There is a Starbucks about one mile down the road from my home. Every morning there is a tough old man sitting outside the Starbucks smoking a pipe and enjoying his coffee. I should really say that he sits on the side of the store where no one can see him, since it’s supposed to be a “smoke-free” zone. For the purpose of this article, let’s just call him Joe.
A couple days ago Joe noticed that I was wearing a name tag and asked me what I do. When he heard that I’m a director of an elderly care facility, he screwed up his nose and said “Those places gouge people! The place down the street wanted $6,000 a month to take care of my sister.” My conversation with Joe is the pretext for my rant with numbers below.
What is the cost of care?
Everybody wants to know and within the first 60 seconds, people ask, “What is the monthly cost?” It’s not a bad question. Unless you can afford the car, you can’t buy the car. So why bother looking under the hood and kicking the tires if you can first peak at the number on the window and get a clear idea if you’re wasting your time.
I can’t speak for the industry as a whole, but here are the numbers behind our prices and a rough summary of the costs for 24 hour care at home. This is hanging out our laundry a bit, but I hope it helps you better understand the cost of care and maybe prepare better for the expensive realities of long-term care.
Monthly Operating Cost: Residential Assisted Living
$17,000 Caregivers Payroll
$4,800 Leadership Team Salaries (Administrator, Care Manager, Activities Director)
$3,000 Property Lease
$2,200 Miscellaneous Business Expenses (Electricity, Gas, Water, Cable, Phone, Internet, Waste, Property Maintenance, Liability Insurance, Advertising, Payroll Processing)
$3,000 Care Expenses (Food, Activity Supplies, Media, Laundry, Personal Hygiene Supplies, Incontinence Supplies, Misc. Care Supplies)
$3,000 10% Profit Margin for our Investors (it all had to come from somewhere)
$33,000 Total Operating Cost per Month
Divide that by six and you know how we come up with our number.
This is a small scale operation with minimal costs. An Administrator and most of the other leadership team can double up and do their jobs in two such homes. This model doesn’t have the huge expense of a commercial building and the large cost of being part of a big corporation with executive staff and shareholders (all necessary at that level).
As hard as it is to swallow the price tag of five thousand plus each month, let’s consider the alternative, staying at home.
