The first step in opening an assisted living home should be an honest assessment if this is the right business for you. I have seen many people who find out about the assisted living home business, discover the financial opportunity and relatively low barrier to entry, and then quickly make a decision to start their own home. This is a mistake.
We are in the business of safeguarding and providing for our resident’s optimum health. This is not a commitment that should be undertaken lightly. The care levels in assisted living homes in Arizona can be quite high. Residents routinely have conditions such as dementia, incontinence, immobility, diabetes, pain and respiratory problems which are managed with a regimen of medications administered every day. This is in addition to needing assistance with activities of daily living. A quality care home operator has a high level of expertise in elder care. If you don’t have this experience, you will need to provide it with staff and healthcare partners while you develop it quickly.
I have seen registered nurses, hospice owners and physicians all struggle to successfully operate an assisted living home. It is a unique healthcare environment which is not as simple as it appears from the outside looking in. I recommend you find a mentor or someone willing to allow you to volunteer at their home in order to truly understand what an assisted living home is about and find out if it is the right business for you.
Identifying a home for Assisted Living
Once you’ve decided to establish an assisted living home, you’ll need to locate a suitable property. The ideal properties are single level homes, 4 bedrooms or bigger. A typical 4 bedroom will accommodate a capacity of 5 residents with the master bedroom being shared by 2 residents. This is the most commonly licensed assisted living home in Arizona.
Can you license the home you are living in?
Absolutely! That’s exactly how my wife and I started our first home. We prepared the home, licensed it and continued to live in it until our third resident moved in.
What makes a property suitable for an assisted living home?
The ideal home is single level and has an open floor plan with minimal or no carpeting and adequate square footage. Ideally it will also have a common bathroom that is easily accessible and can be converted to have a roll-in shower. Larger living areas such as great rooms are better for accommodating residents during activities and leisure time.
Leasing vs Buying
When leasing the home, the main advantage is the avoidance of a significant investment in the real estate needed for the business. But there are many disadvantages.
You will need to find an owner willing to lease for assisted living. The owners may not understand the assisted living home business and have reservations. They may also ask for HOA approval. HOAs typically influence property owners to avoid leasing to assisted living home leases. Often, when you find an owner willing to lease for assisted living the monthly rate is double that of the market rate.
There are other risks as well. A property owner may default on his/her loan. Also, a property owner may opt to not renew a lease. You may also be asked to carry liability insurance and have a beneficiary certificate issued for the property owner.
If at all possible, I highly recommend owning the property in which you license your assisted living business. You have none of the risks associated with leasing. You will also strengthen you overall business and have a business asset beyond the value of the home.
When evaluating home for an assisting living business, the first matter to address is eligibility for municipal approval. This is especially important if the city or county has a separation rule. Normally you can make a quick call to the zoning department and get a quick answer on eligibility. You can also view existing licensed homes on the DHS GIS website and get a rough idea if you are subject to denial due to a separation rule. If a property is not eligible, move on to the next one.
Important! Reserve your municipal approval!
Once you identify a home you plan to buy or lease, remember to reserve your assisted living home eligibility. Municipalities usually process applications on a first come, first served basis. I advise having your application prepared and ready for submission as soon as you have signed a lease or purchase contract. The last thing you want to happen is to wait the 30 days for a home to close and then find out someone down the block submitted an application for an assisted living home a week ago!
Arizona DHS requires that you must have approval from the governing municipality in which your home is located prior to submitting an application. This will either be the city, if incorporated, or the county in which your assisted living home is located. The approval process for each municipality will vary. They requirements may also differ within the municipality based on the anticipated licensed capacity for the home. Some examples of municipal assisted living approval requirements are as follows.
This is an overview of how you assisted living home will operate in the community. You may have to describe staffing, parking, resident population, etc
Many municipalities have implemented a separation rule to control the density of assisted living homes in the city or county. Separation rule distances are typically 1000 feet or ¼ mile. If you are subject to one of these rules you will need to be certain that any home location you are considering for licensure meets the separation requirements.
Sprinkler / Fire Suppression
Requirements vary. Generally speaking, most municipalities require sprinkler systems at capacities above 5 residents.
Inspection and possibly updating, depending on age.
Installation and inspection
Carbon Monoxide Detector
Installation and inspection
A drawing which represents the entirety of the structure, lot, inclusive of fencing, outbuildings, etc.
A drawing which represent the interior of the home with room dimensions, door locations, windows, etc.
An inspection by the fire service with jurisdiction for the property location.
Submission of the DHS license, confirming completion of the licensure process.
Most Restrictive Requirements
Another consideration when navigating the zoning process is to understand the concept of “most restrictive requirement”. Often there are rules from different agencies and municipalities involved in the approval process for an assisted living home. You must follow the most restrictive applicable rules. An example would be fire suppression or sprinkler systems. The Arizona DHS rules require a sprinkler system when licensed for 10 residents and above. The city of Gilbert, Arizona requires sprinkler systems for ALL assisted living home.
You should establish an LLC entity for your business and use it when applying for your assisted living home license. You can easily apply for your LLC in Arizona online via the Arizona Corporation Commission website. If your known place of business is located in Maricopa or Pima county you will not have to publish your LLC in a newspaper. Your LLC will be active within as little as 4 to 5 days if you choose to expedite.
Next, you will need to obtain an EIN or Employer Identification Number. DO NOT pay anyone to obtain your EIN. This is free and easily obtained vie the IRS website.
After you LLC is approved and you have an EIN, you can go to the bank of your choice and open a business banking account.
Often you will have to wait on the municipality to process your approval. Depending on the city it may take 30 days or more. During this time you should prepare you home for your initial survey inspection by Arizona Department of Health Services.
You will need to install grab bars in the bathrooms, post exit signs, install wheelchair ramps, display evacuation routes, etc. I recommend fully preparing at least one bedroom for a resident move-in to be inspected during the initial survey. Arizona DHS provides a checklist to guide you and ensure your home is fully prepared for the initial survey.
Arizona DHS Licensing Application
Once you have your municipal approval, fire service inspection approval and have your home prepared, you are ready to submit your license application to Arizona Department of Health Services. Completely fill out the application accurately.
You will also need to download the remittance for and fill it out according to your requested licensed capacity.
Lastly you will need to download and complete the Arizona Statement of Citizenship and Alien Status.
Submit these forms along with payment to Arizona DHS.
Assisted Living Home Manager
Prior to survey, your assisted living home will need to have a assisted living manager assigned who is licensed by the state of Arizona NCIA Board. Manager’s are allowed to manage a maximum of two assisted facilities.
Initial Survey Process
Arizona DHS will contact you and review your application. Next your application will be assigned to a surveyor. The surveyor will contact you and discuss your preparation for survey. If they are satisfied that you are fully prepared for survey, they will schedule your initial survey.
During the initial survey your facility and documentation will be reviewed for compliance with DHS requirements. The surveyor will inform you if there are any deficiencies or if you successfully passed the survey.
Your assisted living home license will be available a few days after a successful initial survey.
If you need assistance with an assisted living startup in Arizona, feel free to contact me.