On Their Own--With a Little Help : Seniors Find Assisted-Living Centers a Lower-Cost Option

Two years ago, Ken Corum and his wife, Melissa, a Mission Viejo couple in their 30s, were juggling two jobs, caring for their two tots and scurrying regularly to Long Beach to visit Ken’s feeble grandmother.

Unsuccessful back surgery had left Helen Corum frail, dependent on a wheelchair for getting around and unable to live alone in her Long Beach home. The couple resolved the problem by moving her to a retirement home less than two miles from their residence.

“We visit once a week, sometimes more,” Melissa Corum said. “I can take her to the store or the doctor. She is close to her great-grandkids.

“It’s a tremendous burden off of us.”

Helen Corum, 81, now rents a room at Villa del Sol, a two-story Spanish-style building that resembles a small hotel and overlooks a golf course. It’s one of a growing number of facilities that several companies have built to accommodate senior citizens like Corum who need help with daily living but don’t require the around-the-clock care nursing homes provide.

Villa del Sol’s operator, Costa Mesa-based ARV Assisted Living Inc., is buying or building facilities like this across the country in the belief that rising numbers of the elderly will seek such accommodations as a lower-cost alternative to a nursing home.

“In five years, we anticipate having three times the number of facilities we have now,” said Gary L. Davidson, ARV’s chairman, who gamed fame in the 1970s as a founder of several professional sports leagues. The company operates 37 facilities, mostly in California, and has 13 more under development around the country.

ARV is among a handful of companies that have gone public in the last 18 months to finance expansion plans in the “assisted-living” market, but some major corporations are also in the field. Hospitality and food service giant Marriott International Inc., for example, recently expanded its assisted-living operations by investing $600 million to buy the Forum Group, which operates a nationwide chain of these facilities and other retirement centers for seniors.

Marriott’s ambitious expansion in the area can be traced largely to demographics. “The number of people over age 85 is expected to grow 42% by the year 2005,” said Paul Johnson, executive vice president of the company’s senior living services division.

But there are risks. Mark Banta, an analyst at Salomon Bros., notes that while demographic trends are fueling the industry’s growth, “there is the potential for overbuilding.”

Although the flurry of stock offerings, favorable analysts’ reports and demographics on the graying of America recently have whipped up enthusiasm for Wall Street investments in assisted-living outfits, none of the newly public companies is making much money, if any.

ARV, for example, is expected to post its first quarterly profit--about $300,000--on revenue of about $11.5 million for the three-month period ended March 31.

There’s also the possibility that the industry’s rapid expansion may spur government regulators to step up their scrutiny of it. Elizabeth Clemmer, manager of consumer policy research at the American Assn. of Retired Persons, notes that state regulators and consumer advocates are concerned about quality of care as the industry expands.

ARV periodically has been cited by the Department of Social Services, which inspects residential facilities for senior citizens. Last year, ARV’s Villa del Obispo in San Juan Capistrano paid a $150 penalty for failing to supervise residents who tend to wander. An inspector reported that the facility called the sheriff’s office several times to report that residents had wandered off.

ARV executives say the company took immediate steps to respond to inspectors’ concerns and that all of the company’s facilities are licensed.

Various operators define the concept of assisted living differently, though it generally entails a variety of services offered to seniors, depending on their need.

ARV charges an average of about $1,500 a month for basic services, which include room rental, maid service, three meals a day, use of common areas, transportation and staff-run activities, such as book clubs, bingo games and parties.

Additional services, which can add up to $1,000 more a month, range from assistance with medications, bathing, dressing and getting to the common dining area, to intensive care for those with incontinence or other problems that require around-the-clock help.

During a recent interview at Villa del Sol, Helen Corum rolled her wheelchair from her room onto her private patio overlooking the golf course below.

“Here’s where I spend probably three-fourths of my time,” she said. “I sit out here and read my newspaper and work my crossword puzzles and watch the birds and water my flowers--a big job for someone in a wheelchair.”

Corum has undergone physical therapy and can walk short distances now, but she still needs help getting around. A resident drops by to escort her to lunch on the first floor.

“The only complaint I have is the food,” Corum said. “I haven’t eaten any vegetables since I got here because they’re cooked too much for me.” (That same day, resident Dolly Walker, 94, said the vegetables are undercooked.)

Davidson, ARV’s chairman, admits it’s not easy to run such places. “The job involves attention to details. You’re dealing with a very, very finicky clientele who have a lot of time on their hands,” he said.

Davidson, an attorney, had founded the former American Basketball and World Hockey associations and World Football League before turning his attention to senior housing investments in the late 1970s. When John Booty, an acquaintance from the Balboa Bay Club, approached Davidson with a proposal to help finance a retirement home in Placentia, Davidson suggested they develop a chain of facilities.

They established ARV. By the time the company went public last year, it was operating 31 assisted-living facilities, with more than 3,500 units, in 10 states, including California.

Still, the company found that it had to tighten up its accounting procedures to satisfy Wall Street.

On accountants’ advice, the company quit booking revenue for management fees that ARV received for partially completed construction projects. The company began recording revenue only after facilities had opened and achieved stable occupancy levels, among other things.

As word of the accounting change spread, analysts lowered their estimates of company revenue for the quarter ended in September. The stock then took a beating, falling from $15.25 on Oct. 26 to $10 a month later. The stock now has recouped those losses and then some. It closed Thursday at $19.75 per share in Nasdaq trading.

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America’s Aging Population

The demand for senior care facilities is expected to increase as the elderly make up a larger proportion of the total population. Yearly totals in millions:

*--*

% of total % of total Age 1994 population 2000* population 70-74 8.7 26.4 9.0 25.4 75-79 6.6 19.8 7.5 21.3 80-84 4.4 13.1 4.9 14.0 85 and older 3.5 10.6 4.3 12.3

*--*

* Projection

ARV Assisted Living at a Glance

* Headquarters: Costa Mesa

* Business: Senior residential facilities

* Chairman: Gary L. Davidson

* Employees: 1,375

* Facilities: 37, with plans to add 13 more

Sources: U.S. ElderCare Referral Agency, “Statistical Abstract of the United States, 1995,” U.S. Department of Commerce, Bloomberg Business News

Researched by JANICE L. JONES / Los Angeles Times