Six Pillars of Solid Retirement Communities

The founder of Erickson Retirement Communities shares his lessons on what has worked the best.

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John Erickson has the conviction of success. More than 22.000 people live in his 20 retirement communities in 11 states. He opened the first outside of Baltimore in 1983, at a time when large, apartment-oriented facilities were considered unappealing by many experts. Today, Erickson Retirement Communities has grown into one of largest Continuing Care and Retirement Community (CCRC) operators, and is widely considered at the top of the industry in quality and consumer appeal. Erickson himself has reached traditional retirement age but clearly has no interest in slowing down.

Erickson's facilities are big but broken down into multiple clubhouses, low-rise apartment buildings and interconnected facilities that permit residents to walk the entire complex without going outside. As with other CCRCs, residents have a continuum of living and care options depending on their physical conditions and medical needs. The most common purchasers are healthy couples in their mid-to-late 70s who move into independent living apartments and continue to keep their cars. Over time, they likely will need increasing amounts of medical care and can find assisted-living and more advanced nursing care within their community. Most expenses are covered with a single monthly payment and the initial purchase price of the apartment is refundable to the buyers or their heirs. Over the years, as Erickson has continued to build new communities, he has turned what he's learned into six pillars that he believes are the foundation for successfully housing seniors. It's no accident that these pillars also build upon strengths of having lots of residents in one place. Economies of scale permit Erickson to do things that many seniors have trouble doing as well living on their own. And the density of his communities allows residents to pursue broad interests with the knowledge that they can find others to join them.

1. Food and diet. Dietary habits of Erickson's residents improve dramatically after entering a community, he says. Like most CCRCs, residents are offered one meal a day in a central dining facility. Most choose dinner, which becomes a social focus of the day as well. Combined with a wealth of structured physical, cultural and social activities, eating habits improve and so does the health of residents.

2. Exercise. Erickson feels his communities are superior to the detached cottage structure that prevailed 25 years ago and which is still popular. He feels cottages can be an isolating experience, particularly during hot or inclement weather. "Here, weather is never a factor," because residents have a campus setting where they can walk an area that may have 2 million square feet under roof. Walking is a big part of being in an Erickson community and contributes to healthier and more social residents.

3. Social structure. Perhaps the greatest inherent benefit of putting 1,000 to 2,000 people in an inter-connected complex is the ability to offer rich social interaction and opportunities. Isolation is one of the greatest fears of people who live on their own, and is associated with substantial health risks as well. "Social structure can fail in a single-family home," Erickson says. "It can turn into a marital re-run every night with your wife of 56 years," with little new experiences to be shared or explored. More importantly, he says, doing new things with different groups of people stimulates the brain to create new pathways. "Meeting new people and having new experiences really does create more neurological pathways," he says, "and doing so really begins to solve one of the major risk factors of aging."

[The challenges of aging in a single-family home are driving the search for more community ties and social programs. See More Seniors Opting for Nontraditional Retirement Communities.]

4. Medical management. "Eighty year olds just do a terrible job of managing their medical needs," Erickson says. Developing supportive ways to help residents manage their medical needs "was the piece that took the most structured work on our part." Quick access to on-site doctors who already know the residents produces successful medical outcomes in a cost-effective way. Many residents see doctors the same day they request a visit, particularly for pressing needs. "And that's what keeps them out of the hospital," Erickson says.

He is sharply critical of government medical-care reimbursement rules, saying they turn doctors into booking agents focused on fixing a specific problem for which they will be reimbursed. Seniors, by contrast, usually have a variety of medical needs that must be balanced, and when one need become acute, it shouldn't be addressed at the expense of the person's other needs. Too often, Erickson says, this happens in typical medical care because the doctor does not get compensated for helping maintain a patient's overall care. "This leaves the stay-at-home senior at a huge disadvantage," he says. "The system will treat his episodic problem but not his other needs."

Erickson began offering a Medicare Advantage (MA) insurance plan tailored to his community residents and now has about 5,000 subscribers across his communities. By taking advantage of on-site medical care and stressing care that addresses total patient needs, he says, the typical Erickson MA participant spends less than half as much time in a hospital as an average Medicare participant. And since the average age of the Erickson patient is about 80, he says the age-adjusted comparison doubles again in favor of the Erickson model. (There is likely some self-selection bias going on here as well; odds are that the relatively affluent people who buy into Erickson Communities are healthier than average Medicare participants to begin with.)

5. Financial security. "Seniors get worried to death about their ability to survive," Erickson says. Having a monthly living expense that is known in advance, with small annual step-ups for inflation, is a great source of stability. Also, Erickson was an early advocate of guaranteeing the return of the resident's purchase price. either to them or their estate. With purchase prices beginning near $200,000 and ranging up to $450,000 or more, depending on the size of the apartment, this promise has been a marketing plum for Erickson, as well as providing peace of mind to residents and their families.

[See The Recession Hits Retirement Communities.]

6. Spiritual well being. "I discovered this by accident, because I had a big old unused church on this property," Erickson says during an interview at his office. It's located at Charlestown, the very first Erickson community that opened in Catonsville, Md. on the grounds of a former seminary. "I had never realized how important spirituality is to their sense of well being. It doesn't have to be religious," although Erickson has developed denominational programs on its campuses. But how people feel about themselves and their lives becomes increasingly important, "particularly as people approach death and dying. It is an essential piece of aging."