In February, I began an occasional series on innovations in eldercare, describing pioneers who are significantly improving on the "mousetraps" that have been our care choices for the past 40 years.

The first was Elite Care, an Oregon company whose flagship assisted-living facility, Oatfield Estates, is one of the best I've ever seen — for residents who can pay privately.

It's extraordinarily tough to provide excellent care to people poor enough to be on Medicaid (because Medicaid pays so poorly), so few do. Today I'll tell you about an innovative leader that breaks the mold.

ElderHealth Northwest, a nonprofit headquartered in Seattle, has long pushed the envelope. Its roots were planted in the late 1970s when two little-known adult day centers combined. Starting out in church basements, then moving to a hospital and then to its own offices, it is now the largest provider of adult day services in the state, operating six centers.

Nora Gibson, its executive director, says she got "hooked" on day centers when she realized they were the only place she'd worked — including hospitals and nursing homes — where clients love being there. They spend the day, have a meal, talk to people — then go home and sleep in their own beds, she says, which is why they like it so much.

But what happens when their homes no longer work? Are there residential places older people like, and don't dread?

Most long-term care settings — retirement communities, assisted-living facilities, nursing homes — are too big.

They're made, she says, not for people, but for economy of scale and to maximize the real estate. In day-to-day living, we don't walk down a long corridor to get to our bedroom or a cavernous dining room. What we want is to wander down a short hall and look in the fridge.

Large spaces are especially hard for people with memory loss — in fact, the worse someone's memory, the more likely they'll be placed in an unfamiliar environment. No wonder they get confused!

So ElderHealth embarked on a three-year project to invent something new, with five important goals:

To build a residential facility that's homelike — a real kitchen, living room and the smell of cooking food — and small enough to respond to each resident's needs.

To incorporate activities into each resident's day — setting the table or folding laundry, plus attending a nearby adult day center for additional activities and stimulation if they want.

To provide easy access to professionals, such as nurses, therapists, podiatrists, psychiatrists, and social workers, through the adult day center.

To care for people with intense needs, including dementia and end of life care.

To accept residents regardless of payment source, including those on Medicaid.

In 2001, ElderHealth bought two sites. One, Gaffney House, is a lovely 1905 three-story mansion located near downtown Seattle with 14 private bedrooms, a fireplace, an elevator and a grand staircase, plus the creature comforts normal to all homes, like a kitchen, living room, and small dining area. The residents range in age 56 to 94, and most have dementia. All are private pay, with fees of $5,200 to $5,700 a month.

The second is Buchanan Place, a specially built (and my favorite of the two) two-story home in the south end of Seattle that fits in with the attractive old houses in the neighborhood. Each floor has its own kitchen, living room, dining area, bathrooms and private rooms for six residents (12 people in all) plus an elevator. But unlike Gaffney House, Buchanan Place serves only those on Medicaid.

"One of my life goals," says Gibson, "is offering the highest quality of life for people on Medicaid." To do this, ElderHealth had to find new, creative ways of funding.

First, they tapped the Seattle Housing Levy and the Washington Trust Fund, which offered interest-free construction funds targeting low-income residents.

Second, they combine reimbursement for residents using two services: residential and adult day, allowing them to care for people with high-cost needs. For example, one man living at Buchanan Place is 78, diabetic and demented, and came from a locked unit in a nursing home. Medicaid paid the nursing home $140 a day to care for him yet pays Buchanan Place just $65 a day. The man needs constant cueing — to dress, walk, go to the bathroom — and can never be left alone. To keep him busy and prevent falls, he attends one of ElderHealth's adult day centers twice a week for strength and balance exercises, bringing in an additional $46 a day from Medicaid.

Do the math. The nursing home received $4,200 a month to care for this man, while Buchanan Place receives $2,300 — a big gap, says Gibson, requiring ElderHealth to cover its day-to-day costs through frequent fund raising.

Next Monday I'll tell you more about ElderHealth, including how its two facilities almost went belly up before they opened. Meanwhile, you can learn more at its Web site, www.elderhealth.org, or call 206-528-5315.

Liz Taylor's column runs Mondays in the Northwest Life section. A specialist on aging and long-term care, she consults with individuals and teaches workshops on how to plan for one's aging — and aging parents. E-mail her at growingolder@seattletimes.com or write to P.O. Box 11601, Bainbridge Island, WA 98110. You can see all of her columns at www.seattletimes.com/growingolder/.