As seniors age, the level of care they need changes. Because the senior living industry has adapted to meet those changing needs, it’s important to understand the new and different options when it comes to investing in senior housing developments. 

We will discuss key differences in these levels of care, plus share more about our philosophy and considerations when making those investments in the types of communities and levels of care we develop for senior living operators.

In this article you’ll learn about:

Understanding the Differences Between ADL and IADL

Considerations for Developing Assisted Living Facilities

Added Costs & Regulations for Skilled Nursing Facilities

CDP’s unique approach to senior housing development 

Understanding the Differences Between ADL and IADL

First, let’s get familiar with a  couple of terms that come in handy when considering assisted living versus skilled nursing. 

Understanding the difference between Activities of Daily Living(ADL) and Instrumental Activities of Daily Living(IADL) is key to the main differences around investing in an assisted living community versus a skilled nursing facility. It all centers around a person’s capability in self-care and how to build a community or facility to support the caregiving activities that will be needed by the residents. 

Knowing a person’s capabilities in key areas of self-care determines how much assistance they’ll need. There are two tools for helping identify an individual’s care level – the Katz Index of Independence and the Lawton IADL Scale.

Let’s take a quick look at the key differences between ADLs and IADLs. Then, we will dive into why this matters for investors and developers of senior living communities and senior housing solutions in the United States.

ADLs – Activities of daily living

These are skills we learn as young children and are essential to basic daily living. Proficiency in these skills include:

IADL – Instrumental Activities of Daily Living

These actions are important to be able to live independently but are not necessarily required on a daily basis. 

Now, let’s dive a little deeper into the differences between assisted living facilities and skilled nursing care facilities.

Considerations for Developing Assisted Living Facilities (AL)

Assisted living facilities are for seniors who are not fully independent. Perhaps they can’t live on their own and only need a minimal amount of support in their daily personal or medical care. 

In other words, they may need some help with IADLs and a few or no ADLs. Residents in an AL community live in either apartments or individual rooms. Common areas exist for social and recreational activities provided by a program director. A dining room with home-cooked meals is offered by a professional kitchen staff or chef.

Assisted living communities, in most cases, are very similar to independent living communities…but with a bit more support on the IADLs and ADLs. Additionally, assisted living communities often have licensing requirements because they are providing some support for the daily health and physical needs of the residents.

AL on-site staff help with IADLs, but this is not the same level of skilled medical staffing as you would find at a skilled nursing facility.

For example, some facilities provide health management to prevent falls and manage weight. They can help with dispensing medication, housekeeping and laundry services, transportation, and meal prep.

Safe design is a top consideration in any quality assisted living community. Every aspect of a community’s design, budget, and development must meet ADA requirements. As a result, the list includes handrails and grab bars, adequate space in bathrooms, and proper lighting.

Developing assisted living communities that embrace limited independence while providing healthcare benefits are an important part of the design. Additionally, it’s important to provide communities that serve both the resident and their visiting family. 

It’s a fine balance for most developers but an area where CDP excels. Knowledge of laws and regulations is critical when choosing the right team for your next senior living community. 

Added Costs & Regulations for Skilled Nursing Facilities (SNF)

Let’s look at skilled nursing facilities. They offer a wide range of services, personal care, and medical care for residents who need help with IADLs and most ADLs. 

For example, SNFs offer more specialized medical support for residents than an AL community.  Staff includes licensed nurses and other medical professionals. In addition to services available in ALs, SNFs gear their services toward seniors who need round-the-clock care because of physical or cognitive decline. 

In addition, skilled nursing facilities offer rehabilitation therapies including:

Skilled nursing facilities have a heavy focus on healthcare support for residents who have specific medical needs. As a result, the development of these facilities requires extreme attention to the guidelines for such care.


There are many differences in oversight of ALs versus SNFs. ALs are regulated by the state. The guidelines vary from state to state and some are laxer than others. On the other hand, SNFs must abide by both state and federal regulations. 

Regulations for SNFs began in the 1960s. Facilities participating in Medicare or Medicaid must abide by the  1987 Nursing Home Reform Act. The 2010 Affordable Care Act included more guidelines. 2016 saw even more added regulations.

In addition, inspections at SNFs occur at least once every 15 months. In contrast, inspections for ALs can occur anywhere between six and 60 months.


Of course, the increased level of care in SNFs means an increase in cost. The national average cost per month in an AL is about $4,000 per month, excluding higher levels of care. For skilled nursing facilities that number increases to $7,500-$8,000 per month or more.

To sum up, designing and developing a skilled nursing facility requires knowledge of local and federal regulations. Additionally, the operator must have the proper licensure and level of care for residents that makes them a premier facility for the local market.

CDP’s Focus on Assisted Living Developments

At CDP, we work with senior living operators across the country. A primary focus for any of our projects lies in the operator partnerships. We look at the market viability of the levels of care an operator wants to provide. We assess the profitability to ensure that community development will serve all stakeholders – the operator, the residents and their families, and the investors who fund the development. 

For us, we’ve found the demand for communities with multiple levels of care to serve the families and communities in a way that benefits all stakeholders for the long term. By developing communities that offer independent living, assisted living, and specialized memory care, we are developing stable residences for seniors and their adult children.

Based on our current operating partners, this serves their global mission of quality senior living. Skilled nursing has its rightful place on the spectrum of senior living, but this simply isn’t for CDP or our current operating partners. For CDP, our focus has remained on high-quality independent living, assisted living, and memory care communities.

In closing, there are a lot of options out there. What differentiates CDP from other real estate developers?  We commit to creating projects that support communities and commerce. Our development projects are strategic and intentional to serve the greatest good for all stakeholders involved.

Learn more about us and our unique approach to senior housing development. Download our free Senior Living Strategy Guide for interested investors.