A tiny California program to help indigent seniors afford assisted living may herald a sea change in how people without savings can obtain long-term care.

And with some tender loving care, it may even help keep the state solvent.

As the state’s population ages rapidly – from today’s 5 million to an estimated 8.4 million by 2030 – the question of how to care for those seniors with nothing in the bank has become increasingly urgent.

The housing trajectory for older adults – from least to most expensive – is a fairly clear one: independent living, assisted living then skilled nursing.

So when an older adult who lives independently becomes frail and needs help with cooking, cleaning, feeding and transportation, the next step is an obvious one. Assisted living, right?

Wrong.

Old, poor and sick Californians no longer able to live independently have typically been shuttled into skilled nursing facilities – or SNFs – as required by law.

Enter the Assisted Living Waiver, launched in 2009 and now operating in 14 California counties.

Aging Californians on Medi-Cal (the state’s version of federal Medicaid) can use the waiver to pay for expenses at an assisted living site. Typically, their base “rent” is paid for with Supplemental Security Income (SSI), with other costs covered by Medi-Cal, usually at a rate of $62 per day.

But here’s where things get interesting.

With over 8,000 California assisted living facilities, a scant 189 of them actually participate in the waiver program. And inside, only a paltry 3,000 indigent seniors are housed there, diverted away from more expensive full-service nursing homes (at around $65,000 a year) into these assisted living sites (at about $25,000 annually).

Why don’t more participate?

“If you’re looking at it just on paper, it does not look like the best deal for the provider,” says Eric Dowdy, vice president of policy and communications for the advocacy group LeadingAge California.  “That’s the big problem with assisted living. It’s a middle income, higher income product.”

Most providers are not thrilled with the economics.

To make the waiver work, they typically drop their fees by about $1,000 – from over $4,000 a month to around $3,000 – which stretches facility budgets already strained by housing, personal care, activities, meals and transportation.

Dowdy says because of this price drop, some assisted living providers no longer view the service as a revenue stream but, instead, part of their “mission” to house the poor.

Yet there are even more concerns about the waiver program.

Fees once paid privately by families now involve both state and federal governments, thus further bureaucratic oversight and regulations. Moreover, Medi-Cal doesn’t reimburse for 60 days. And while the waiver program was renewed in 2014 for five additional years, what happens if it’s dissolved in 2019? Providers would be stuck with residents no longer able to pay for their services.

Yet like most challenges, the waiver program could actually offer a hidden opportunity: austerity. And in the wildly competitive world of long-term care, austerity is not a word often spoken.

The one word that drives the long-term care industry more than any other is this: “marketing.”

Assisted living sites trumpet their latest advancements – New building! New activities! – and while these glitzy facilities and splashy programs drive business plans, marketing often clashes with the reality of limited personal savings. Simply put, seniors are deciding to stay at home much longer in part because they cannot afford to move.

But Mark Cimino thinks such operators are swimming upstream.

One of the few assisted living operators to embrace the waiver program, Cimino says it actually offers a huge opportunity to reinvent how assisted care is delivered.

CiminoCare, a family business that operates nine facilities in Northern California, uses a simple motto:   “Old World Hospitality.”

Cimino says that by accepting the waiver he not only fills beds – with indigent older adults, but it forces him to further refine a modest business model that focuses on substance rather than style – personal care over glamor.

A limited marketing budget. No sous chef. And fewer “bells and whistles.”

The nation is today saturated with long-term care facilities – both profit and not-for-profit – with top executives making hundreds of thousands of dollars annually. With glittering facilities and marketing dollars gobbling up expenses, Cimino wonders whether the emphasis shouldn’t be elsewhere.

“It’s one thing to ask ‘How do we maximize efficiency so we can satisfy our stockholders?’ says Cimino. “It’s a whole new conversation to ask ‘How can we operate more efficiently so we can pass those savings along to our customers?’”

A majority of Californians have only enough money saved for a few months of long-term care. After draining those cash reserves – the dreaded “spend down” – seniors typically qualify for public assistance like Medi-Cal. In the past, that would have meant a one-way ticket to skilled nursing. Instead, the waiver program helps re-direct impoverished (or disabled) Californians into assisted living, where many belong.

In the meantime, to further deploy the waiver program, groups like the California Assisted Living Association are working with state officials to encourage the federal agency that pioneered the waiver program – which operates in dozens of other states too – to increase reimbursement rates for the program.

Until that happens – unlikely given the country’s already intense cost-cutting measures – more California assisted living providers may begin to forego glitz and glamor while housing needy California seniors.