Organic Growth – Getting More Out of What You Already Have

Organic Growth – Getting More Out of What You Already Have

“You’ve Got Questions . . . We’ve Got Answers”

 Is there something really important that I should focus on in 2017?

 

You should focus heavily on “organic growth” in 2017.  My definition of organic growth is reducing expenses and enhancing revenues of existing properties.  Committing substantial capital investments in terms of new development and construction is not the only way to realize additional future growth.  Here are three basic organic growth strategies:

  1. Revenue Enhancement – Sharpening your pricing strategies while staying competitive and market-responsive.
  2. Improving Occupancy – Since most of your fixed costs are probably already covered, the incremental profit margin for each additional unit occupied soars to approximately 65% for assisted living and up to at least 80% for independent living.
  3. Expense Reduction – As an example, a community consisting of 120 independent living and 35 assisted living/memory care units operating at 90% occupancy results in approximately 50,000 annual resident-days. Reducing operating expenses by just $2.00 per resident-day (PRD) would result in $100,000 of additional cash flow in 2017.  The median operating expense benchmark for the above defined community is approximately $112 PRD.  A $2.00 PRD expense reduction would decrease operating costs by 2%.

The central budgeting theme for 2017 should be – organic growth – getting more out of that which you already have.

 

MDS can tailor our services based on your need of revenue enhancement, occupancy and/or expense reduction. An operations analysis can uncover a way to increase your cash flow.  Call us today and let’s get started on your success.

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To Understand What Works, Drill Down

To Understand What Works, Drill Down

 

[This article by Jim Moore previously appeared in the industry publication McKnight’s Senior Living]

It is generally recognized that the senior living business is becoming more complex with increasing need for operational sophistication and innovative best practices. The senior living continuum of products and services is growing. There is a pressing need to optimize the financial viability of existing communities through revenue enhancement and expense reduction.

financialYet in spite of these generally recognized complexities and challenges, many sponsors and owner/operators still focus exclusively on tracking and evaluating their financial position on a broad consolidated basis. This is a great big-picture summary approach, but the true financial dynamics and sensitivity of the organization must address the development of individual cost and profit centers within the continuum. Simply combining three or four businesses within a community into one simple consolidated income statement of revenues and expenses is not the best practice for the future. In reality, each of these major product and service businesses should meet reasonable industry financial benchmarks of:

  1. Revenue
  2. Expenses
  3. Net operating income
  4. Profit margins
  5. Cash flow

Each cost center must initially stand alone before being merged into the consolidated financial statement. Just using consolidated financials can frequently mask unacceptable subpar performance of one cost center, while penalizing another one.

Clearly owner/operators must provide a seamless consolidated continuum of products and services for their aging residents. But this consolidated continuum is really composed of a number of individual business models with unique challenges and opportunities. Each key element of this continuum must first be segmented as standalone cost and profit centers and then (and only then) combined to track the results on a consolidated basis. Each business element must be successful individually.

Let’s take a look at a typical example. One of my clients operates a comprehensive CCRC that has independent living, assisted living/dementia/memory care, nursing/rehabilitation and assistance-in-living/wellness as major components in their seamless continuum for their residents. These components have each been segmented as these standalone profit centers. Individual income statements exist for each one. These individual income statements include earned operating revenues, operating expenses including direct costs and an appropriate overhead allocation that applies to that cost center, individual net operating income, profit margin and cash flow. These financial statements also include monthly and year-to-date budget versus actual results and, where appropriate, a discussion of why variances occur.

This approach also quantifies and enhances the objective assessment of key staff member performance. Coupled with resident satisfaction scores, this provides an objective criteria for addressing important initiatives.

The senior living continuum is becoming more complex, with services like comprehensive assistance-in-living within independent living, geriatric assessment, memory care and external continuing care at home. Financial performance sensitivity is also increasingly putting more pressure on profits, debt service coverage and capital investment needs impacting overall cash flow for aging physical plants.

The standalone cost and profit center is a concept whose time has arrived. It is already being implemented by progressive sponsors and owner/operators. The benefits include sharpened pricing, focused cost controls and potential overhead cost reduction. Finally, the concept is fast becoming a key element of a state-of-the-art business practice.

Need help drilling down your financials? Contact MDS at 817-731-4266

 

Is “Cost Creep” affecting your income statement?

Is “Cost Creep” affecting your income statement?

 

Cost Creep, senior living consulting, senior living consultant

What is “Cost Creep”? How is it measured?  How does it affect your community, division, or company? What can you do to stay out in front of it?  These are some questions I hope to answer for you.

Cost creep, in its basic form, is providing more care to residents than you are being compensated for. This can come about for many reasons, such as:

  • an incorrect loaded hourly rate on which to base monthly service fees (MSF) and care tiers upon;
  • not having residents assigned to correct care tiers;
  • not catching resident’s decline soon enough; and
  • caregivers not understanding the dynamic of what they provide the resident and the company through their service.
Has Your Senior Living Community Adapted to the New Information Paradigm?

Has Your Senior Living Community Adapted to the New Information Paradigm?

 

New Information Paridigm, senior living consulting, senior living consultatnts, Moore Diversifed Serivces

Welcome To The New Information Paradigm!

There has been a new day dawning concerning the flow of information in the Senior Living industry the last few years. Some in marketing/sales have gotten this and some haven’t quite embraced the movement yet. The larger movement has been from transaction-based selling to relationship building. Transaction-based selling is where the sales person shows the prospect the living unit and dining area and then does a 30-minute information dump about their community.

Relationship building involves a lot more listening than talking, asking the right questions, really being interested in the prospect’s current situation, their history, wants and needs, and opinions, and really CARING about them, not just lip service.  In this piece I’m not going into the entire relationship building concept, but more how the information is exchanged today. The New Information Paradigm!

Continue reading “Has Your Senior Living Community Adapted to the New Information Paradigm?”

Is Your Business Prepared for the $15-An-Hour Entry Level Worker?

Is Your Business Prepared for the $15-An-Hour Entry Level Worker?

 

increase in entry level wages, senior living consulting, senior living constultant, Moore Diversified Services

Is your company or community ready for the financial impact of rising entry level worker pay? While $15 an hour is the new “rally cry” for the minimum wage, whether it will happen nationwide can be debated. But it still begs the question, “Can your current financial structure handle entry level wages increasing to $14, $12, even $10 per hour?” Reality is there are a lot of communities that struggle even with current entry level wages somewhere between $8 to $10 an hour. A recent Wall Street Journal article indicated U.S. wages were on pace to increase at rates not seen since 2008. So while we don’t know where entry level wages will land ultimately, it is certain that wages will continue to increase, and more than likely increase at a faster pace than over the last few years.

Continue reading “Is Your Business Prepared for the $15-An-Hour Entry Level Worker?”

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10 Critical Steps to Increase Employee Retention

 

steps to improve employee retention, senior living consulting, senior living consultant, Moore Diversified SerivcesEmployee retention is an area most businesses can improve on. In the heat of the moment with deadlines, phones ringing, and customers that need servicing, this is one area where short cuts are often taken. With the average entry level worker costing approximately $7,500 to turnover and executives reaching 200% of their yearly salary and some technical workers up to 400% of their yearly salary, this shortcut can be a costly proposition.

Thought we’d start the year off with a list of critical steps to increase employee retention in 2015. This is not meant as the be-all-end-all list by any means, but it’s a great start.

 

1. Initial Screening – Take the time to review applications and resumes thoroughly. Develop a combination of basic and individualized questions to fill in the gaps. Be alert to attitude and personality in addition to the candidate’s skill set. There are great programs available that can help automate this process. I read a great line in a book about prospective employee attitudes, “Attitudes are catching, ask yourself if you would want someone to catch theirs.”

 2. Orientation – This is a tempting one to skip. You are shorthanded and really need the new hire on the floor….but don’t! Take the time to thoroughly orientate new hires even if they have worked in the same industry. It will be worth the time it takes.

Continue reading “10 Critical Steps to Increase Employee Retention”

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Strategic Planning Series Webinar Recordings

 

I want to thank everyone who joined us for our Strategic Planning Webinar Series.  If you missed the opportunity to participate live, here is your chance to view these recordings.  These webinars contain important and helpful information to remember as you finalize your Strategic Planning journey for 2015.

We are busy putting together some new webinars that you will not want to miss.  These can help you take your organization to the next level.  I am currently planning for late January or early February.  Watch our blogs and newsletter for more information. To sign up just enter your email in the box on the left hand margin.  Also, please send me an email with any suggestions you might have for both blog and webinar topics. Let us know what your specific challenges are and I will try to accommodate as many requests as possible.

Below you will find links to MDS’ recent Webinar Series on Strategic Planning, both Parts I & II.  The images are linked to the MDS YouTube page, so just click on the image of the webinar that you want to view and it will open up the presentation video in a new window for you.

Part I Part II

 

 

 

 

 

 

 

 

 

 

 

Roy Barker is Director of Special Projects at Moore Diversified Services, a Fort-Worth, Texas-based organization specializing in operations analysis, marketing development, and investment advisory services. Roy is an authority in the field of employee turnover analysis and retention strategies.

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Strategic Planning Webinar

Moore Diversified Services presents Plug-In and Prosper Webinars:

A STRATEGIC PLANNING SERIES
Part 1 – Where Do I Start?
Thursday, Nov. 6
1:00-1:30 p.m. (CST)

 

At Moore Diversified Services your success is our goal. We are committed to equipping our clients with tools and strategies to make their businesses successful. As we close out fiscal 2014 and approach 2015, MDS would like to offer a special, COMPLIMENTARY webinar series on Strategic Planning.     Plug in with copyright

Join Roy Barker, Director – Special Projects at MDS, for “Part 1 – Strategic Planning: Where Do I Start?” as he answers this question and provides insights into strategy planning.   Topics will include:

  • Selecting a team
  • Employee Buy-In
  • SWOT Analysis
  • Data Driven Indicators
    • Operations
    • Marketing
    • Employee Turn-Over

Space is limited. Don’t miss out on this special opportunity to learn from a company with over 40 years of experience.  Click here to view webinar flyer

REGISTER TODAY!

third3@meta.ua

Gold Is So Yesterday … Go Platinum!

 

A guest on an NPR show I was listening to the other day mentioned the “Platinum Rule” in the context of how we treat others. I had no idea what they were talking about. Now, after a little research, I can see that I’m very late to the party. This is a concept that has been around for some time. For those of you who may be living under a rock, like myself, the Platinum Rule now trumps the Golden Rule.      platinum-rule1

The Golden Rule is, “Do unto others as you would have them do unto you.” The Platinum Rule, however, is, “Do unto others as they would like done unto them!” What a novel concept. While the Golden Rule sounds good on the surface, it is really kind of self-centered. This would mean that we think we know what is best for everyone else because that’s what we like or we want. While this could be very true, it could also be the furthest thing from the truth.

With people we have just met or known for a short time, we may not know exactly what they want. This is the beauty of the Platinum Rule. It causes us to shift focus from us to them. It forces us to try and determine what the other person really want or likes. It forces us to be an active listener and maybe even ask some questions. This also meshes well with one of my favorite Covey teachings, “We must first seek to understand.”

Continue reading “Gold Is So Yesterday … Go Platinum!”

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Employee Training and Retention: The Debate between Expense and Investment – Part I

 

This is an excerpt from a research paper by Kim Jimenez.

Most employers have some form of training implemented for their new employees and some even have programs designed for ongoing employee development. If asked, many employers, if not all, will say that training and employee development is important. But when truly evaluated, many employers do not provide adequate training or employee development to realize the advantages of proper training.

The disconnect lies in the fact that training and employee development comes at a price -financial resources, human resources and time. Employers view training as a cost or expense rather than an investment. They are hesitant, and some even resistant, to spend too many resources on an employee that may take that training elsewhere.

But, in fact, research has shown that proper training and employee development will increase employee productivity, job satisfaction and instill a higher commitment to the job among other things. This commitment to the job by the employee actually reduces employee turnover.

Continue reading “Employee Training and Retention: The Debate between Expense and Investment – Part I”