.
4. "What questions should I ask a CCRC management team regarding their 'actuarial surplus' or 'actuarial deficit,' and how does this differ from a standard accounting profit/loss?"
- Why ask this: Standard financial statements show past performance. An actuarial report predicts future viability—specifically, whether the community has enough money to care for current residents for the rest of their lives.
5. "What is a reasonable historical average for annual monthly fee increases in CCRCs over the last 5 years, and what red flags should I look for in a community’s fee history?"
- Why ask this: You need to know if the community artificially suppresses fees to attract new residents, only to hit them with massive hikes (5%+) later to cover budget gaps.
Part 2: The Management (Governance & Operations)
6. "What is CARF accreditation for CCRCs, and what does it signal about a community’s financial and management quality compared to non-accredited communities?"
- Why ask this: CARF (Commission on Accreditation of Rehabilitation Facilities) is the "Gold Standard." It is a voluntary, rigorous inspection. If a community isn't accredited, you need to ask why.
7. "What specific questions should I ask about a non-profit CCRC's Board of Directors regarding resident voting rights and board composition?"
- Why ask this: In a non-profit, the Board holds the power. You want to know if the board includes actual residents (who have skin in the game) or just local business people with no personal stake in the community's quality.
8. "How does a CCRC's occupancy rate affect its financial stability, and at what percentage (e.g., below 85% or 90%) should a potential resident be concerned?"
- Why ask this: High occupancy keeps fees stable. If occupancy drops, the community loses revenue, which often leads to cutbacks in dining, maintenance, and staffing.
9. "What inquiries should I make regarding a CCRC's 'Capital Replacement Reserve' study to ensure the buildings won't deteriorate?"
- Why ask this: You don't want to move into a community that looks nice now but has no money set aside to replace the roof or elevators in 10 years. This question reveals if they are planning for the long term.
10. "What happens to a resident's contract and entrance fee if a CCRC declares bankruptcy or is acquired by a for-profit entity?"
- Why ask this: This is the "nuclear scenario." You need to know if your entrance fee is held in an escrow account protected from creditors, or if it’s considered unsecured debt that could be lost.
Wishing you much success.