Senior home gold rush

The Lodge at Aspen Village seemed like a smart-money investment as the first wave of baby boomers started to retire.

Senior housing had a growing reputation as a lucrative sector of real estate, and The Lodge in 2013 seemed perfectly positioned to capitalize on the aging population of Atlanta's suburbs.

The plan was straightforward: Open the assisted living community and fill it with residents, demonstrate a profit and then flip it in a few years for a healthy return.

Six years later, the facility that was supposed to be a successful business venture is in bankruptcy. Occupancy suffered as the financial problems dragged down the facility’s reputation and as state inspectors cited the home for one serious violation after another, including untrained, insufficient and abusive staff.

» SEARCHABLE DATABASE: Details on every home studied by the AJC

» MORE: The 'Unprotected' investigative series

“I know that it’s just a matter of time before someone’s going to die,” said Mondresia Carver, who managed the facility for several weeks this year but said she was let go after repeatedly expressing concerns. “I worry myself to death for those residents.”

That kind of story has been repeated at dozens of homes throughout Georgia, an Atlanta Journal-Constitution investigation has found.

Fancy senior care facilities like Aspen Village popped up all over the state in recent years, especially in metro Atlanta, as money poured in from across the country and even around the globe. The building boom was made possible by a gold rush mentality among investors hoping to make money on the graying of America.

But the tidal wave of retirees expected to create an overwhelming demand for private pay senior care has yet to arrive. Meanwhile, the building boom increased competition, and costs shot up.

The result: More than 20% of Georgia's assisted living communities and large personal care homes had owners or operators that faced recent financial problems, the AJC found. Those in trouble range from the largest national chains, including Brookdale Senior Living and Five Star Senior Living, to local operators, like Aspen.

It’s unclear how many more could be facing a squeeze because many are owned by private companies. But stress on metro Atlanta’s facilities is particularly pronounced. The metro area’s occupancy rate for assisted living communities hit 80.6% last quarter, one of the nation’s lowest rates and the Atlanta area’s lowest rate in the 14 years that the National Investment Center for Seniors Housing & Care (NIC) has been tracking the data.

“That would be a challenge for businesses to operate at that … occupancy rate for a very long time,” said Beth Burnham Mace, NIC’s chief economist.

Financial woes are often hidden from families checking out a facility for a loved one. Facilities desperately in need of new residents don’t bring up their profits or losses during a sales tour.

Yet financial stresses can trigger a range of issues for residents. To fill beds, homes may admit or keep residents whose health needs require a higher level of care than the facility can provide. Cash flow issues can lead to everything from short staffing and neglected maintenance to unappealing meals.

At Brookdale Sweetwater Creek in Lithia Springs, inspectors this year found the kitchen was filthy, training requirements were not met, medications weren't properly administered, and a resident was on the floor and in need of help. The director also failed to notify health officials, as required, of an outbreak that sickened at least 16 residents and failed to report 13 incidents in which residents were seriously injured.

Gardens of Fayetteville, a Five Star home, was cited this past February for having four extremely frail residents who needed more hands-on care than the home could provide. When inspectors returned weeks later, the problem was worse. This time they found five residents who should not have been there.

The AJC found a host of violations, including one linked to a death, at facilities caught up in a fraud case involving Atlanta senior care owner Christopher Brogdon. He was under financial pressure because of an order to pay jilted investors $89 million.

Concerned that financial problems can lead to care issues, a growing number of states require owners and operators to disclose finances or to notify regulators if they file for bankruptcy or default on loans.

Georgia doesn’t have such requirements.

A real estate play

Melanie McNeil, Georgia’s long-term care ombudsman, pushed lawmakers for years to authorize an “assisted living” designation. When the Legislature agreed, McNeil and other advocates expected the industry to expand to meet the demand from seniors who wanted to receive care in a more homelike setting instead of the hospital-like environment of a nursing home.

She imagined that the growth would come from local and national chains and charitable organizations whose entire focus was long-term care.

“Maybe that was naive on my part, but I don’t think we thought long-term care was going to turn into real estate investment,” she said.

Credit: Tyson Horne

Credit: Tyson Horne

But it did. Though some Georgians built homes and operate them, too, money has poured in from all sorts of investors who had little if any experience with frail seniors. Senior housing was just the next hot opportunity.

Big banks and private equity funds financed new projects, as did real estate investment trusts, also known as REITs.

International investors placed bets on senior housing too. At least five projects in Georgia got money for their projects from wealthy foreigners who wanted to get EB-5 visas — a federal program that offers permanent residency in exchange for investments in U.S. businesses. Investment companies from China, Israel and Bahrain also bought stakes in Georgia facilities, the AJC found.

» AJC INVESTIGATES: Where the money came from

» CONSUMER GUIDE: Resources for finding and evaluating a senior care facility

Charitable organizations, primarily linked with churches, do build and operate some facilities, but that’s a minority of the homes both nationally and here.

The newest care facilities tried to one-up their competitors down the street, with a focus not on the most qualified staff but on the fanciest amenities. They hoped that a bistro, giant fireplace in the lobby and in-house theater would charm new families. To pay for the costly investments and turn the profits touted to investors, they needed to fill the building.

That became a challenge with more competition, along with the high construction prices and labor costs that are part of a booming economy. Rising insurance costs, driven by an increase in legal settlements related to breakdowns in care, also hit operators. Many still make money, but the challenges mean the entire industry is less lucrative. “Owners are not making as much profit as they used to,” said Steve Monroe, partner and managing editor of The SeniorCare Investor newsletter.

Newcomers to the industry may not have calculated the complexity of providing around-the-clock care to residents who are increasingly frail and more likely to have dementia. That adds to costs, especially when the tight labor market makes it difficult to find and keep top-notch employees, said Curtis McGill, who with his wife, Lydia, were among the first in metro Atlanta to open an assisted living facility.

Credit: HYOSUB SHIN / AJC

Credit: HYOSUB SHIN / AJC

A former UGA football player who once served as a Gwinnett County commissioner, McGill said he's an oddity among senior housing owners in today's marketplace: He's a hands-on operator who walks the hallways at Ashton Senior Living, gets to know his residents and personally deals with problems that have come up.

“I come here every day, seven days a week. You’re with the staff, and you know what’s going on,” he said. “These big corporations, they have no idea.”

Mark Perloe and his brother, Ross, were promised quality care when they placed their 91-year-old mother in a high-end assisted living facility in Atlanta. The next year, the family was devastated after she was attacked by ants and died within days. They came to view senior care as an industry more focused on serving investors, sometimes to the detriment of people living in the facilities.

“You think you’re going into a caregiving situation,” Mark Perloe said, “and you’re really a pawn in a real-estate deal.”

Competitive markets

Few senior care companies placed a bigger bet on aging Americans’ need for intensive assisted living services than The LaSalle Group, a Texas-based company that specialized in developing and managing facilities for those with Alzheimer’s and other kinds of dementia.

At its peak, the company had more than 40 stand-alone memory care homes across the Midwest and South, including four in metro Atlanta that operated under the Autumn Leaves name. But LaSalle ran into cash trouble in recent years as a surge of competitors with new facilities drove down occupancy and rental rates, especially in hypercompetitive markets.

Company officials said they had no choice but to file bankruptcy in May as they faced some 30 lawsuits from various vendors, creditors and others. The barrage of financial and legal problems threatened to cripple operations.

“The cost and expense of defending the pending litigation has drained the Autumn Leaves Group of precious resources better used for quality resident care,” the company outlined in a bankruptcy filing.

None of the financial challenges was apparent to Eula Greene's family when they moved the 90-year-old widow into Autumn Leaves of Stockbridge three years ago. Though the facility appeared to be less than half full, that didn't throw up a red flag at the time.

But Greene’s children later noticed that many new residents moving in seemed to have serious health issues that required one-on-one care. And the facility appeared short-staffed, especially at night, the family said.

Meanwhile, Greene, who had Alzheimer’s, suffered a series of falls. Some required hospital visits. The family says a staff member in 2017 left Greene alone in a kitchen chair late at night and she had a bad fall. She died a few days later from bleeding on her brain. The family blamed The LaSalle Group for inadequate care and filed suit.

“There were so many things that happened that should have alarmed me greatly,” said Kaye Sheets, Greene’s daughter. “But I was trusting in these people.”

In a separate lawsuit filed last year in Gwinnett, a family of an 86-year-old resident at Autumn Leaves of Sugarloaf accused the facility of leaving the man unattended, which led to a fall and six broken ribs. The man died two weeks later from complications from his injuries, the lawsuit says.

Both facilities had a pattern of violations, including cases involving harm to residents, according to an AJC analysis of state regulatory records.

LaSalle Group co-owner Mitchell Warren, who stepped down earlier this year as CEO, declined the AJC’s interview request. He said in a written statement the safety and care of residents are always the company’s No. 1 focus.

Since the bankruptcy filing, the company has shed nearly 20 properties, including all four of its metro Atlanta locations, which have changed names and operators in recent months.

Warren told Senior Housing News in a July article that the development push for memory care came five to 10 years too early to catch the wave of boomers needing care. He noted the average age in the Autumn Leaves facilities is 84.

“A lot of novices thought, baby boomers are getting older … people get dementia in their 70s, boomers are now 72,” Warren told the publication. “But with Alzheimer’s in particular, it takes some time to set in — a five-plus year process before you need a full-time care setting.”

The potential for resident care to decline in a financially distressed senior housing facility is so high that federal bankruptcy law has a provision to reduce risk. A bankruptcy court can appoint a patient care ombudsman to monitor facilities to ensure the financial issues don’t result in harm to residents.

In the LaSalle case, a bankruptcy trustee in Texas assigned an ombudsman to monitor care at four Autumn Leaves facilities in that state. In court papers, the ombudsman noted various disruptions related to the financial troubles, including “challenges” with incontinence supplies and delays in repairing laundry equipment.

Georgia regulators with the Department of Community Health wouldn’t comment on whether the agency would step up inspections if it knew a home was in trouble. For months, department officials have declined repeated requests to be interviewed for the AJC’s series.

‘Win locally’ strategy

Two national chains that dominate the market in Georgia — Five Star Senior Living and Brookdale Senior Living — also saw increased competition that lowered occupancy rates, drove up labor costs and undermined profits.

Five Star last year said the company’s financial situation raised “substantial doubt on our ability to continue as a going concern.” It contemplated filing for bankruptcy before announcing a major restructuring earlier this year.

» READ INSTALLMENT 1: A beloved father, a night of betrayal

» READ INSTALLMENT 2: Suffering behind the facade

As the company struggled financially in recent years, care at some of its roughly 20 facilities in Georgia suffered, state inspection records show. Gracemont Assisted Living was cited in October 2018 for inadequate staffing that resulted in a resident who fell and suffered a facial fracture. A month later, Morningside of Evans and Northlake Gardens were cited for violations involving medications. In 2017, Morningside of Conyers was cited for having residents too frail for the staff to care for properly.

The company, which is the nation’s fourth largest senior housing operator, declined an interview request. But late Thursday, it issued a statement that the restructuring plan has improved its prospects. “Five Star remains committed to operational excellence,” the statement also says.

Meanwhile, the struggles of the country’s largest operator, Brookdale, is reflected in a stock price that went from nearly $39 in 2015 to its current price of around $7 per share. Its problems forced a change at the top, with Cindy Baier appointed as the new CEO in early 2018.

“She set about addressing the company’s most urgent need: to turn around the business,” Brookdale spokeswoman Heather Hunter said in a written statement. “She developed a multi-year strategy that is a balance of mission and margin.”

Since then, the company has invested millions to improve facilities to make them more appealing and implemented strategies to attract and retain quality staff. To try to address financial problems, the company offloaded some facilities. It went from operating more than 1,000 senior housing communities at the beginning of 2018 to fewer than 800 this year. In Georgia, the number went from 21 to 16.

The AJC found that about 25% of Brookdale's assisted living and large personal care facilities in Georgia were given multiple citations for serious violations over the past five years. Brookdale Columbus was cited for 20 violations since 2015, including mishandling a scabies outbreak. Brookdale Vinings was cited 40 times, including multiple violations involving allegations of harm.

The company declined to discuss details about its business operations in Georgia.

“We shifted our strategy from a national one to a ‘win locally’ strategy,” Hunter said, adding that attracting the best staff will “create the relationships that will encourage seniors to want to make Brookdale their home.”

Multiple pressures

Local government authorities across Georgia have helped fuel the senior care building boom by approving developers’ requests for hundreds of millions of dollars of “conduit” bonds, which are sold to investors to finance facilities. The projects were touted as bringing jobs to the area and needed services to seniors. Governments have no risk in these deals, and developers can get favorable rates.

But more than a dozen of the bond-financed projects have struggled, according to financial disclosures available online. A recent project in Canton, for example, expected to be almost full by now. But only 60% of its units are leased, and it can’t afford to make its bond payments.

The pressure to pay investors can compete with the pressure to provide top-notch care to residents, the AJC found.

Take Christopher Brogdon, the Atlanta businessman who mastered the art of financing his projects through dozens of bond deals. Brogdon, also a co-founder of the J. Christopher’s restaurant chain, became wealthy through his senior care empire. He had a private plane, a $2 million beach house on St. Simons Island and a swank condo in the heart of Buckhead that he put on the market for more than $5 million.

But in 2015, he was sued by the Securities and Exchange Commission and ordered to pay $89 million to investors who bought bonds to finance his assisted living communities, nursing homes and other senior care projects across the country. He was accused of diverting money from one project to another and into personal accounts.

While he faced intense pressure to pay, three Brogdon senior care homes were written up repeatedly by Georgia inspectors for poor care. A food supplier sued a Brogdon company last year over thousands of dollars in unpaid bills. The supplier stopped delivering food at some facilities, including one in Vidalia where the director said she had to go out and buy groceries every week.

Dianna Vazquez, the director of the Vidalia home, said that continued until a new owner, Affinity Living Group, took over. Now, she said, the home has suppliers again and is getting the technology it needs.

Greene County Development Authority in 2015 authorized more than $40 million in conduit bonds for construction of The Glen at Lake Oconee Village, a swank senior care complex designed to look like The Ritz-Carlton hotel nearby in Greensboro.

With a thriving, upscale community nearby, the facility seemed well-positioned to fill up quickly.

Instead, the project is in turmoil. The developers failed to disclose and pay off a $1.7 million loan that had an interest rate of 24.5%. The loan was taken out in a rush to make the bond deal possible. Still, the bonds went into default. Multiple lawsuits have been filed. The developers lost collateral that the project relied on for cash flow, according to court filings.

In spite of the financial issues, The Glen has had a favorable inspection record.

But this month, residents faced uncertainty when a new management company that had experience with “troubled assets” was brought in. A third of the units are vacant, and the facility is losing money, recent financial disclosures show.

‘Fell through the cracks’

The financial miscalculations at The Lodge at Aspen Village were matched only by the scope of failures in care at the Paulding County facility.

Majority owner Anderson Glover had no prior experience in the senior care industry, but when approached with the opportunity to invest in early 2013, he poured in his life savings.

“It was a solid investment for him had the business model stayed the same,” said Joyce Pearson, Glover’s friend and a consultant who helps him oversee his investment at the facility. “The problem was a high interest loan and a bad construction project. In between that, things fell through the cracks.”

Among the misjudgments, a year and a half after opening, Glover and his business partner, Robert Fouse, an architect, decided to purchase land across the street to build a 44-unit memory care building.

Construction delays, miscalculations and disagreements between the business partners forced the company into bankruptcy in February. Glover has had to take out a second mortgage on his home, and took out a personal loan to make payroll at The Lodge and keep it operating, Pearson said.

» READ INSTALLMENT 3: Prosecutors not alerted to potential crimes

» DEEPER FINDINGS: Georgia families in the dark about risks

Early on, Glover hired a company, Canopy Lifestyles, to handle day-to-day management and oversight, but that didn’t work out as planned.

“For someone who came in just for the investment, we got pulled into the operation,” Pearson said. “We never could just sit back and watch it. We always got pulled into issues.”

Meanwhile, Aspen Village racked up more than 50 state violations since 2015, one of the worst regulatory records in the state, an AJC analysis of thousands of records found.

In March 2018, as the facility’s financial problems were reaching a crisis point, state regulators issued a scathing report citing the facility for a host of problems with care, including allegations that staff lacked training and four residents were abused.

» OPINION: Better protecting Ga.'s vulnerable seniors

One resident was put in a cold shower and screamed, records show. A staffer got in a resident’s face, shouting curse words. A worker pinned a resident’s arms behind their head while providing personal care, and the same caregiver pulled down another resident’s pants and was rough when placing the person on a toilet.

“Why are you doing this to me?” the resident cried out in pain, records show.

Two months later, inspectors cited Aspen Village for improperly admitting and keeping a resident for whom it couldn’t provide adequate care. The resident had cancer, was bed bound and had open wounds on the buttocks and a leg.

A 2018 lawsuit against Aspen Village, Canopy Lifestyles and a hospice company claims a resident with dementia was listed as having pancreatic cancer when he didn’t and given a potentially dangerous antipsychotic medication to chemically restrain him. When his daughter discovered him lethargic, she called an ambulance. He was taken to the hospital and died six days later.

Credit: Tyson Horne

Credit: Tyson Horne

Mondresia Carver said she witnessed many problems when she briefly worked as general manager at Aspen Village until October. She said she was brought in to help turn the facility around.

“They just couldn’t understand why the business wasn’t coming in and they couldn’t maintain the people that were there,” she said.

She said she discovered a culture with disregard for safety regulations. The facility suffered from staffing shortages, poor training and a pattern of frequent falls that weren’t properly documented. At one point, she said, the kitchen ran low on food, an assertion Glover denies.

After two months of trying to effect change, Carver said she was let go after the facility grew tired of her efforts to identify and correct care issues.

Pearson said Carver wasn’t at the facility long enough to get a full picture of what’s going on and was more of a compliance specialist, not an operational manager. She said Carver’s management style alienated staff and didn’t help fix problems.

“It’s a very tough job,” Pearson said. “It could be a crisis a day or one a week; it could develop into a crisis if you don’t know how to handle things.”

The owners are hopeful the bankruptcy court will accept their restructuring proposal any day now. Pearson said that will help begin the process of rebuilding Aspen Village’s reputation and draw in new investment money to complete the memory care unit.

“We’re going to turn everything around, and it’s going to be a first-class facility,” Glover said.

For now, the partially finished shell of a building sits on an unkempt lot with weeds and abandoned construction materials. A marketing sign attached to a chain link fence surrounding the site belies the uninviting scene.

“We’re always home — Come by for a visit,” the sign reads. “Discover why The Lodge at Aspen Village is the choice for senior living!”