The bankruptcies of Dallas’ Edgemere and three other Texas continuing care retirement communities raise questions about the viability of a business model that requires hefty entrance fees.
The entrance fee guarantees residents a spot for life at the facility, no matter the level of care they require in the future, whether that be assisted living, memory care or skilled nursing. And a percentage of the fee is often refundable to residents or their heirs.
But CCRCs are capital-intensive projects that generally require bonds to fund construction. That means communities that use the entrance fee model must not only keep up with debt obligations to bondholders and regular maintenance costs but also with the cycle of refunding deposits as residents move out or die.
