Bankruptcy Risk and State Regulation of Continuing Care Retirement Communities

Vol. 32, No. 4
Winter 1995-1996
Conover, C.J. and F.A. Sloan
pp. 444-56

Continuing care retirement communities (CCRCs) often require substantial financial investment from residents, prompting concern about potential losses to residents in the event of a CCRC's bankruptcy. State governments have responded to this concern with varying levels of regulation. Overall, CCRC bankruptcy rates are very low (.3% per year). We found that measures of varying regulation stringency had no effect on indicators of CCRCs' financial performance relating to bankruptcy risk. CCRCs that offer extensive contracts, including unlimited long-term care in addition to housing, have less positive indicators of financial strength than other types of CCRCs. When measured by traditional health care industry standards of financial strength, CCRCs appear less profitable than other types of health care facilities. This raises the question of whether CCRCs can continue to attract the needed capital from private markets and because of that, suggests that their future growth may be limited.

View full article...