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PPE and virus tests still lacking for senior living communities: CEO

Argentum looks to help expand senior living through industry-leading events, publications, and education. Argentum CEO James Balda joins Yahoo Finance’s On The Move panel to address the future of senior living facilities.

Video Transcript

ADAM SHAPIRO: Let's turn our attention to something else. And that has to do how we protect our senior citizens who live not only at nursing homes, but also in assisted living facilities and senior retirement facilities. And to help us to understand that is James Balda. He is the Argentum-- Argentum CEO. That's a trade group that represents these kinds of facilities. Welcome to the program, sir.

JAMES BALDA: Thank you for having me. I appreciate the opportunity.

ADAM SHAPIRO: You've been at the White House during some of these meetings about getting PPE and protective gear to the men and women who assist and help care for our elderly. What's the reaction been? I know that you're seeking, what, $20 billion for the industry to help protect our seniors.

JAMES BALDA: Yeah, so-- and thank you for bringing that up. You know, we represent communities that serve about 2 million seniors around the country, really the frailest of the frail when you think about the resident profile, particularly over the age of 85, suffering multiple chronic conditions. Over 40% have some form of cognitive impairment.

And so COVID-19 really is a crisis for those residents. And our providers have been doing everything they can from day one to protect them, but that comes at a cost in terms of increased labor costs, increased supplies, accessing PPE. And so we've really been advocating to make sure that our providers get access to funding, to that $20 billion that you mentioned to help offset those costs.

We actually project that, with labor costs increasing over 20%, supply costs increasing over 100%, the impact on our industry could be anywhere from $40 to over $50 billion over the next 12 months. And this crisis will continue in our communities for the next 12 months until, ultimately, there's a vaccine.

And so we've been working with Congress, as well as the White House and the administration, to make the case that our providers need financial support, just as the hospitals have received support and just as skilled nursing facilities have received support. And so we appreciated the invitation to the White House. The event was focused primarily on support for nursing homes. And so just need to make sure that senior living communities, as you mentioned, assisted living, independent living, and memory care, are receiving the same kinds of financial support and access to PPE and testing that other health care providers are.

JULIE HYMAN: Hi, James. It's Julie here. Just to be clear, I mean, help me understand a little bit more about why this money [INAUDIBLE]. Because I think of senior living facilities as quite profitable ventures, really. Regular cash flow. We know that, because of the aging of America, there has been an enormous expansion in these types of facilities.

So unlike, say, a hospital that isn't getting those elective surgery dollars that it was before, or like the airline industry, where people aren't traveling, I mean, you guys still have an income stream. Your members still have a steady income stream right now.

JAMES BALDA: Well, that's a great point. And thank you for bringing that up. And we are predominately a private pay model, so we don't typically receive reimbursement through Medicare or Medicaid, as other health care providers do. But a part of our business model is being able to accept new residents.

And so the crisis, COVID-19, has really forced providers to limit access to their buildings and restrict new move-ins. And so what you're seeing is escalating increases in costs related to staffing and supplies at the same time that revenue is decreasing because we don't have new residents moving in.

Long-term, the prospects for the industry are certainly positive once we get through the crisis related to COVID-19. People choose to move into our communities because of the supports they need and the socialization they're looking for. But in this current crisis, we are seeing an impact on revenue, as well as on the expense side.

INES FERRE: James, Ines Ferre here. And long-term, as you just mentioned, after this crisis, what are some of the changes that you see within the senior living facility industry that may be permanent going forward?

JAMES BALDA: That's a great question. And before I get into some of those long-term sort of considerations, you know, I think our providers are laser-like focused on caring for residents today.

And one concern we have, and our providers are taking very seriously, is, as the rest of the country begins to open up and people's lives return to some sort of new normal, things will continue to be at crisis mode for our communities as we're trying to protect our residents. And so they're focused on that right now, but I think long-term, you know, you could see some changes. There's been conversations in terms of the physical structure of the building potentially changing, in terms of new development.

Now, senior living communities, I think, are going to have probably more positive outcomes related to the crisis than perhaps what you're seeing in nursing homes, in large part because of the physical structure of our buildings. Typically, our residents have their own apartments, so when you need to go into self-quarantine, it's easier to protect the residents because they're not necessarily sharing rooms, you know, two beds, three beds to a room. They have their own apartment.

So I think there's components of like-- of that that we'll see continue, but you'll also see enhanced infection control protocols, which actually we've been seeing from day one. Oftentimes, long before states were requiring limiting of visitors to the building and enhanced infection control, our providers were already implementing that. And I think, at the end of the day, we're going to see some more positive outcomes as a result of that.

ADAM SHAPIRO: James Balda from Argentum, and the CEO. We appreciate what millions of people are doing to protect several million of our seniors. We're going to be right back.

JAMES BALDA: Thank you.