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What is the Business Model of an Assisted Living Facility?

Are you wondering what type of business model an assisted living facility is? If YES, here are business models operated by most assisted living facilities.

In the United States, there are different business models used by assisted living facilities scattered all over the nation. Have it in mind that no two assisted living facilities are exactly the same.

A varying range of factors make them unique. Location, history, and other qualities are what helps to define each one, but you also have to understand that a facility’s business model is one of its most important characteristics.

An assisted living facility is a senior living option for people with minimal needs for assistance with daily living and care. The aim of these facilities is to help adults live and enjoy themselves independently in a safe environment when aging alone is no longer a safe option.

Have it in mind that assisted living facilities can vary widely, from smaller home-type environments to larger communities that provide a vast range of activities and amenities. In the United States, a good percentage of facilities at a minimum offer secure living spaces, meals, transportation, and medication management.

Every single decision at an assisted living community is impacted by the underlying business model used by the facility, which is why it’s necessary for stakeholders to understand the different types of business models when starting an assisted living facility.

According to experts, new and innovative business models are beginning to show promise in delivering better care and generating higher returns. Although this innovations vary across board, common among these new business models are the better alignment of incentives involving risk-bearing, adequate integration of care, and leveraging data and advanced analytics.

In addition, any government program, legislation, or initiative that affects healthcare reform, reimbursement, and regulation has a potential impact on seniors’ housing and care properties, especially how these facilities generate and disburse revenue.

Note that any government initiative to adjust these entitlement programs can have substantial effects throughout the industry. Most states in the United States have instituted governing or oversight agencies that handle property licensing, regulation, and inspection to include need-based certifications to run properties’ units or beds. Therefore, the concepts and arrangements of assisted living facilities will surely vary state by state.

Common Business Models for an Assisted Living Facility

Have it in mind that business models make a huge difference in how each assisted living facility makes decisions and which values they put first. Therefore, prospective assisted living facility owners and also residents have plenty of options to choose from, and they include;

  1. Not-for-Profit Facilities

This is one of the most common models for assisted living facilities in the United States. A good number of churches and charitable organizations consider senior living communities, like assisted living facilities and nursing homes, as a way to further their mission. Whether they center their offerings specifically on the poor, people with special needs, or take a more passive approach, their overall mission influences every action they make.

However, just like any other business model, Not-for-profits facilities also face unique challenges, and staying steadfast and concentrated on their specific mission can sometimes consume all their resources. However, for individuals who connect with the mission, not-for-profit communities can be the ideal assisted living facility to live.

  1. For-Profit Facilities

These sorts of assisted living facilities are the direct opposite of Not-for-Profit facilities. These facilities are managed as a regular business and are expected to be profitable; however, as with any business, each facility asks have its own unique goal.

According to reports, there are adequate variations within this category that it’s worth dividing into three sub-categories and looking at each individually: real estate developers, conglomerates, and family businesses. And although they all work towards having a profitable organization, each one comes with its own unique perspective.

  • Real Estate Developers: Note that this is a very attractive prospect: Real estate developers develop a property into beautiful apartments, help senior citizens move in, hand it over to experts, and never have to worry about difficult tenants breaking fences or making too much noise.
  • Conglomerates: Primarily found in large cities, conglomerates are more or less established when many facilities are put together into a single large network. This could happen if one facility is particularly successful and buys up others, or, more commonly, investors could get into the business by buying up a number of established communities.
  • Family Businesses: these sort of for-Profit facilities are passed down from generation to generation, and they tend to be deeply connected to their local community. Note that when a family is a driving force behind a business, it shows. Parents, for instance, put in a lot in their children and do whatever it takes to care for them. Those family values make a huge impact on businesses.
  1. Hospitals and Health Care Systems

In this age, Hospitals and healthcare systems are one common category of senior living community builders. According to reports, they more or less enter the market when they choose to inculcate senior living into their list of care options.

According to most, it offers them a more convenient way to provide intermittent or low-level care to seniors who don’t quite need a nursing home. Have it in mind that assisted living facilities managed by hospitals or healthcare systems offer a reliable range of medical care, but many of their decisions can be influenced by institutional influences.

For instance, they mostly tend to establish their system around what insurance plans cover, or what the government regulations ensure. Although this approach can feel somewhat impersonal, the attainable care options could be attractive to seniors who feel they require a certain level of medical care.


Indeed there are various types of assisted living facility business models, and they can seem overwhelming especially for new entrants into the industry. However, you need to understand that the particular characteristic prospective clients look for is person-centered care.