Three years ago, when Bob and Sandy Curtis moved into an upscale continuing care retirement community in Port Washington, New York, he thought he had found the best possible senior care solution.
In exchange for a hefty admission fee of about $840,000, paid for by the sale of the Long Island home they had owned for nearly 50 years, they would be cared for at Harborside for the rest of their lives. From among several options, they both chose a stable monthly fee of about $6,000, with half of the admission fee refunded to their estates upon death.
“This was the final chapter,” said Mr. Curtis, 88. “That was the deal I made.”
CCRCs (Life Plan Communities) provide a high level of care on one campus, from independent living and assisted living to nursing homes and memory care. Unlike most senior housing facilities, these are primarily non-profit organizations.
About 900,000 Americans live in more than 1,900 CCRCs, according to Leading Age, which represents nonprofit senior housing providers. Some communities offer lower or higher rebates, many avoid purchase fees altogether and operate as rentals, and others are hybrids.
For the Curtises, Harborside provided a sense of security. Mr. Curtis, an industrial engineer who works as a consultant, stayed in a comfortable one-bedroom apartment in an independent living building. “It was a vibrant community,” he said. “Food. Amenities. Gym.”
Every day, he spends time with Sandy, 84, who lives in a memory care unit at a facility one elevator ride away. Curtis said staff there “treat Sandy with love and care.” “It would have been great if it could have continued.”
However, in 2023, Harborside declared bankruptcy for the third time since opening in 2010. Residents and families say its services and activities have decreased. The group of about 65 residents, most of them in their 90s, has hired a lawyer, but it remains unclear whether they will get the restitution guaranteed in their contract.
“Everyone is panicking,” Ellen Zlotnik said. Her parents also live separately in an independent living and memory care unit at Harborside. Their contract specifies a 75 percent refund. “While many people are moving, others are refusing to move.”
Data tracking senior housing bankruptcies and closures is lacking. Dee Pekrun, who leads Life Plan and Community Policy at Leading Age, said that while there have been some recent close calls, “actual bankruptcies are very rare.”
But state and local long-term care ombudsmen are increasingly reporting “problems in financially challenged facilities,” said Lori Smetanka, executive director of National Consumer Voice for Quality Long-Term Care. said.
Recent crises include the closure of Unisen Senior Living, a CCRC in Tampa, Florida. More than 100 residents were forced to leave after the company filed for bankruptcy for a second time last spring.
In Charlotte, North Carolina, in 2023, state officials stepped in to oversee a long-established CCRC called Aldersgate that had been struggling financially for years. The state approved a “corrective action plan” and Aldersgate was saved from bankruptcy. However, refund payments are still delayed for months and state oversight continues.
In Steamboat Springs, Colorado, a CCRC called Casey's Pond went into court-ordered receivership last summer. The facility will continue to operate since it was sold to a nonprofit health system, but after two municipalities, a local foundation and hundreds of area residents raised $30 million to save it. Only in Japan.
Other types of senior housing may also close. According to the American Medical Association, approximately 1,550 nursing homes closed between 2015 and mid-2024.
However, if the CCRC fails, residents and their families face not only the physical and emotional challenges of relocation, but also the potential loss of their savings.
Natalie Martin, a University of New Mexico law professor who has written about failed CCRCs, said that in a bankruptcy, residents entitled to refunds are “at the bottom of the list” of creditors seeking payment. said.
Secure lenders with collateral can collect the debt first, followed by lawyers, accountants, and employees.
Because those living in CCRCs that have been promised refunds are unsecured lenders, “residents are in a very vulnerable position, but they don't know it,” Martin said. Without reimbursement, patients may not be able to afford treatment elsewhere if they are forced to move.
At Harborside, a previously proposed sale to a national chain would have allowed the facility to remain open and residents who left or died to be reimbursed. The deal stalled last fall when state regulators refused to approve it.
“It's amazing that the Department of Health would allow something like this to happen,” said Elizabeth Aboulafia, a lawyer representing Harborside residents.
Now, Chicago investment firm Focus Healthcare Partners wants to buy Harborside and close everything except for the independent living apartments, which will be rented out. (Focus has since said it intends to apply for state licensing for assisted living and memory care, which could take several years.)
A skeptical federal bankruptcy judge questioned the proposal last month, urging the parties to reach an agreement that protects residents instead.
“We deeply empathize with our residents,” Focus co-founder Kurt Schaller said in a statement. He added: “We cannot undo the losses of others that led to this bankruptcy.”
Harborside's attorney said he could not comment during pending litigation. The next bankruptcy hearing is scheduled for February 12th.
Although the federal government regulates nursing homes within CCRCs, other living arrangements and contracts are regulated by a patchwork of state laws. Many require various disclosures or oversight of contract terms from prospective residents.
But few mandate what Martin considers critical to protecting refunds: reserves. If mandated, “facilities would be required to set aside a certain amount of money for future care when paying these high fees,” she explained.
A handful of states, including California, Florida, New Mexico, and especially New York, require reserves, but “as we've seen, that doesn't mean communities don't have those funds and file for bankruptcy.” It’s not a hindrance,” she says. Martin added in an email.
“We need to pay more attention to oversight bodies,” said Smetanka of National Consumer Voice, referring to state regulators and the federal Centers for Medicare and Medicaid Services.
“The licensing authority should bring in a forensic accountant to look at the books. They should do more auditing.”
Additional regulations will not sit well with the senior housing industry. “The more we tighten regulations and make housing more expensive, the less we can afford to house people,” said Robert Kramer, co-founder of the National Senior Housing and Care Investment Center.
He said the requirement for reserves would mean “far fewer CCRCs would be built and the net worth of the people who would move in would be in the millions of dollars.”
One solution for aged care shoppers is to choose a CCRC that operates as a rental, without high buyouts or refunds. This method reduces the threat of possible financial ruin, but increases the monthly costs as the level of care increases.
Industry insiders urge potential tenants to carefully research a facility's financial health and applicable state laws, and to have an attorney or financial advisor review the contract.
“Harbourside has been in the news for years, but it wasn't a secret,” Kramer said.
To help with this, the National Continuing Care Residents Association publishes a consumer manual. CARF International and MyLifeSite also offer consumer guidance.
But Bob Curtis and his sons, who work in finance, consulted with accountants and even met with Harborside's parent company's chief financial officer. Yet they are here.
Mr. Curtis will attend all bankruptcy court proceedings via Zoom. If he loses his refund, “Where will Sandy go?” he wonders. “How is she going to get by? How is she going to pay?”