LTC Bullet: LTC Summit Conference in Boston

Monday November 26, 2001


***Important Reminder: Check out the Center’s new "LTC Week in Review" feature published every Monday afternoon in our website donor-only zone. Titles in today’s edition include: "Older Americans Month," "Clues for Marketing to the Boomers," and "One More Reason to Own LTCI." Details on how to access the donor only zone are available at See you there!***

(Fair warning: the following Bullet is much longer than most. You may want to set it aside or print it out for later reading. But, do read it! This LTC Bullet is packed with perspective on why our LTC service delivery and financing system is in crisis.)

The second in a series of "LTC Summit Conferences" sponsored by the Center for Long-Term Care Financing convened in Boston, Massachusetts on October 15, 2001. As promised in our LTC Bullet: Triathlon Conclusions and Recommendations (8/24/01), the following is a report on that event.

The Center's LTC Summit Conferences are invitation-only, CEO- or executive-level, small-group, three-hour intensive discussion sessions. They bring together America's leading financiers, providers and insurers of long-term care to explore problems and solutions related to long-term care service delivery and financing. The need for a series of top-level meetings to discuss industry-cross-cutting issues became clear from the Center for Long-Term Care Financing's path-breaking study "The LTC Triathlon: Long-Term Care's Race for Survival." (Read the Triathlon report online at

Attendees at the Boston LTC Summit Conference by industry sector were:

PROVIDERS: Paul Lanzikos of Sunrise Assisted Living; Stephen Guillard of Harborside Healthcare; Jack MacDonald of Beverly Enterprises; Dan Mosca of Advocare; Margaret Wylde of ProMatura Group; William Thomas of Eden Alternative; Steven Chies of Benedictine Health Systems; and Laurence Lane of Genesis Health Ventures

INSURERS: Loida Abraham of John Hancock; Claude Thau of Thau, Inc.; Pam Delaney of MassMutual; Don Charsky of LifePlans; Jim Glickman of Life Care Assurance; Larry Feldman of CFK Life Plans Inc.; Michael Bialek of GEFA; and Eileen Tell of The LTC Group

FINANCIERS: Stephen Press of Health Care Property Investors; William B. Sims of Herbert J. Sims; Steve Insoft of Nationwide Health Properties, Inc.; Ellen Kantrowitz of Continental Wingate Capital; Katheryn Sweeney of AEW Capital Management; Dean Graham of Capital Source; and Alan Feo of Capital Source (observer)

Dr. Charles "Chip" Roadman, M.D., President of the American Health Care Association gave Summit attendees a thoughtful yet rousing welcome and call to action. He invited them to visit AHCA's 52nd Annual Convention and Exposition, which was held coincident with the LTC Summit Conference.

Following the welcomes, self-introductions and sector overviews provided by experts on nursing home care (Stephen Guillard, President of Harborside Healthcare), assisted living (Paul Lanzikos of Sunrise Assisted Living), home care (Laurence Lane of Genesis Health Ventures), long-term care insurance (Don Charsky, President of LifePlans), and debt and equity financing of long-term care (William B. Sims, President of Herbert J. Sims), the Boston Summit attendees engaged in a structured discussion of some highly provocative questions. Three examples of the queries posed:

TO LTC PROVIDERS: "We hear so often that the problem with LTC service delivery is just mismanagement driven by greed. How do you respond to that kind of criticism?"

TO LTC INSURERS: "LTC insurance sounds like such a great idea, given the demographics and costs of long-term care. Why hasn't it taken off faster?"

TO LTC FINANCIERS: "The ability of Medicare and Medicaid to pay adequately for LTC has been declining for many years. Yet, LTC financiers seem to like government funding best and ignore private funding sources like home equity conversion and private LTC insurance. Why?"

To see the complete Boston LTC Summit Conference agenda including all 23 challenging questions addressed by the attendees, visit the Center's donor-only website zone. All you have to do is qualify as a CLTCF donor and obtain your password and user name. If you do not already have a password and user name to access our donor-only website zone, please review the criteria for access at Not yet a supporter? It’s easy. You can donate online via a secure server connection at or send your tax-deductible contribution to the Center for LTC Financing at 11418 NE 19th St., Bellevue, WA 98004.



Here are a few highlights in paraphrased quotes of the Boston LTC Summit Conference: (We promised not to cite speakers by name, but only by industry sector, in order to encourage complete openness and frankness.)

CLTCF: "This is a time in our country to raise our defenses against attacks from the outside, but it is also a good time to lower our defenses among each other. We should try to understand the challenges our colleagues in long-term care face and begin to work together in a more unified way."



"We have a nickel-ante, non-system for LTC in America compared to what we'll need in the future. Our problems will be orders of magnitude worse when the boomers retire. Our fractured, Ponzi-scheme funding system has led people to think that government is the insurer of LTC."

"We have an inverted pyramid of funding of LTC, too few paying for too many. Providers and payors are caught in a crossfire between boomer/parent expectations and funding realities. The fundamental importance of personal responsibility to maximize quality of care has been lost."

"Let’s dream about and build a better long-term care system so that when the huge problem hits, the funding is in place. Otherwise, we’ll wake up with a huge problem and no funding to solve it."

"We've spawned a group of vultures teaching people how to avoid asset liquidation."

"We as providers cannot solve the problem by ourselves. It has got to be the providers, the insurers and the financiers that come together and say this is a system that needs to be fixed . . . Yes we have different stock-holders, yes we have different drivers, yes we have different constraints, yes we're for profit or not-for-profit, but if we let those wedges divide us we will get to 2011 when the boomers come along and then we will say 'Oh my God' but it will be too late."

"Nursing-home length of stay (LOS) has collapsed from over 3 years to about 9 months with a median LOS of less than 40 days. Today, 85% of my patients come from the hospital and 80% leave walking. The hospital gets over $1100/day, but Medicare pays me in the low $300’s. Worse yet, private pay averages $170, but Medicaid pays only $130. So, my Medicare residents are higher acuity and shorter-stay; my low-acuity, long-stay private payers have migrated to assisted living; and Medicaid pays less than the cost of care."

"It is almost impossible to define the economic model for long-term care. That is why you've seen so many bankruptcies, because the industry has always sat on the very threshold of tight margins, very difficult funding processes, so that the least little problem could topple the industry over. That's what happened with the implementation of the Balanced Budget Act of 1997 (prospective payment system.)"

"The most complex problem facing the industry today is the tort challenge. Costs for liability insurance are increasing at over 150% per year. This issue is rippling across the whole country."

"Nursing homes are going down for the count; it’s over for them. You should cross off nursing homes as a care option in all LTC insurance policies and say 'We don't pay for it.' My interest in LTC insurance is whether it is a vehicle to build an alternative approach to long-term care. Assisted living facilities are starting to make some of the same mistakes as nursing homes. It breaks my heart to see it."

"Unlike the more regulated parts of chronic long-term care, assisted living is very much a private-pay market. You have to satisfy the consumers, both the older people and particularly the adult family. If you don't, they'll be telling you with their feet and their movement what they think of your operation."

"Most of our providers are just trying to keep their nose above water. They don't want to talk about insurance or anything else other than how am I going to make my payroll this month, pay my mortgage, keep the lights on. They are focused on survival. It's an attitude that permeates this industry."

"LTC insurance represents a minimum number of patient days. It’s not a viable product for us. We've worked at it and trained our business staff how to bill for it. We've gone to great expense to focus our marketing people on it. We've gone that extra mile, but it's just not there. It's not there because your product does not work. Medicare works. We bill Medicare and it pays."

"Our product has been defined by the government and the provider has been approved by the government. Consumer choice has not been in existence. The same thing is true on the home health side. That's why people are so concerned about the government coming in and paying for assisted living. That's not what the average consumer wants. That's what your paid advocate wants. But that's not what the family member or the patients themselves want. We've got to go back to who the consumer is what that consumer wants."

"There are no more dollars. Any ideas about more federal or state dollars, it's not going to happen. It's got to be the private insurance side. The challenge to the insurance side is to expand products to meet a range of needs."

"Every study ever conducted whether GAO, OIG, private or otherwise has concluded that the price of providing home health care is the highest, most inefficient cost that you have in the entire spectrum of the health care industry. We all love it. We think it’s great. It’s like everything else in life. We want it but nobody wants to pay the bill. And that's why home health care has run into the problems it has. It started as a program and became an entitlement. It started having compound annual growth rates at the 20% to 25% level. You cannot sustain that."

"The problem with the LTC industry is that we have a product that people need, that people want and that people are very satisfied with, but that no one on the planet wants to pay for."



"Our industry is isolationist. We haven't been involved with financiers or providers heretofore. The product that we offer allows us to operate on our own little island."

"Long-term care is still sold and not bought. I differentiate that from a lot of coverage that is mandated. To have a driver's license, I have to have auto insurance. So insurance companies don't have such a difficult time convincing me I need auto insurance as they would to convince me I need LTC insurance."

"Nursing home owners and administrators walk by our booth at provider conferences as if we didn't exist. They don't even want to talk about LTC insurance. They have no idea what it is. You can't even initiate a conversation with this group of people."

"I would see the opportunity for the providers to hook up with the insurers in partnerships, sometimes with agents, sometimes with their own employees serving that function. But work in actually selling the product and working out arrangements with the carriers. You have some of the best access to that type of customer (i.e., friends, relatives, loved ones of current residents)."

"We want to be able to provide more for less. Average premiums today are nearly double what they were 10 years ago. Ten years ago they were too expensive; now they are still too expensive. The more you try to encompass more comprehensive care, the more expensive they get. The more you try to make them into annuity-like vehicles, the more you don't get the positive effects of forfeitures by people who never use the coverage to the pool of money available to those who do."

"I know the financiers are not interested in LTC insurance, because we have not shown them the money. The financiers and caregivers have not seen the LTC insurance because they have only been good products for about 12 years so there have not been many people on claim. But if they are interested in long-term profitability, maybe they need to hand on a second tiller which is encouraging people to privately fund for care that is being publicly funded now. We should be talking about what kinds of partnerships we can form to encourage the sale and purchase of private LTC insurance."



"Most of the interest in financing these days is for Continuing Care Retirement Communities (CCRCs). There is little interest in nursing homes and less interest in assisted living these days."

"Skyrocketing liability insurance premiums scare the bejesus out of us and have scotched some deals."

"One example of a CCRC that uses LTC insurance is the 100% refundable entrance fee, no Medicaid in the nursing home. It is either Medicare, private pay or LTC insurance. That is a model that works very well. People are encouraged to get LTC insurance because the private pay nursing home rates are so high that even wealthy people need some help."

"The crisis we keep talking about is a silent crisis: Medicare and Medicaid imploding forty years from now when the boomers grow up. I think it’s a very hard sell to have the individual solve the problem of the many. Whether I pay privately for nursing home care or the state bails me out, I get the same care. What's my incentive to get LTC insurance?"

"Our investors have a time horizon of 3 to 10 years, so we're not looking at how we're going to pay for LTC 30 or 40 years out. We're looking at how we can capitalize on a demographic reality that, if we can get a little ahead of it, we can make significant returns for our investors."

"We underwrite market areas with a preponderance of elderly people with upper-middle-class income and assets who can pay out of their own pockets for independent and assisted living. My investors don't like government financed businesses (nursing homes).  One penny for every dollar just won't attract them. Nevertheless, there is a train wreck out there coming. In 2011, there will be another investor out there with a 10-year horizon and senior housing better be an attractive investment to draw that investor in."

"LTC insurance has not been relevant to us. Where it might be relevant is for people moving into independent apartments or a campus who would know they'd have to pay out of their own pockets when they move into the assisted living or nursing home."



Providers said: "Participants showed more interest in solving individual sector problems than in identifying a common solution for problems affecting all sectors." "The conference was worth my time because of the discussion from multiple stakeholder perspectives."

Insurers said: "I saw first hand why LTC insurance is not on the radar screens of providers and financiers and that they do not understand how LTCI works." "The confusion, half truths, and misinformation flowing among the groups is amazing."

Financiers said: "It gave me time to think about things I never had a chance to think about before." "It promotes a sharing of ideas from compatible industries that would not normally be available in industry literature."

The most common criticism of the meeting was insufficient time:

"Three hours for a topic of this magnitude and importance is not enough."

"Should be a full-day conference with a cocktail reception the evening before to encourage interaction."

"More time, more focus, more structure, fewer attendees."