During the past 20 years, hundreds of communities in virtually every state where CCRCs operate have selected A.V. POWELL & ASSOCIATES as their actuarial consulting partner.

A list of our standard services is given below and detailed descriptions can be reviewed by clicking on the items that are highlighted. To request a fee quote, a formal proposal, or references, please contact any A.V. POWELL & ASSOCIATES office.

ACTUARIAL EVALUATION STUDIES

SOFTWARE DEVELOPMENT AND SUPPORT

Fee and reserve adequacy State regulatory compliance Pricing new contract options Future service obligation reporting Annual actuarial compilations

FORCAST—actuarial study projection software Entry fee amortization software FINAID—software to assess prospective resident's ability to pay monthly fees A2ZCCRC—Internet-based benchmarking database

ACTUARIAL/FINANCIAL FEASIBILITY STUDIES

POPULATION FLOW PROJECTIONS

Credit-enhanced financing Pre-development planning Mergers and acquisitions New starts and expansions Debt capacity analysis

Long-term health care needs Apartment turnover statistics Financial projection assumptions

OPERATIONAL REVIEWS

ASSESSMENT OF LONG-TERM CARE LIABILITIES

Benchmarking studies Cost allocation procedures Comparison to industry standards Financial ratio analysis

Self-insurance funding requirements Analysis of LTC insurance programs Coordinating contract design with individual LTC policies

As innovative consultants to the aging services continuum (ASC), we provide our clients with a multidisciplinary approach combining accounting, actuarial, general management, marketing, operational and analytical expertise in every consulting engagement. A.V. POWELL & ASSOCIATES combines the most sophisticated population projection model with a state-of-the-art financial statement system. This FORCAST model, along with our actuarial and financial database—which is the largest in the industry—allows us to generate credible and reliable projections.

Comprehensive actuarial study (aka Actuarially-Based Financial Accounting "ABFA" actuarial study).
A comprehensive actuarial study is the cornerstone of an actuarial analysis of a CCRC. The results of this study indicate whether a retirement community is in "satisfactory actuarial balance" as defined by the actuarial standards of practice. This study determines whether the cash and reserves held by the facility are sufficient to cover its future obligations to current residents, whether the combination of monthly and entry fees charged to new entrants covers their costs over their expected lifetimes, and whether projected cash flows are positive and will meet any financing covenants or regulatory requirements. The Board and management of CCRCs use this study as a guide for annual fee adjustments and to determine whether their facilities are solvent. Positive results from a comprehensive actuarial study are often shared with residents to assure them of the financial health of the facility and to educate them about how fee increases are determined.

Actuarial feasibility studies for rated bond issues.
Sophisticated investors and bank credit committees have relied on financial projections based on actuarial techniques and assumptions to authorize commitments for more than $1 billion in letter-of-credit rated CCRC bond financings since 1988. An actuarial feasibility study enhances the traditional accounting feasibility approach by determining whether the entry fee and monthly fees paid over a typical resident's lifetime will cover the expected cost of the resident's care (referred to as an actuarial new entrant cohort pricing analysis). The actuarial feasibility study also quantifies the level of reserves (cash and investments) that a facility needs today in order to meet future obligations to current residents (referred to as an actuarial valuation). An annual update to the actuarial study, which indicates a CCRC's financial condition and provides valuable information to guide management in making adjustments to future fees, can document a CCRC's "satisfactory actuarial balance," which is often required to maintain its letter-of-credit commitment.

Actuarial reports to meet CCRC statutory requirements.
CCRC regulations in several states (Arizona, California, Maryland, New Hampshire, North Carolina, New York, and Texas) require periodic submission of a formal actuarial study. Our actuarial report is specifically designed to meet the format and content requirements specified by state regulations. In states that require an actuarial analysis, our reports have been reviewed and accepted by appropriate regulatory agencies. We have provided consulting services to most states that regulate CCRCs, and two states have designated A.V. POWELL & ASSOCIATES as their primary advisor on actuarial issues for CCRCs and reviewer-of-choice for actuarial studies submitted by other firms.

Actuarial compilation.
For many CCRCs, an annual update to their actuarial analysis is a critical ingredient in finalizing their budget and making decisions about annual fee adjustments. For clients who lease our FORCAST software, we annually provide a summary actuarial report that provides information to indicate whether or not the organization is in "satisfactory actuarial balance." For those organizations who update their actuarial study less frequently, such as every two or three years, moving to annual updates using the actuarial compilation should prove to be an affordable and more informative option. The actuarial compilation report employs the same procedures that are used for the comprehensive actuarial study. The primary differences are that no formal presentation is made to the Board, management, or residents; only a limited number of key tables and charts are included in the report; and no comparison of actuarial statistics is made with similar organizations.

Compliance reports for estimating the obligation to provide future services.
To prepare a CCRC's financial statements in accordance with generally accepted accounting principles (GAAP), auditors rely on the future service obligation report. The CCRC's obligation to provide future services is derived using a method prescribed by accounting guidelines that are found in Chapter 14 of the AICPA Audit and Accounting Guide for Health Care Organizations. Although an future service obligation report is essential for completing a CCRC's annual audit and employs some actuarial principles, it is not a substitute for, nor does it provide the same information as, a comprehensive actuarial study.

Design and pricing of alternative continuing care contracts.
Since funding options for senior housing are very competitive in today's market, CCRCs are challenged to develop new contracts and adjust existing contracts to meet consumer desires. In the past, many contract options were devised without evaluating the long-term financial implications. However, by applying actuarial techniques to determine the cost factors for various contract design changes, CCRCs can create new contracts that are compatible with existing contract pricing. In other words, an actuarial contract pricing analysis reveals information that allows a CCRC to set monthly and entry fees that are "revenue neutral" in relation to other contracts. A.V. POWELL & ASSOCIATES has designed, or assisted in the development of, numerous contract options for CCRCs nationwide, and we maintain a database of frequently requested options by client location.

Actuarially-based population projections to determine nursing care needs and provide basis for economic feasibility studies.
Critical to any CCRC's financial projections are assumptions about apartment turnover (attrition), apartment density ratio (number of second persons in units over time), and usage of healthcare services (e.g., assisted living or nursing care) by continuing care contractholders. These assumptions have dependent relationships that must be consistent if the resulting projections are to be credible and reliable. As the pioneer in the application of actuarial science to CCRCs, A.V. POWELL & ASSOCIATES has accumulated the largest database on CCRC resident demographics and usage of healthcare services. By applying information from this unique database, we help define assumptions for feasibility studies for unrated bond financings as well as generate actuarially based population projections to assist our clients in anticipating long-term care needs.

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