With the average price for independent living increasing at a faster pace than that of assisted living for 2014 sales, it makes sense that the spread between the expense ratio for IL and for AL would also widen. However, the change was bigger than expected. The expense ratio for IL decreased from 64.4% in 2013 to 61.0% in 2014, while for assisted living, the expense ratio actually increased by 260 basis points from 70.6% in 2013 to 73.2% in 2014, effectively doubling the basis point spread between AL and IL, from 620 basis points to 1,219 basis points. What could account for the higher average expense ratio for AL are the higher acuity levels and more memory care services.
