Conchy Bretos gives testimony to the Senate Committee on Aging and Entrepreneurship

On February 12th I was invited to testify to the US Senate Aging and Entrepreneurship committees to provide information about the challenges that “late-in-life” entrepreneurs like myself face in starting their businesses. The purpose was for the Committees to gather recommendations on how to facilitate these initiatives. At the meeting were senior senators and chair of committees, Senators Bill Nelson, Susan Collins and Tim Scott. There was consensus among those providing testimony that older entrepreneurs constitute the largest group of small business owners today and is growing. Today over 9 million seniors are establishing businesses with 30 million more coming over the next decade. It is a matter of great interest to the Senate and a matter they want to prepare for and facilitate. These businesses are also the largest source of new jobs to young employees.

A main challenge that these older entrepreneurs encounter is access to capital to start and remain in business. Access to government, federal agencies and investors is also a barrier. Discrimination toward seniors is real and alive. Accessing capital from lenders always raises the question of how long the business will be operating given the age of the owner. Succession planning then becomes more necessary than ever. The myth that older individuals cannot learn new skills or new technology; that they take rather than give was shattered with the testimony and research presented at the hearing.

The Senators asked for ideas of what would make life easier including introducing legislation. Several workable ideas were submitted that include allowing the use of unemployment benefits for startups, new regulations to make it easier to obtain a Small Business loan, coordination at the federal level so entrepreneurs can communicate with federal agencies, and more.

The hearing was the first to address this issue We believe that it provided clear understanding of the role that older entrepreneurs are playing today and in the future and the obstacles that they face that could be facilitated by the Senators. More on this.

Conchy Bretos and Senator Bill Nelson after the hearing:

Conchy Bretos’ testimony to the committee:

For the past seventeen years our firm has worked with public and private entities in 23 states. Later this spring we will be opening and managing an affordable assisted living facility for the District of Columbia Housing Authority. Our projects have proven to reduce Medicaid and Medicare spending by keeping our residents healthy, away from costly institutions, while generating thousands of new jobs and healthy operating margins. For the past two years we have partnered with low income housing tax credit developers, owners of affordable housing and private owners/investors to scale our model. This has required a major restructuring of our firm and our business model.
In 1995 I created Mia Senior Living Solutions as a for profit company understanding that if our firm was to grow rapidly it had to be fueled by profits. As Florida Secretary for Aging under the Lawton Chiles governorship, I got a good understanding of aging issues and developed a strong relationship with the aging network. I had lived long enough to learn from failures, how to deal with detours and the inevitable ups and downs. Changing the way we care for low income seniors and disabled adults was not a new idea but no one had created a successful model to do it. We created a model within an exponentially growing market with little competition.
Starting my own business was as much due to life circumstances as it was a career change. An empty nest, the end of a marriage, the loss of a job, I reached midlife with an urgency to leave a legacy, to contribute, to make money and live to the fullest those bonus years that longevity gives us. Wanting to leave an impact on the world grows stronger as we age. I asked myself if not now, when? If not me, who? For a long time I had dreamed of creating something lasting that would connect me with future generations. I did not want to defer this dream any longer. Not having health insurance kept me awake at night. I took some time to reflect and assess what I wanted to do, what skills I possessed and then tested the idea in the real world.
When my term ended as Florida Secretary for Aging, I came home to Miami with some savings from my job and an idea; to convert a public housing building into assisted living and allow for true aging in place. The Miami-Dade Housing Agency Director wanted to dispose of the highly deteriorated Helen Sawyer building in downtown Miami. I told him I had an idea I wanted to test in the building. He said yes but he had two requirements: One was that I had to prove my idea quickly and two, I had to find the funds to do it. That day I formed my company, invested some money in stationery and worked on a feasibility report with the help of some friends. At the same time I approached the State Legislature and was able to get a $1.2 million allocation of Medicaid waivers. I was awarded a five year contract by the Board of County Commissioners to start the conversion of Helen Sawyer Plaza with a promise that it would be self-sustainable by the end of the first year. We developed detailed budgets, worked on the policies and procedures needed, hired the staff needed, secured vendors. I worked very hard until what seemed like the impossible, happened. We opened the doors of Helen Sawyer and in six months the place was full with a good waiting list. I knew that this first project had to be successful if we were to move forward. This innovative project was featured several times in the media, won four national awards and became the model for the nation. It became a show place with constant visitors from the entire nation, senators, governors, secretaries and a multitude of housing directors who wanted to have one just like the one I had created. I was able to negotiate new contracts with housing authorities as far away as West Virginia. I was invited to speak at several industry conferences and build a community and a larger network. Although we did a lot of free work in the beginning, we moved away from the pro-bono and created a successful business. It was hard to keep up with demand with only myself so in 2001 I asked my daughter, a management consultant in New York, to join the firm. To my amazement she accepted. Mother/daughter teams weave together business and family life, school schedules, time with the grandchildren. All are important parts of the day-to-day routine. Succession planning is a prominent topic of discussion. Although letting go is not an easy process for me.
Receiving the first Purpose Prize award in 2006 and becoming an Ashoka Fellow in 2010 have certainly been turning points in our business life. These awards have provided validation for what we do and a network of professionals that are interested in our scaling our business. We have received expert and legal advice, mentoring and support. We have learned how to present ourselves, how to raise money, structure ventures, re-engineer our firm. I know now more about databases, LinkedIn, Facebook, electronic health records and blogging than I ever wanted. I do not have one boss anymore but many of them, our advisors, board members, funders, clients and investors.
However, most of my fellow entrepreneurs are not so lucky. Lack of capital, connections and mentoring remain major obstacles for us aging entrepreneurs. Relying on grants to sustain your work has become an impossible proposition. In order to survive, the initiative must generate its own source of revenues by selling products produced by the company and that can be replicated over and over again.
Most of our work involves partnering with government to change policies that represent obstacles. Today, more than ever, government needs individuals like us with the public interest in mind, talented and driven. Approaching government usually ends in rejection at least that was my case. Two years ago we made a major decision to team up with private entities to better grow our business. But this too has its own challenges like the distrust by investors of the reliability of government subsidies like the Medicaid waiver or the disconnection between the regulations of the Low Income Tax Credit program and assisted living. For these investors financial rewards come first and social impact is gravy. Maintaining that balance has been a major challenge for us. But we know consumers are demanding more socially responsible behavior from businesses. Businesses need to catch up with this trend. Profits are not everything.
America is a young country; our models do not include old people. The most common image of an innovator is that of a youth creating a great idea in a garage, a dormitory, or a makeshift office. In reality these are the exceptions. Research tells us that it usually takes 20 years for the birth of an idea to become fully implemented. It is around the age of 40 or 50 years that individuals are at the peak of their work. It has been proven that a 55 year old and even a 65 year old have significantly more innovation potential than a 25 year old. It is fair to say that less gray hair sharply reduces the innovation potential in an organization. Yet, stereotypes like old people cannot learn new skills, master new technology, that they take rather than give abound. Shattering these stereotypes must be a major priority for all. This hearing goes a long way to doing that.

Elders Do Better at Home

 What accounts for reducing healthcare costs, faster recovery of seriously ill clients and improved physical and cognitive heatlh? You will never guess – bringing services to where these clients live.

The private assisted living industry is now fully engaged in servicing elderly clients in their homes. Most major assisted living chains are now caring for clients by dispatching caregivers to their homes at a cost of $240/day. Most have seen a growth of 20% in this line of service. The impetus to engage in this line of service may have come as a result of the stagnation that private facilities have been experiencing for the last five years; or, perhaps it may have been the result of several studies revealing that 89% of elders wish to remain at home as long as possible. Hospitals are finding out that seriously ill elders do better when medical services are provided in their homes.

John Hopkins University School of Medicine began the home-hospital movement back in 1996 as a pilot program. Research has proven that elders with potentially deadly diseases like congestive heart failure and cellulites can be safely treated at home with astonishing results. Not only was the care as safe and as satisfactory as hospital care, but recovery was faster and the cost much lower, 60% less.

There is no doubt that the trend in the future will be to provide as many services as possible to elders in their homes. A great idea!

The Challenges of Global Aging

America is a relatively young country as far as the percentage of individuals 65 years and older in the U.S. today. About 12% of the population in the U.S. is 65 years and older. However, that percentage is projected to increase to 20% within the next decade. Compare those numbers with that of other countries like Japan with the highest percentage of seniors currently at 21.5% of the population. Global aging affects all aspects of our society: work, health care, retirement, services and housing, among others. One of the major challenges is what we call the dependency ratio which means that for every person age 65 years and older there will be fewer than two persons in the workforce and available to care for the older generation. Exceptions are those countries with high birth rates (Mexico, Iceland and Turkey) or in countries like Australia, Canada and New Zealand with high immigration. However, in most countries the dependency ratio will sharply increase from 2020 to 2050. It is becoming more important that we create new ways to care for this aging population that is cost effective and dignified. The U.S. has the highest per capita health care expenditure in the world with a per capita cost per individual of $6,714. Japan, on the other hand, has the lowest health expenditure with a per capita expenditure of $2,581, half of that of the U.S. Most of the expenditure in Japan is paid by the government.

During the Ashoka Summit held this month we were able to discuss with other Fellows challenges facing their countries. Masue Katayama, a Fellow from Japan, has worked for the past twenty years in providing services to the older population in Japan. She came to learn how our firm has been able to change how we care for this older population. We believe that the global financial crisis is pushing us to make due with less and to learn how to use government funding more efficiently. Our firm has a proven track record of being able to service three times as many seniors with the funding the government spends on one. Japan, along with many European countries, has older people and lower health care spending than the U.S. They do this by fixing prices and manipulating prices to keep costs down. Every two years the price of each treatment, test and medication is examined to see if excess profits are leading to overuse and if so the price is cut. This is not done in the U.S. because those who profit from high prices are so powerful. This rationing and price cutting impacts the ability to control chronic illnesses at an early stage. Instead of rationing, Japan should look at ways to improve people’s lives by systematically changing lifestyles through better diets, exercise, medication management and supervision. This is something that Japan and other European countries can learn from the U.S.

Masue and I sat down to establish a collaborative effort that will enable us to learn from each other. She visited one of our affordable assisted living facilities and was impressed with the home atmosphere and the improvement in the physical and cognitive health of our residents. We agreed to formalize this collaboration by her sending a group of her operators to the U.S. for a month to live and learn at one of our facilities. Mia will do the same as we know that there are lessons to be learned from Japan as they tackle the common challenges of global aging.

Impact of Supreme Court Decision on seniors

In June the U.S. Supreme Court will determine the fate of the healthcare reform and with it, the fate of many seniors in this country.  There is consensus that healthcare reform cannot be viable if the public option is deemed unconstitutional.  This comes at a time when the economic and health security of seniors is at its worst.  Healthcare reform,although aimed at the 40 million uninsured individuals, provided great benefits to seniors who cannot afford long term care.  Included in the healthcare reform were incentives to state to provide affordable long term care to seniors who want to remain in their communities and avoid costly nursing home care.

Lets take a look at what is at stake.  Debt and deficit reduction proposals by policymakers include major changes to thre three major entitlement programs, Medicare, Medicaid and Social Security.  Some proposals include raising the age of retirement to 67 years, asking higher income Medicare beneficiaries to contribute more to the cost of Medicare and federal block grants to states so they can pay the federal share of their Medicaid program expenses.  One mistake made by policymakers is to look at each of these programs separately and failure to recognize how interrelated they are in their effect on the economic security and well being of seniors.  For example, stopping annual increases in social security payments will result in less funds available to seniors to pay for healthcare.

Most seniors live on low or modest incomes, 1 in 10 have income below the poverty level ($10,458) and the number of seniors living in poverty increased when you take into account out-of-pocket expenses from 9 to 15%.  Many seniors today do not have long term care insurance coverage which means that assisted living and community care services are unaffordable or that paying for them will require a larger outlay.  It is predicted that low incme seniors will exhaust all their assets by the time they reach older age.  It is estimated that 2/3 of those 65 years and older will need long term care services.  Meaning that they will be solely reliant on Medicare and Medicaid to survive.  And yet most states restrict long term care funding in community settings forcing these seniors to enter nursing home care prematurely at four times the cost.  Dont they see the writing on the wall, or is it that they constantly engage in wishful thinking?  Those who will fare the worst are minority groups.  Poverty rates among black and hispanic seniors are more than twice as high as those among their white counterparts.  To compound the problem they suffer from a multitude of healthcare problems, again higher than the white seniors.  One wonders what information our policymakers rely on to make untimely and disastrous cut cutting decisions.  Not our seniors.

Hispanic seniors

We live in an aging world with countries like Japan and Italy with 21.6% of their population 65 years and older.  Our nation is still relatively young with an elderly population of less than 13% but that is about to change.  The baby boomers who started turning 65 last year will add 75 million more seniors and the percentage of seniors in this country will rise to 20% within the next ten years.  This is good news  if you are getting older while remaining healthy.  Unfortunately for the large number of low and middle income seniors staying healthy and having access to services is not always an option.     The growing number of Hispanic seniors continues to experience a litany of problems when accessing services, among them, language and cultural barriers, a fragmented service delivery system and lack of trained bilingual staff.

Take for example my own state of Florida where over one million individuals are 65 years and older and few have access to critical healthcare services.  Luckly for our Hispanic community they are part of what is called the Hispanic paradox which means that despite their socioeconomic hurdles and lack of access they live longer than anyother ethinic or racial group by seven or more years.  This is because Hispanic seniors are much healthier than expected and the reasons for this paradox are a matter of debate.  Many suggest that factors such as diet, lifestyle choices and a strong social support network are key in understanding Hispanics’ better-than-expected health.  Another favorable condition of Hispanics in Florida include declining disability rates, lower rates of Medicaid use and low utilization of nursing home care.

Conchy and 105 Rafaela

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