The Hidden Cost of Assisted Living Referral Agencies (and Why a Transparent Alternative Is Needed)
Introduction: What Families Don’t Know About Assisted Living Referrals
When families search for help placing a loved one into Assisted Living, they often turn to referral agencies like A Place for Mom or Caring.com. These companies advertise as “free” services for families but in reality, they make money by charging the facilities hefty fees for every placement.
Behind the scenes, this system can drain small and mid-sized operators of thousands of dollars per resident, reducing resources that should go directly to caregivers, nurses, and residents.
This blog will explain:
How referral agencies really make money
The financial impact on operators and families
What government investigations have revealed
Why monopolies hurt small businesses
And how new models, like Jessica Solomon’s Next Best Home, are changing the game
How Assisted Living Referral Agencies Really Make Money
Referral agencies make their money by charging placement fees to senior living communities. While families don’t get a bill, operators do.
Fees often equal the first month’s rent and care charges
These can run from $5,000 to $12,000+ per resident
Agencies advertise as “no cost to families,” but these expenses drive up overall pricing and limit what operators can reinvest
Example: The Financial Drain
A small community that admits 10 residents per year through a referral agency at $10,000 each loses $100,000 annually.
A mid-sized operator admitting 30 residents per year could lose more than $360,000 annually.
That’s money that could instead fund:
Higher caregiver wages and retention bonuses
Hiring additional nurses or activity coordinators
Facility upgrades and safety improvements
Better dining, memory care, or wellness programs
Instead, those funds are siphoned into referral agencies that provide no direct care.
Government Investigations Into Referral Agencies
Referral agencies have faced increasing scrutiny in recent years:
Senator Bob Casey, Chair of the Senate Special Committee on Aging, demanded answers from A Place for Mom over misleading claims that their services are “unbiased” and “free” while only promoting facilities that pay commissions.
A Washington Post investigation revealed that over a third of facilities awarded A Place for Mom’s “Best of Senior Living” designation had recent citations for neglect or unsafe conditions.
The Better Business Bureau has documented numerous complaints from providers who were billed by referral agencies even without requesting services.
Reports show that families are rarely told how the referral business model works—that they are being “sold” to whichever operator pays the highest commission.
These findings highlight why the current system lacks transparency and can distort family decision-making.
How Referral Agencies Create a Monopoly
Referral giants like A Place for Mom dominate:
Advertising and SEO – They spend millions to appear at the top of every Google search for “assisted living near me.”
Lobbying and influence – Their large budgets shape legislation and oversight conversations, drowning out smaller providers.
Biased visibility – Facilities that can’t afford high referral fees are buried, even if they provide excellent care.
The result? Families see a narrowed pool of options, while independent and smaller operators are forced to either pay up or lose residents.
The Alternative: Jessica Solomon’s Next Best Home
While the old referral model drains communities, innovators are building transparent alternatives. One promising example is Jessica Solomon’s next best home.com
How Next Best Home Works
Full transparency – Families and providers know exactly how fees work. No hidden commissions, no inflated referral charges.
Fair monetization – Instead of charging operators thousands per resident, the platform uses creative shared-value revenue streams.
Banker & attorney partnerships – Families gain access to financial planning and elder law guidance—critical services for seniors navigating contracts, payment options, and long-term care planning.
Community-first design – By reducing unnecessary fees, operators can reinvest into staff wages, resident programs, and quality of care.
Why It’s Better
Families win – They get unbiased placement plus financial/legal tools to make better decisions.
Operators win – They save tens or hundreds of thousands annually.
Staff & residents win – More money is available for better wages, training, and quality of life improvements.
This is a true win-win-win model—a sharp contrast to the traditional referral monopoly.
What Families Should Know Before Using a Referral Agency
If you’re considering assisted living for a loved one, keep these points in mind:
Ask how referral agencies get paid. If it’s “free to you,” the facility is paying—often heavily.
Do your own research. Don’t rely only on the facilities shown by referral sites. Visit smaller, local communities directly.
Check quality ratings. State inspection reports, staffing levels, and reviews from residents matter more than badges like “Best of Senior Living.”
Explore alternatives. Transparent platforms like Next Best Home are designed to prioritize both families and operators.
Conclusion: Time for Transparency in Senior Care
Referral agencies claim to help families, but in reality, they’ve built monopolies that drain operators and hide the true cost of placement. The money they extract—sometimes hundreds of thousands per year from a single community—could instead fund caregivers, nurses, and programs that directly improve residents’ lives.
Thankfully, leaders like Jessica Solomon and next best home.com are proving there’s a better way: transparent, fair, and supportive of everyone involved. Families, staff, and residents all deserve that change
