- The Washington Times - Monday, April 8, 2002

Sunrise Assisted Living is coming of age.Closing in on its 21st birthday, the McLean pioneer of assisted living communities is still growing, trying to keep pace with its expanding customer base and stay ahead of its growing list of competitors.
Sunrise is working hard to build brand loyalty and offer services that cater to seniors' needs and desires. People entering their retirement years today are healthier than in the past and tend to want less intrusive help in their day-to-day lives.
Like some of its competitors, Sunrise last year began its "At Home" program, which allows seniors who don't require constant care to remain home as long as possible, receiving occasional care as needed.
Frank Morgan, an analyst with Jefferies & Co., says the program is a good strategic move for Sunrise, because it gets people used to their services two or three years before they would need to move into an assisted living facility.
"It makes a lot of sense," he says about the program, which is operating in Washington and Philadelphia, and will expand to Boston, New York and New Jersey this summer.
The at-home care strategy is just the latest move for a company that has grown rapidly in its relatively short life. Sunrise was founded in 1981 by a young couple in search of an alternative retirement option to nursing homes. Now it is a multimillion-dollar business with about 12,000 employees and some 200 properties.
Its earnings last year beat analysts' expectations, while occupancy at Sunrise's mansion-style assisted-living facilities remained above 90 percent compared with the industry average of 85 percent.
Assisted-living centers differ from hospitals and nursing homes in the level of service and client base. Sunrise's residential communities are geared toward seniors who are unable to live independently but do not need complex medical care. The centers provide help with such daily activities as eating, bathing and dressing, as well as specialized services such as caring for people with Alzheimer's disease.
Deciding to move an relative into an assisted-living community is tough, which is why Sunrise is trying to offer families as many choices as possible, says Paul Klaassen, founder and chairman of the company.
"When families visit [a Sunrise facility] they think about what they need and sometimes might say, 'You know, Mom is not ready for assisted living but she could use help at home in other ways.' Or the other way around," he says. "Sometimes they come thinking their elderly relatives can stay at home, but then they realize it's better to have them move in."
Mr. Klaassen, 44, is Sunrise's biggest shareholder. Originally from the Netherlands, he spent his summers before college visiting his grandparents, who lived in assisted-care houses where residents lived in a homelike environment. They were able to do all the things they had done on their own before, receiving assistance only when they really needed it.
Mr. Klaassen was exposed to the American version of caring for the elderly when he met his wife, Teresa. When she was 15, her mother became terminally ill. Father and daughter opted to care for her at home until her death, rather than put her in a nursing home. But the lack of options was something that made a lasting impression on the future Mrs. Klaassen.
When the couple met, they volunteered together at senior care facilities. Mr. Klaassen had liked what he had seen in the Netherlands and wondered why care options in the United States were so limited. So in 1981, the couple sold their home and moved in and renovated a boarded-up nursing home in Oakton.
The first year, they cared for residents on their own. But demand grew quickly.
Today Sunrise owns and operates 193 facilities through the United States, mostly clustered around major cities such as Washington, Boston and New York. In the late 1990s, the company opened facilities in Britain and Canada. Now it is breaking ground on a property in Germany, and Mr. Klaassen says he has been approached by investors interested in expanding the company into Japan.
"[Mr. Klaassen] really has created the assisted living industry in America, and he did it out of the deep conviction that there's a better way than nursing homes for America's senior population," says Jerry L. Doctrow, analyst with Legg Mason Wood Walker, who has known Mr. Klaassen for more than three years. Legg Mason also owns about 100,000 shares of Sunrise.
"They are a real innovator in the industry," says Mr. Morgan of Jefferies & Co., which doesn't owns any shares of Sunrise.
The residential, rather than medical, atmosphere of the Sunrise properties coupled with the independence that residents are allowed make the company unique, Mr. Doctrow says.
Sunrise's philosophy stresses the importance of preserving the independence, privacy and dignity of its residents. For instance, if an elderly woman is able to bathe herself, she is not given assistance unless she requests it.
For an industry that was started just two decades ago, assisted living has boomed, with thousands of companies in the market. Among the competitors are Alterra Healthcare Corp., Epoch Senior Living Inc., and Marriott Senior Living Services, a division of Marriott Corp. in Bethesda.
Industry insiders say assisted living arrangements appeal to elderly who feel robbed of their independence when care is forced upon them.
"The Dutch have a saying," says Mr. Klaassen, who founded a national trade group, the Assisted Living Federation of America, which represents more than 7,000 members. "'Providing care with your hands behind your back.' It means it's unhealthy to do too much for the elderly."
Gregg Powell and his wife, Barbara Rosen, kept his parents close by in a condo at the same building for years. But recently the couple has become nervous about leaving the elders alone all day.
So a year ago, the younger Mr. Powell began looking at assisted living facilities. He even flew to Oklahoma, where his parents are originally from, in search of the perfect retirement spot for them. Among the numerous places he checked out were Sunrise residences. But none caught his eye like the one in Alexandria, where his parents are moving.
"It's just such a hard decision, one that people like to postpone as long as possible," says his wife, Barbara Rosen, whose grandfather lived at a Sunrise facility in Falls Church.
Sunrise's Alexandria facility "seems calm and everyone is helpful," says their son. "Nobody here seems to be just sitting around."
The number of Americans 85 and older jumped 37 percent during the 1990s, while the nation's total population rose just 13 percent, according to the Census Bureau.
As the aging population grows, so does demand for senior care. About 7 million elderly Americans needed assisted living care in 1999, according to investment firm Dain Rauscher Wessels.
Mr. Klaassen says Sunrise will remain ahead of the game, offering seniors whatever services they need, like the "At Home" program.
"Sunrise does have a philosophy that goes a little bit further in the concept of aging in place," says Paul Willging, director of the National Investment Center Seniors Housing & Care Program at Johns Hopkins University. "They've developed a reputation of keeping the resident as long as possible, even as the resident gets to point of frailty and when most people would say a nursing home is the best next step."

Feeling at home
The "At Home" program is an extension of Sunrise's services, a sort of preparation for the final move into one of its properties.
Here's how it works: Sunrise schedules a variety of "At Home" services such as personal emergency-response systems, phone and video monitoring, medication reminders, home health care and wellness visits, meal delivery, housekeeping, transportation, and home maintenance.
The cost for the service depends on what a customer signs up for. If one just wants an emergency response system, for instance, the price would be about $49 a month. But a personal health trainer with 24-hour care could be as much as $6,000 a month.
"No matter how good an assisted living facility is, seniors would still prefer to stay in their own homes as long as possible," Mr. Willging says. "So there's a market out there obviously. And Sunrise can build brand loyalty [with clients] while they are at their own home."
The comfort and look of a facility is a deciding factor in whether a family moves an elderly relative in a Sunrise facility, or if they keep looking. That's why Mr. Klaassen says the company's properties are more likely to remind one of a Ritz-Carlton hotel than a nursing home.
The rooms at Sunrise's headquarters in McLean are spacious and sunlit, tastefully decorated in wooden, cushioned furniture in earth tones. The walls are covered in antique black-and-white photographs and colorful paintings of peaceful settings.
The Sunrise residences are nothing like nursing homes. Each is built in a mansion-style, with half of the space designated for common use where residents can gather for activities like baking, playing cards, watching TV or reading. There are gardens, patios and porches.
Unlike at nursing homes where routines are established for all the residents, the Sunrise staff works around residents' schedules.
"It's all about focusing on the mentality of the residents and how they live," says Todd Williams, executive director of Sunrise's Alexandria facility. He joined Sunrise in 1988, ago after years of working at nursing homes and with the Alzheimer's Association.

Moving in
As Sunrise has moved into home care, so have other large skilled nursing chains. Beverly Enterprises, of Fort Smith, Ark., now offers hospice and home-health equipment and services at about 60 locations around the United States.
Another company, Manor Care of Toledo, Ohio, completed a merger with In Home Health Inc. in December 2000, increasing its home health and hospice operations to nearly 80 offices in 22 states. Manor had previously been headquartered in Gaithersburg, Md.
Sunrise, as one of the oldest companies in the business, has about 5 percent of the nationwide market share. The company beat analysts' expectations for both quarterly and yearly earnings early this year.
For its fourth quarter ended Dec. 31, the company reported net income grew 26 percent to $11.12 million (47 cents per share) from $8.8 million (39 cents) for the like quarter a year earlier. Meanwhile, revenues rose 43 percent to $112.29 million from $78.55 million.
Annual net income rose 102 percent to $49.1 million ($2.08) from $24.28 million ($1.10). Revenues were up 37 percent to $428.22 million from $312.67 in 2000.
Shares of Sunrise, which are trading better those of its competitors, dipped earlier this year as the Enron Corp. fiasco put the spotlight on companies that profit heavily from joint ventures, which typically do not disclose many of their terms.
Sunrise has released higher-than-expected earnings and begun disclosing more information about its joint ventures, so the stock is up again. It closed at $tk Friday on the New York Stock Exchange, up from the low $20s where it traded after Enron's joint ventures made the news in the fall.
"The stock has improved significantly since they reported year-end earnings," Mr. Doctrow says. "With that they provided a lot more disclosure about the joint ventures, and that's gotten people more comfortable."

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