Retirement & Financial Planning Report

Assisted living arrangements are emerging as a desirable and less expensive alternative to nursing homes even for people with significant personal-care needs, creating a demand for the marketplace to meet, according to a study by two Harvard professors.

It notes that the official industry definition of assisted living is a residential setting that provides or coordinates personal services, 24-hour supervision and assistance, activities, and health related services. Within that definition there is a wide range of arrangements and services available, it adds, saying that “facilities have come to serve a more disabled resident population with an increasingly complex array of services, potentially implying that assisted living could be a more viable nursing home alternative than it initially was.”


“Growth in assisted living has been driven in large part by consumer preference. People who need assistance in performing everyday activities such as bathing, eating, or dressing prefer to receive supportive services in the least institutional and most homelike setting possible. A general population survey found that people would prefer to be cared for in an assisted living facility over a nursing home if they needed twenty-hour care, by a margin of six to one,” says the study.

In addition, a study by a financial services company put the average annual cost of assisted living care at $34,000, compared to $74,000 per year for a semiprivate room in a nursing home.

The report added, however, that there is less regulation of such living arrangements than there is of nursing homes, and there is “limited and uneven” information on the quality of care. Even data on the numbers of such facilities are scarce. It estimated that there are about 11,000 such facilities nationwide with more than 800,000 units, a unit being a living space for either a single person or a couple.

It said the supply rose sharply in the ‘90s but has moderated since, in part due to challenges getting financing.