Erickson Tribune

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UPDATED: Wednesday, May 07, 2008

What makes Erickson different from the rest

Posted on Tuesday, April 22, 2008
 

In this last of a three-part interview with founder and CEO John Erickson of Erickson Retirement Communities, he discusses the many unique benefits Erickson offers retirees.

How does the financial structure at Erickson compare to the one people live within their homes?

Twenty-five years ago, I was trying to put together a financial structure for Erickson Retirement Communities that would satisfy Middle America.

I wanted to come up with a system in which people could transfer their home equity into [one of our apartments], but still get a 100% refund if they left or died, in which case the money would go back to their estate. And they could live in the community under a cost structure that was within the same cost structure as their own home environment.

The 100% refund meant that I had to come up with an estimated price per apartment that would also include the common facilities and cover the capital costs of the campus. That’s what we started with, and it turned out to be a really good move. Middle America has plenty of home equity. If they transfer a portion of that into an apartment home in a community and the kids still get the inheritance—whether they leave or die, they get that money back—that’s a good safety position for Middle America.

Twenty years ago, the [senior housing] industry had a pooled-risk insurance plan. The problem with this plan is that it means you might have been living for $1,000 a month in your home, but it’s now going to cost you $2,000 a month because you’re going to have to go into the insurance pool for health and all the other things that you might experience.

I went to a fee-for-service program that included the main meal, utilities, taxes, transportation— everything but the telephone bill and the other two meals were in the package. And people found that they could live in one of our communities probably for a couple of hundred dollars cheaper than they were living in their homes.


John Erickson

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Tell us a little about the different groups of people who are moving into Erickson-developed communities, particularly related to the benefits associated with the move.

Over the years I’ve tried to classify the people who make this move into a few categories. The first is couples who have a significant health risk. They know that the other is going to need some support, and they want to get into a supportive environment.

Another category is people who want to plan ahead. Their reasoning is, “I don’t want my kids making a Yellow Pages decision from a hospital room on what to do with me.” They want their total care system to be in their decision grid and not an emergency decision made in that kind of environment. By making the move early enough, they’re planning their total future. There are also people who do this just for fun. It’s a better lifestyle. It gives them a greater sense of freedom. I had a friend of mine in his 80s visit one of my communities and stay there for a few weeks. He told me, “I ended up with four hours of extra time a day because I wasn’t doing all the stuff I had to do in my home.”

Then there are those who are just tired of toughing it out. They’ve been hanging on with white knuckles for so long, and it’s getting to them, particularly those who live by themselves. Anyone who lives alone really benefits from getting into a social-based community.

You classified one group as those with health concerns. What does Erickson have to offer them?
Erickson-developed communities are a compelling choice for those with serious health concerns. The rest of the country has disease care. We actually have health care. Our vision for residents is, “What can I do to keep you healthier than you could possibly accomplish on your own?” So we built a national infrastructure of 60 full-time geriatric-certified doctors.

We also offer simple things, like balance testing, that make a difference with our medical program. Every person over 75 should have an occasional balance test. If you can test somebody who is likely to fall before they fall and correct it, you can avoid a $35,000 hip fracture. This is why I say the government really has a disease care plan. Their plan doesn’t pay $50 to have your balance tested. They pay $35,000 to fix your hip. Throughout our system, we’re doing all kinds of interventions, and that’s why we have a quarter of the hospital time that Medicare has.

How does Erickson’s social environment benefit residents?
I think that the single family home is really the biggest killer of the elderly. I say this because it creates the isolation that separates individuals from this active, engaged social environment. That sucks the meaning out of your life. You’d be amazed at how just being the vice president of the woodwork club gives you something that you didn’t have when you were sitting by yourself watching TV.

I really push people to get into the social side. We were designed to be much more engaged. And what you find is that people do need that engagement but don’t recognize it until they get into an environment where they experience it again. So, I would tell people who are on the fence that no one’s going to push you into this decision. You have to make it yourself and, ultimately, if you choose to live better, you will live better.



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