How to Minimize Risk in Assisted Living: The Non-Medical Advantage

Friday, January 31, 2025

Primary Blog/Assisted Living /How to Minimize Risk in Assisted Living: The Non-Medical Advantage

Brett Chotkevys

Many investors shy away from assisted living due to perceived medical risks and liability concerns. However, when structured correctly, assisted living can be a low-risk, high-reward investment. Unlike nursing homes, assisted living is a non-medical business, meaning operators do not need to employ doctors or nurses. Instead, they can leverage external healthcare providers while focusing on real estate and operations. In this blog, we’ll break down how to limit liability, separate risk, and maximize profitability in assisted living investing.

Why Assisted Living is a Low-Risk Investment

One of the biggest misconceptions about assisted living is that it carries high medical risk. The reality? Assisted living is non-medical by definition. This means:

No doctors, nurses, or medical personnel are required on staff.

All medical services are provided by third-party healthcare providers.

Liability for medical care falls on these external companies, not the assisted living operator.

Instead of providing medical care, assisted living focuses on helping residents with Activities of Daily Living (ADLs)—bathing, dressing, toileting, and medication management (pre-prescribed by doctors).

By keeping the business non-medical, assisted living operators can dramatically reduce liability while still offering essential care.

Separating Risk: The Right Business Structure

To further minimize risk, successful assisted living investors separate their real estate from their operations. This is done through a two-entity structure:

Real Estate Company: Owns the physical property and leases it to the operations company under a Triple Net Lease.

Operations Company: Runs the assisted living business, handling staffing, residents, and care services.

Why does this matter? The real estate company holds the appreciating asset and remains protected from lawsuits or operational risks. Meanwhile, the operations company can manage day-to-day responsibilities while shielding the investor’s long-term wealth.

Leveraging Outside Healthcare Services for Added Protection

Since assisted living is non-medical, external healthcare providers handle medical needs. This includes:

Hospice & Home Health

Primary Care Doctors & Nurses

Physical Therapists & Dentists

These providers bill the resident’s insurance directly, meaning:

✅ The operator does not pay for their services.
✅ The operator does not manage their liability.
✅ The operator gains value by offering a full-service environment without added cost or risk.

By leveraging these external services, assisted living facilities can charge higher rents while avoiding medical liability.

Addressing Common Risks: Falls, Abuse, & Neglect

Even in non-medical assisted living, some risks exist. The most common concerns include:

Falls: Elderly residents naturally decline in mobility. Assisted living does not prevent falls but ensures rapid response.

Abuse & Neglect: Preventable with strong management, well-paid staff, and clear protocols.

Legal Issues: Higher-end facilities attract families less likely to pursue lawsuits.

The best way to mitigate these risks? Hire quality caregivers, implement strict procedures, and create a personal connection with residents and families.

The Role of Insurance in Risk Reduction

To further protect the business, investors should have the right insurance policies in place:

General Liability Insurance (covers accidents, injuries).

Professional Liability Insurance (protects against claims of negligence).

Business Income Insurance (covers lost income from unexpected events).

Workers’ Compensation Insurance (for employee protection).

With proper insurance, potential risks become manageable, making assisted living a stable and scalable investment.

Final Thoughts: High Reward, Low Risk

​Assisted living is one of the most recession-proof, high-reward investments available today. By structuring the business correctly, separating real estate from operations, and leveraging outside healthcare providers, investors can significantly limit liability while maximizing cash flow.