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Operations, Finance and Direct Care
Sales and Marketing, Affordability, Consumer Financial Planning
Operations, Finance and Direct Care
The Impact of Reducing Operating Expenses PRD
What it is: Shows total and PRD revenue and expenses for a community. PRD figures are based on variables including total capacity, occupied units, occupied resident days per year.
How to use it: User can set variables including total capacity, occupied units, revenue and expense figures to represent the community’s current situation. Two large dials are used to set expected reduction in expenses PRD
Expected Outcomes: User can simultaneously run two different expense PRD reductions and see the outcome in dollar amount increase in NOI, percent increase in NOI and percent expense reduction PRD.
What Does Your CNA REALLY Cost
What it is: Real per hour cost of a CNA and then total loaded cost beyond the base hourly rate. Lets the user adjust variables such as the base hourly rate, fringe benefits, downtime, overhead allocation and profit margins.
How to use it: Set base hourly rate to reflect individual circumstances or average hourly rates of all CNAs in a community. Select community specific cost for fringe benefits, average amount of downtime, overhead allocation cost and desired profit margins
Expected Outcomes: Indicates what an operator would need to charge residents for car provided in order to achieve desired financial results.
Direct Care FTE Sensitivity Analysis
What it is: Shows bottom line loaded labor rates for direct care workers including RNs, LVNs and CNAs. Uses yearly base salary and adds fringe benefits, indirect cost and overhead allocations as percent of yearly base salary for direct care workers.
How to use it: User can adjust base salaries and the percent of fringe benefits, indirect cost and overhead allocation for direct care workers.
Expected Outcomes: User can see the effect of direct care loaded labor rates on the bottom line. This will also allow management to run what-if situations with lower variable rates and/or and increase/decrease in FTE for each category
Direct Care Staff Cost Sensitivity Analysis
What it is: Shows the loaded wage rate of a direct care worker or an average of all direct care workers and minutes of direct care provided to residents. Variables include direct care workers base salary, fringe benefits, indirect cost and overhead allotment as a percent of base wage rate, staff efficiency, number of residents receiving care and actual number of direct care staff.
How to use it: Set all variables mentioned above to reflect the current or anticipated situation of their community.
Expected Outcomes: Two options are available on this template; 1) change in FTEs and 2) change in minutes of care provided to residents. The first option, change in FTEs, will show the user how an increase/decrease in FTEs will affect the minutes of care provided to residents. The second option, change in number of minutes of direct care provided, will show the user how an increase/decrease in number of direct care minutes provided will impact the total number of FTEs needed and both will show the bottom line impact to the community.
How to Recover cost Creep Through Tiered Pricing
What it is: Shows loaded labor rate for direct care worker or average for all direct care workers. User can see the additional revenue needed to cover direct care cost creep through tiered pricing. Variables include base hourly rate for direct care worker, fringe benefit, overhead allocation and desired profit margin as a percent of base pay and staff efficiency. The weighted average month service fee for the community is also variable.
How to use it: Set salary variables to reflect the community situation. The dial located middle right can be set to reflect expected additional minutes of direct care to be delivered to residents.
Expected outcomes: User will be able to accurately determine pricing tiers for additional care provided to residents based on community wage rates and additional minutes of direct care to be provided to residents.
Dietary Analysis
What it is: Operators can view current dietary trends in total dollars and per resident-day (PRD) format as compared to industry benchmarks. Also allows user to run and see results from what-if scenarios involving increasing/decreasing the three major categories in dietary; labor, raw food and other dietary expenses.
How to use it: Set variables to reflect their specific current operating situation. The variables include average number of independent living, assisted living and nursing residents, number of meals served per day to each living arrangement, number of moths in the current fiscal year, base line escalation of benchmark data and expected escalation factor, Kosher premium (if needed), current dietary expenses as related to labor, raw food and other expenses.
Expected Outcomes: Allows user to view the current dietary situation by total dietary expense and broken down into three major categories; labor, raw food and other expenses. Each category is expressed in PRD values. User can then compare community’s current PRD dietary expense to benchmark data. The template also allow user to run what-if scenario based on increasing or decreasing expenses in each category. The related expense increase or decrease can be seen with a bottom line total impact to the dietary department.
Blended Operating Margins Based on Current Occupancy
What It Is: Shows blended operating margins based on occupancy ratios and profit margins from different living arrangements
How to use it: User can adjust total units, actual occupancy and profit margins for each different living arrangement
Expected Outcomes: User can see the resulting blended operating profit margin form their current situation. Template also allows user to run what-if scenarios based on changes to teach of the variables listed, total units, actual occupied units and increase/decrease in margin for each different living arrangement.
Sales and Marketing, Affordability, Consumer Financial Planning
Recovering the Opportunity Cost of Potentially Vacant Units
What it is: Determines the dollar impact of vacant units
How to use it:User can adjust the number of occupied units, average monthly unit rental dollars, and incremental cost of additional residents
Expected Outcomes: User can see the dollar amount impact to the community’s bottom line of vacant units per month and per year
The Opportunity Cost of Pent-Up Home Equity
What it is: Will show current resident or prospect how to put home equity to work for them to make up shortfall on income.
How to use it: Find out approximate value of resident or prospects home and estimate the selling cost (default 10%). Template gives the user three options for current rates of savings and a marginal tax rate selection.
Expected Outcomes: Lets user set variables to senior’s estimated current situation concerning home equity and/or investments. Template return the estimated per month and per year after tax return on invested home equity to be used for monthly service fees or other expenses.
Home Equity Analysis – The Hold or Sell Comparison
What it is: Compares hypothetical return from selling a home and earning interest on the proceeds versus holding the current residence for the same specific period of time.
How to use it: Find out approximate value of current resident or prospect’s home and estimate the selling cost (default 10%). Template gives the user options for holding period, percent value of home appreciation and percent return on investments.
Expected Outcomes: Lets user set variables to senior’s expected value of their home and selling cost. User is able to compare the difference in future value of a senior selling their home and investing the proceeds versus the future value of holding the property.
Senior Consumer Affordability Analysis
What it is: Shows potential clients different sources of income compared to cost of senior living arrangements. The variables include Social Security Income, Pension, saving/investment portfolio, home equity, average returns on investment, tax rate, discretionary allowance and cost of living.
How to use it: User will obtain information from potential client and set all variables to reflect current situation of prospect.
Expected Outcomes: This will show the prospect if they can afford the community with current income. This will also allow marketing representative to begin dialog of other sources of income some seniors do not think of such as investments, home equity and/or getting family members financially involved. The community representative will now know if they must discuss the possibility of spending down prospects investments or home equity and estimate how long the funds will last.
The Medical Tax Deduction for Assisted Living, Alzheimer’s/Dementia and Nursing
What it is:Allows operator to show a prospective resident a side-by-side comparison of using or not using the medical tax deduction while living in assisted living and any savings that may result. It is advisable that the prospective resident seek independent financial and tax counsel on this specific issue.
How to use it: Select the appropriate monthly service fee for the community and then select the most appropriate response for the resident’s gross income level using the arrows next to the individual boxes
Expected Outcomes: The results are a side-by-side comparison of potential savings presented as total dollars and a percent of savings based on the community’s monthly service fee.
Finance, Capital Investment
Cost Recovery for Capital Investments to Individual Units
What it is: Lets community operators evaluate revenue increases – expressed as increase to monthly service fees – needed to recapture capital dollars expended to upgrade individual units.
How to use it: Community operator can set property specific variables such as average occupancy rates, loan amortization in number of years, lender/company acceptable debt coverage ratio and expected prevailing market interest rates. There are three interest rate scenarios available for comparison. Once the community specific and estimate market variables are set, the operator can then select and compare different levels of potential capital investment.
Expected Outcomes: The community operator can now evaluate potential capital investment decisions required to upgrade individual units based on the sensitivity of raising current monthly service fees when considering community specific and current market variables.
Cost Recovery for Capital Investments to Common Areas/Physical Plant
What it is: Lets community operators evaluate revenue increases – expressed as an increase to monthly service fees – needed to recapture capital dollars expended to upgrade common areas and/or physical plant equipment.
How to use it: Community operator can set property specific variables such as total number of units, average occupancy rates, loan amortization in number of years, lender/company acceptable debt coverage ratio and expected prevailing market interest rates. There are three interest rate scenarios available for comparison. Once the community specific and estimated market variables are set, the operator can then select and compare different levels of potential capital investment.
Expected Outcomes: The community operator can now evaluate potential capital investment decisions required to upgrade common areas and /or physical plant equipment based on the sensitivity of raising current monthly service fees when considering community specific and current market variable.
Cost Recovery for Capital Investments For Both Common Area/Physical Plant and Individual Living Units
What It Is: Evaluate revenue increases – expressed as an increase to monthly service fees – needed to recapture capital dollars expended to upgrade common areas and /or physical plant equipment and individual living units.
How to use it: Set property specific variables such as total number of units, average occupancy rates, cost of funds, loan amortization in number of years and lender/company acceptable debt coverage ratio. Once the community specific and estimated market variables are set, the operator can then select and compare a range of different levels of capital investment for upgrading common areas/physical plant equipment in combination with three levels of potential capital investment in upgrading individual units.
Expected Outcomes: Evaluate potential capital investment decisions required to upgrade common areas and/or physical plan equipment in combination with upgrading individual units based on the sensitivity of raising current monthly service fees when considering community specific and current market variables.
Annualized NOI Sensitivity Based on Occupancy
What it is: Compares target/budgeted NOI and margin to YTD data annualized for the remainder of 12 months. Will allow user to test bottom line results by adjusting occupancy, average monthly service fees and cost factor for the remainder of the year.
How to use it: Initial base data is annualized YTD data based on figures and target/budgeted figures provided by community/providers. The user can manipulate occupancy, average monthly service fees and cost factors for additional residents.
Expected Outcomes: Allows users to see how increased occupancy, increase/decrease in monthly service fees and increase/decrease in cost factors for additional residents, either as individual changes or a combination of change to all three variables, will affect the bottom line of the community.
Build vs. Buy – The IRR Sensitivity
What it is: Lets the potential investor compare possible internal rates of return (IRR) for three common scenarios at various capitalization rates (cap rate). The three different scenarios are: 1) buying existing facility with a five year hold, 2) building a new facility with a five year hold and 3) building a new facility with a seven year hold.
How to use it: User can set template variables with data unique to their specific market situation. The variables include cost per unit when buying an existing facility and the cost per unit to build a new facility. User can also set a range of six expected terminal capitalization rates.
Expected Outcomes: .Allows the user to evaluate potential IRRs when deciding whether to invest capital for buying an existing facility or building a new facility. Potential returns are shown in both tabular and graphic format.
Land Values – Range of Reasonable Land Cost
What it is: Investors and/or operators can evaluate a range of raw land cost per unit when considering building a senior living community. this can be accomplished using an all at once or a two phase development program
How to use it: User selects specific variables such as total acres and expected cost of raw land per unit. User can also select number of units to be build all at once or in a two phase development program. User can select three values for raw land cost per unit for evaluation purposes.
Expected Outcomes: Investor/operator can compare and evaluate the total land cost, cost per acre, and cost per square foot based on specific project assumptions.