What is that price again? Be wary of dynamic pricing practices in some Assisted Living and Memory Care

A big part of what my job has evolved into is not only finding the right place for a clients seeking Assisted or Memory Care, but providing a written report detailing, among other things, an apples-to-apples comparison of costs over time.

What’s the big deal?

If you don’t pay attention, it can cost you plenty. Thousands or even tens of thousands of dollars over time.

Unfortunately, it's not simple. There are a lot of things you need to pay attention to.

First, please understand that very few Assisted Living and Memory Care communities offer a fixed, all-inclusive price, meaning that after your loved one has had an assessment by a nurse, you are given a set monthly fee, regardless of whether their care level or number of medications increases. That set monthly fee remains stable for one year from move-in, with typically a 3-5% cost-of-living increase once a year (unless there is a drastic change in care needs, for example, after a stroke, needing much more medical oversight and care, as well as a two-person assist).

Most places offer a base rate for the room, a care level cost (with as many as five different care levels), a medication administration cost (with as many as three levels), and an incontinence cost (with as many as three levels).

It is unfortunately common that Mom is assessed at the lowest care level upon entry, budgeting for $6,000/month, only to find that two months later, the cost is now $7,500.

"Her care needs are more taxing than we thought," the nurse may say. Sometimes this is valid. Sometimes, though, it's not. Recently, one client told me her mother’s bill rose $4,000 in one month.

A second issue is that some places use "dynamic pricing." In other words, one price might be quoted at the end of a month (when sales reps need to hit quotas) and a much higher one provided at the beginning of a month or if there is suddenly less inventory. A $500 difference per month adds up to a $6,000 increase at the end of the year.

A third factor in some residential communities is how the sales or marketing staff is reimbursed. Some are paid simply a straight salary. Some are paid a salary and an additional flat rate for each new client they move in. Some, in addition to their salary, receive bonuses equal to the price contracted with the new client. In other words, they are incentivized to quote higher monthly fees. There may be residents with the same care needs, the same room type and nearly the same entrance date paying very different monthly rates.

Is this legal? I don't know. It doesn't feel ethical, especially given that I regularly see people running through a lifetime of savings in their last two to three years.

What’s the takeaway message?

Don't choose residential care in a panic. Read the fine print. Talk to other families who have loved ones there. Look at online reviews. See who the owners are. What implications might being owned by a foreign management company have for pricing practices?) Be smart.

The alternative is you might have to move mom right after she’s gotten settled in, you’ve gotten to know her caregivers and routines, and you’ve finally been able to return to the job that will pay for your own care one day. And this, as you know, has its own costs.