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Opening a New Assisted Living Facility
How to Set Up and Open a New Assisted Living Facility

New Facility
New Facility

Want to open a business that targets one of the fastest growing global market? If you're opening a new assisted living facility to serve seniors, you're on the right track.

Are you interested for the money or helping older people?

The reasons for serving this segment are personal and fit your needs to provide an honorable assistance to the local community, or are you entering the assisted living business because it's a great way to tap into a booming sector of business and secure a sound investment?

You'll need both reasons but, before you commit, know what you're getting into.

Assisted Living Facts

Older adults present an opportunity for entrepreneurs, but the senior living industry is swelling to match the demands. The industry includes many forms of living options; retirement housing with minimal medical support to full-blown nursing homes.

There are (estimated) 38,000 assisted living centers, 17,000 nursing homes, 2,200 "continued care retirement communities" and hundreds more "independent living" residences in the U.S., according to the National Investment Center for the Seniors Housing and Care Industries.

Thirty-seven percent of residents were receiving assistance with three or more activities of daily living and 42 percent had Alzheimer's disease or other dementias. Thirty-nine percent of communities provided skilled nursing services by registered nurses or licensed practical nurses and 13 percent of residents received these services. In this National Center for Assisted Living study, researchers found that 19 percent of residents received Medicaid funding.

The United States senior citizens will account for 20% of the nation's total population by 2030, up from just 12.4% in 2000. By 2050, the number of U.S. citizens aged 85 and over could quintuple, to 21 million. The senior-aged group will explode.

If you have talent for real estate development or health care and like giving older adults a helping hand and more, then senior living is for you.

A First Step

Assisted living is in demand now but in several years, it'll be over the top. A drawback to the senior housing industry, from a business owner perspective, the business is challenging to get off the ground.

Operational manuals and close examination of data are essential tools to review before writing a business plan. Without scrutiny, you'll make costly, new venture mistakes that could terminate the business. More on this topic later in the article; we'll also look at government regulations and close inspections, hiring issues, and family expectations that question your sincere intentions.

Get help - but not from the government or friends and family initially, but ask for help from someone who's in the assisted living business. Make certain the person you ask for help is successful in the industry.

It's a good idea to get a job or volunteer time at a facility for at least a year to see if you enjoy the work and the people involved. You'll get to see how things work, the rewards, and the problems. After the year is up, you may run to the bank for money to open your assisted living home, but you might just run. So, get experience and be involved first.

You have several options in choosing a senior living facility to work with or to volunteer time. You could start visiting an assisted living facility with 75 to 100 residents, and a smaller one operated in a small private home that cares for 5 to 7 residents.

Get a part-time job as a caregiver, unless you are a licensed or registered nurse. Working in a facility, you'll learn a lot about the operations. Remember that the marketing aspect of owning a facility is very important.

No degree required, but there are certification programs to better prepare you to run one. Check with your state on available programs. Check with your local Alzheimer's Association and AARP business office for caregiving training. Both are good resources.

Owning and operating an assisted living facility requires knowledge. Some owners have nursing or nursing home administration backgrounds.

Questions to ask a current assisted living owner

  1. Why did you get involved in senior living?
  2. What other options did you consider?
  3. What do you regret now about your decision to open a facility?
  4. What would you do differently, in hindsight?
  5. What keeps you up at night?
  6. What skeletons uncovered in the assisted living business that you worried about?
  7. How do you get referrals and make the phone ring? Define your target audience?
  8. How did you learn about the demographics (in your area) of the target audience?
  9. How did you hire your staff? What types of training needed for us; the staff and me, a potential owner?
  10. What complaints do you hear?
  11. Find ways to learn the revenue history of the business.
  12. Find out how much money flows in and out of the business each day, week, month and year.
  13. Find out if the senior living owner is aware of past, current or potential legal disputes related to the business operations.
  14. Find out the types of insurance needed.
  15. What is your exit strategy?

First Step, Part B

Know the Federal and State Licensing Procedures

You've done the due diligence from working at a facility or volunteering for one, now it's time to get federal and state licensing knowledge.

Even though federal laws impact assisted living, oversight of assisted living occurs at the state level. More than two-thirds of the states use the licensure term "assisted living." The second most used term is "residential care." Other licensure terms are basic care facility, community residence, enriched housing program, home for the aged, personal care home, and shared housing establishment.

The National Center for Assisted Living State Policy Developments in 2012 and 2013

18 States Reported Regulatory Changes

Policies impacting assisted living and residential care communities from January 2012 through January 2013 showed eighteen states reported regulatory changes. Among those states are: Colorado, Georgia, Michigan, Missouri, New Jersey, New York, Ohio, Oregon, and Washington.

These states continue to design new models for surveys:

  • Expanding disclosure and reporting requirements
  • Addressing life safety and infection control issues
  • Allowing increased delegation of medication administration to non-nurse staff

New Jersey and Colorado joined the small number of states with innovative survey approaches to help target resources. New Jersey's Department of Health (DOH) collaborated with The Health Care Association of New Jersey Foundation to create a voluntary program called Advanced Standing. The state also performs follow-up surveys based on a random sample.

In January 2013, Colorado conducts risk-based re-licensure inspections for assisted living residences (ALRs), initially on a pilot basis. Under the new system, the meeting criteria specified in the law will be eligible for an extended survey cycle.

In 2012, Michigan began a new renewal inspection system.

After creating an additional level of licensure for assisted living communities a year earlier, Georgia updated rules for personal care homes in January 2013, including new requirements for additional staff training, staffing above minimal standards, and a resident needs assessment upon move-in.

Effective in January 2013, New York adopted rules stating that no adult home with capacity of 80 residents or greater may admit or retain more than 25 percent census of residents with serious mental illness.

Several states made changes to policies and rules for care provided to residents receiving Medicaid services, some to accommodate managed care contracting. In 2012, the state of Washington changed its licensure term to "assisted living facility" from the outdated "boarding home."

Oregon requires facilities to adopt policies for the treatment or referral of acute sexual assault victims.

Contact Your State Licensing Agency

State Regulations for Assisted living

Every state is different in licensing terms. You're encouraged to contact the identified state agencies and to obtain copies of the regulations in their entirety if you desire more detailed information. The general terms and requirements are different for all states - the following list is purely an example of what you will find and can expect.

  • Licensure Term - Assisted Living Facilities and Specialty Care Assisted Living Facilities
  • Facility Scope of Care - Assistance with activities such as bathing, oral hygiene, and grooming. A facility must provide general observation and health supervision of each resident to develop awareness of changes in health condition and physical abilities and awareness of the need for medical attention or nursing services.
  • Third Party Scope of Care - Home health services by a certified home health agency and hospice care delivered by a licensed hospice agency.
  • Move-In/Move-Out Requirements - To be admitted to an assisted living facility, residents may not require restraints or confinement; require limitations on egress from the facility; be unable, because of dementia, to understand the unit dose medication system in use by the facility; or have chronic health conditions requiring extensive nursing care, daily professional observation, or the exercise of professional judgment from facility staff.
  • Resident Assessment - Each resident must have a medical examination before entering an assisted living facility and a plan of care developed by the facility and the resident and, if appropriate, the sponsor. There is certain information that's in the plan of care, but there is no required standard form.
  • Medication Management - A resident may either manage, keep, and self-administer his or her own medications or receive assistance with the self-administration of medication by any staff member. Medications managed and kept under the custody and control of the facility shall be unit-dose packaged. In specialty care assisted living facilities that care for residents with dementia, medication be administered by a registered nurse (RN), licensed practical nurse, or an individual licensed to practice medicine or osteopathy by the Medical Licensure Commission of THE STATE.
  • Physical Plant Requirements - Private resident units require a minimum of 80 square feet, and double occupancy resident units require a minimum of 130 square feet. Look to YOUR STATE for guidelines.
  • Residents Allowed Per Room - A maximum of two residents allowed per resident unit.
  • Bathroom Requirements - Shared resident rooms may have common toilets, lavatories, and bathing facilities. When shared, the minimum requirements include (at least one of the following): one bathtub or shower for eight residents; one lavatory for six residents; and one toilet for six residents.
  • Life Safety - EACH state has one or two types of licensed assisted living facilities for the elderly: standard assisted living facilities and specialty care assisted living facilities for residents with dementia or Alzheimer's symptoms. Check with your state to get the full description and categories.
  • Alzheimer's Unit Requirements - Facilities that are not licensed as specialty care facilities may neither admit nor retain residents with severe cognitive impairments and may not advertise themselves as a "Dementia Care Facility," an "Alzheimer's Care Facility," or as specializing in or being competent to care for individuals with dementia or Alzheimer's disease.
  • Staff Training for Alzheimer's Care - All staff having contact with residents in assisted living facilities and specialty care dementia units must receive training on specific topics before having any resident contact and must have at least six hours of continuing education annually. Every state is different; please check with your state on requirements.
  • Staffing Requirements - Required staffing include: an administrator and personal care staff as needed to provide adequate care and promote orderly operation of the facility.
  • Specialty care assisted living must have an administrator, a medical director, at least one RN, and a unit coordinator. Specialty care assisted living must have at least two staff members on duty 24 hours-a-day, seven days a week, and must, at a minimum, meet the staffing ratios specified in regulation. Check with your state for specific requirements.
  • Administrator Education/Training - Administrators have a license by the STATE Board of Examiners of Assisted Living Administrators. Check with your state.
  • Staff Education/Training - In an assisted living facility, staff having contact with residents including the administrator must have required initial training and refresher training as needed. In a specialty care assisted living facility, each staff member must have initial training in the basics and complete the Dementia Education and Training. Check with your state.
  • Continuing Education (CE) Requirements - YOUR State Board of Health rules require administrators to complete six hours of continuing education per year. The STATE Board of Examiners of Assisted Living Administrators requires 12 hours of continuing education for licensed administrators of assisted living facilities and 18 hours of continuing education for licensed administrators of specialty care assisted living facilities.

The list illustrates what's expected. All states are different in requirements.

State by State Summary of 1012 Legislative & Regulatory Changes

A state-by-state summary of 2012 legislative and regulatory changes and copies of NCAL Assisted Living State Regulatory Review are available on NCAL's web site at: Karl Polzer, NCAL Senior Policy Director.

To view and get your state-by-state licensure terms, staff training requirements, administrator education and training, continuing education requirements, Alzheimer's training and unit requirements, life safety requirements and physical plant requirements, Read NCAL.

To be eligible to provide assisted living services and receive reimbursement for them, a provider agency must meet eligibility criteria. Rules regarding program and contracting requirements are found on your state website.

Do a web search using the following term: (your state name) licensure for assisted living facility in US. The needed information is given.

There are ALF consultants you can hire, if you need help with the process of starting a new facility. They have the tools to teach owners & and staff on how to best care for residents, help you with government paperwork, state licensing, senior living guidance and how to stand out from the local competition.


  • Contact YOUR State Licensing body to learn the application process
  • Learn the Appropriate State Regulations and Requirements to becoming an Assisted Living Facility. (link to regulations page)
  • Contact the State Licensing body to learn the application process

Read Senior Care Mike Realty on Opening a Facility

Carol Marak
Carol Marak

After seven years of helping her aging parents, Carol Marak has become a dedicated senior care writer. Since 2007, she has been doing the research to find answers to common concerns: housing, aging and health, staying safe and independent, and planning long-term.