Rising Challenger Takes On Elder-Care System

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The Wall Street Journal

Rising Challenger Takes On Elder-Care System
By LUCETTE LAGNADO
June 24, 2008; Page A1

PRINCETON, N.J. -- In the spring of 2001, Bill Thomas, dressed in his usual sweat shirt and Birkenstock sandals, entered the buttoned-down halls of the Robert Wood Johnson Foundation. His message: Nursing homes need to be taken out of business. "It's time to turn out the lights," he declared. Cautious but intrigued, foundation executives handed Dr. Thomas a modest $300,000 grant several months later. Now the country's fourth-largest philanthropy is throwing its considerable weight behind the 48-year-old physician's vision of "Green Houses," an eight-year-old movement to replace large nursing homes with small, homelike facilities for 10 to 12 residents. The foundation is hoping that through its support, Green Houses will soon be erected in all 50 states, up from the 41 Green Houses now in 10 states. "We want to transform a broken system of care," says Jane Isaacs Lowe, who oversees the foundation's "Vulnerable Populations portfolio." "I don't want to be in a wheelchair in a hallway when I am 85."

The foundation's undertaking represents the most ambitious effort to date to turn a nice idea into a serious challenger to the nation's system of 16,000 nursing homes. To its proponents, Green Houses are nothing less than a revolution that could overthrow what they see as the rigid, impersonal, at times degrading life the elderly can experience at large institutions... Green Houses face a host of hurdles. Many Green House builders say they've encountered a thicket of elder-care regulations. It takes enormous capital to build new homes from scratch. Plus, experts say the concept faces stiff resistance from many parts of the existing nursing-home system. Traditional nursing homes, many of which care for 100 to 200 patients, are predicated on economies of scale -- the larger the home, the cheaper it is to care for each individual resident.

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The $122 billion nursing-home industry arose from the 1965 birth of Medicare and Medicaid, the government health-insurance programs for the elderly and poor that provide billions in government reimbursements. Made up of both not-for-profit and for-profit companies, the industry still generates most of its revenue from Medicaid and Medicare. Now, many nursing homes are aging, and the industry has suffered through so many scandals involving patient care that many elderly shun the thought of entering such institutions. A 2003 survey by the AARP, an advocacy group for older Americans, found that just 1% of Americans over 50 with a disability wanted to move to a nursing home. In recent years there have been attempts to create more popular alternatives, with mixed results. Assisted living, an ambitious effort begun in the 1980s to allow seniors to live independently in apartments and other group settings, has proved very popular but it "serves the needs of people who are relatively wealthy and relatively healthy," Dr. Thomas says. (

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One big source of resistance is the dizzying array of federal and state regulations that are mostly geared to protecting residents in large institutions. There are "life safety" rules intended to keep residents safe and prevent them from dying in fires and other disasters; "physical plant" standards that deal with building codes; health-care rules that guarantee a modicum of privacy -- requiring, for example, a curtain between beds. Infection-control regulations are meant to stop transmission of disease, while quality-of-life codes try to ensure residents receive adequate recreation and activities. As a result, the groups with the know-how and resources to build Green Houses are often nursing-home operators themselves. Some nursing-home executives argue such rules can make it difficult, if not impossible, to create the homelike environment that is a Green House's hallmark. Generally licensed as nursing homes, Green Houses are designed to provide a full range of care to the very sick.

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Perhaps the most significant hurdle to Green Houses is the perception that they are too expensive. "The biggest criticism I hear is, 'How do you make it work financially?'" says Mr. Minnix, whose association represents not-for-profit nursing homes as well as assisted-living and retirement communities... Others disagree. Robert Jenkens, who is spearheading the Green House project at NCB Capital for Robert Wood Johnson, says that some not-for-profits and at least one for-profit believe the model to be financially viable. St. John's Lutheran Ministries in Billings, Mont., operates both a nursing home and some Green Houses. In an internal review, officials found that it cost $192 a day to care for a resident in the traditional nursing home versus $150 a day in their Green Houses. While building costs were high, Vice President David Trost says the Green House model also has cost savings. "We no longer have to take a resident 200 feet to the dining room -- we only have to take them 20 feet, and that is significant," he says.


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