Category: General

In the September/October issue of Senior Living Executive published by Assisted Living Federation of America (ALFA), Jim Moore discusses extensively the various components of pricing and how it all works together for (or against) your community.  In this article you will find that:

·        More than 40 percent of the cost of operating an assisted living community comes from hands-on direct care and dietary/ food and beverage.

·        Reducing or using short term incentive pricing strategies on substandard units decreases a community’s projected revenue in the short run, but has a stronger long-term outcome.

·        Pricing concessions represent real money, but so does the lost opportunity cost of each vacant unit.

·        Senior’s and family’s  pricing misconceptions form a flawed and dangerous mindset that must be addressed with pragmatic pricing strategies and communication.

Jim addresses the above items in great detail and clarification.

Please visit ALFA’s website where they have provided a digital version of the publication Senior Housing Executive to read the article Power of Pricing by Jim Moore in full.

by: Roy Barker, Director – Special Projects

Communities undergoing a change in ownership can be a very unsettling time for all those involved. Communication is an essential element to ensuring a smooth transition. Questions that are not answered directly and thoroughly will create an unhealthy and disruptive environment inside even the most harmonious of communities. Information is key to managing people’s expectations during times of uncertainty. Here are some simple suggestions that can help you through those difficult but exciting times of change.

Disseminate pertinent information to everyone involved, such as staff, residents, and family as soon as possible. This can be accomplished through many different means such as staff and small group meetings, flyers, letters, phone calls, emails, or some combination of these methods. Keep in mind that face to face conversations tend to work better the more important the information being delivered, not only because it is a more personal and intimate form of communication, but it also encourages two-way streaming of information. Anxiety can be quickly defused by allowing those affected by the change to ask questions and get answers in real time.

It is important to be as upfront as possible when discussing what is currently going on and what will happen in the future. While informing staff, residents, and family members is your number one priority, it is also a chance for you to control the information delivered. This can help them from taking hearsay for the truth when it may or may not be. They deserve to hear this important information from the top leadership, and if they don’t they can become very apprehensive to the entire process. It is imperative to make sure that staff members are a positive influence as well.

If you can, assure the residents that it will be a seamless transition. To help make this possible, put off big changes or make them slow and calculated, unless the value to the resident can clearly be seen. This list of things not to do would include increasing monthly service fees beyond scheduled normal cost of living increases, changes to entry fee amounts, payment/refund schedules, referrals, changes to residency agreement terms and conditions, changes in policy or resident benefits, especially if Life Care is involved.

Say what you mean and mean what you say! If asked, be honest with expectations of what will be different after the transition is completed. Be sure to include likely resident impacts, both positive and negative.

Be a cheerleader, celebrate change! Keep rallying the troops through the process. Do what you can to ensure those affected stay upbeat, positive, and looking forward to the new and great things change will bring. If a negative attitude or reaction from staff members, residents, or family members is detected, even though it may be difficult, meet with them one on one to address any issues or concerns they may have. More than likely they do not feel well informed or given due consideration in the process. The time you take to sit down with someone that is the least bit discontented will be well worth it in the end.

If the acquiring company has a history and it is good one, make the information on their current operations available to those that are concerned or interested. This would include things like:

• Years in business
• Communities owned/operated
• Number of residents currently being served:

• Independent living
• Assisted living
• Alzheimer’s/memory care
• Nursing

• Leadership Bios
• Current/future Programs
• Operating philosophy
• If available, resident satisfaction survey scores

If it is a not for profit, make financial information available. Don’t make residents or family members search for data that is public information. This will only appear that you are trying to hide something. Transparency is always the best course of action. Even if it is not always positive, at least it gives you a change to manage the situation. If left unmanaged, it will not typically just go away, but will more likely get out of control.

If key staff members are remaining with the community, highlight them and what they have accomplished. If new staff members are coming onboard, do the same and celebrate the change they can bring.

Communication and execution are both important factors to retaining current residents and continuing to attract new prospects especially during an ownership transition. While a change for the good can be very to accept, open, honest, and transparent communication while delivering what you promise will generally go a long way to making true believers out of the biggest doubters.

Whether you are buying, selling, or building, MDS can provide the expert guidance you need from start to finish. Give our team a call and let us know how we can help you.

by: Roy Barker, Director – Special Projects

How many times have we heard this objection, right?  This is a very common response by those residents that are uncomfortable making a decision to move into your community right now.  This objection could be based on many factors or even fear. While sales people always want to make that next sale, it is good to remember that for the prospect, moving into your community, no matter how great it is, can be an intimidating life altering decision. Instead of taking this as a negative, take it as a positive, an opportunity to ask more open ended questions and get to know your prospect better.  This also provides the opportunity to frame the decision around a lifestyle choice that will motivate the prospect.

The “I’m just not ready” can be a legitimate cover for other reasons the prospect could be embarrassed to admit or talk about.  A couple of these are affordability and coming to grips with the fact that a higher level of care is needed.  Even though we want to refute all objections to our great sales pitch, empathy must be shown for the prospects plight and pushing too hard could just lead to embarrassment for them.  As sales people we must have that sense about whom we can probe further and whom we can’t.  We don’t want to beat prospects down, but we must get to the heart of the objection if we are to overcome it. For the latter, the next question should be something like, “what do you see as a drawback to moving here” or “how will you know when you are ready”. It is very important to ask the open ended questions to try and get the prospect to talk about what is the real concern.  Then the objection can be addressed by painting the picture of the dream/lifestyle. Be sure to let them know what they are missing by not already living at your community. If they are local, it is also a good idea to present the move as an enhancement to the great life they already have.

For instance, snow plowing/lawn maintenance is included as part of the monthly service fee, but there is a huge difference in covering this information from sheet of paper while sitting down across a desk as opposed to creating a mental picture of the new lifestyle while touring the community.   Set the stage, tell the story, and let them visualize their new life.  For instance, this winter they will not have to shovel snow themselves, pay someone to do it, or even worry if it is getting done and/or done right.   As a resident, they can be sipping hot chocolate and having a muffin with their friends while playing dominos and watching the plow guy out the window in a 72 degree room.  Vice versa, they can enjoy a beautiful manicured lawn this summer without having to get out in the heat to mow, oversee a lawn person, pay them as well as a large water bill, and so on.

If the concerns are relationship or activity based, we would want to show them the active card games, domino games, puzzle solving that are going on in our community. Have them speak with other residents that are involved in charity work, church groups, and other group activities.  Introducing the prospect to current residents who had the same reservation upon move-in is also a great idea.  This is called the feel, felt, found technique of selling.  Empathize with how they are feeling, let them know that others before them have felt the same way, but what they found was they wished they had done it sooner.  These would be great testimonials for a community’s website and it is recommended to provide the option of a DVD for the prospect to take home.  Don’t be afraid to utilize those current residents that are positive, happy, outspoken, and well adjusted in the community; they are the best sales presentation a community can have.

By exercising some patience and empathy you will be able to turn that “I’m just not ready,” into a “wished I had moved here sooner.”  With that you will also gain another positive testimonial for your website/DVD.

MDS would like to know: How are you over coming typical objections?  What are some of your success stories?  Let us hear from you!

MDS has a wide variety of services to help your marketing team overcome these types of objections in order to increase your closing ratios, increase occupancy, and thereby increasing your bottom line.  Give MDS a call today and let us get started working for you!

by:  Roy Barker, Director – Special Projects

Have you taken the time to consider how the health care reform will impact your community’s expenses?  Industry experts have predicted these changes could drive up your cost of doing business by 10% to 15%.

While the U.S. Supreme Court recently upheld the Affordable Care Act (ACA), a recent insurance industry survey estimated that 20% of businesses have yet to start planning for what currently is the law.  While most businesses still remain hopeful that some relief will materialize in the form of challenges, new regulations, appeals or even the upcoming November elections, it is still uncertain if or when this might happen.  That is why now is the time to devise a strategic plan of action for your business!

What will it cost to insure all full time employees, those that work over 30 hours?  How much cost will be incurred administering the new laws? Will it be more cost effective to insure all of your employees or drop your existing coverage altogether by opting out and paying a penalty?  These are the tough questions that need to be answered today, so that a plan of action will be in place in the event there is no future relief from the ACA or at least the bulk of it stays in place as written today.

Not having a viable plan of action may not only cost you through higher expenses, lower future net operating income (NOI), lower operating margins, and lower cash flow, but it could also affect the terminal value of your community in the event that you need or want to sell or refinance your community in the next few years.

MDS clients have benefited from a guided analysis of what would be the most financially prudent decision for them and their community.  We have also provided clients with quick reaction Operation Analysis for their community and assisted them in devising a strategic plan of action to help control their monthly expenses, maintain or increase operating margins and cash flow, and also provided a feasible value for their business in the event they decide to sell or refinance their properties.

Call MDS today to set up an appointment so that we can help you evaluate the best options for you and your specific situation. You can only make the best financial decisions when you have the full, complete financial picture in front of you.

Has your organization been keeping up with the latest Seniors housing state policies and ongoing legislation?  There are some interesting issues currently being addressed.  For example, in California, a bill (AB 1698 – Continuing Care At Home) has been introduced that would allow CCRCs to provide services in a private residence without that residence having to become licensed as a residential care facility for the elderly (RCFE).  This bill would eliminate a barrier for “continuing care at home” (CCAH) for those Seniors who do not wish to move to a Seniors housing community but want to receive an array of services at home that can include home maintenance, home care, assisted living and/or skilled nursing.  This “CCAH” concept is currently being practiced in at least five other states and more and more of our clients are interested in implementing the program.

In Florida, a bill (HB 787 – Referral Fees) has recently been signed into law that removes the prohibition on assisted living providers from offering rewards to referral services that provide information, consultation or referrals to consumers to assist them in finding appropriate care or housing options if the referred consumers are not Medicaid recipients.  The legislation will also allow assisted living providers in Florida to provide existing residents with a monetary reward for referring a friend or family member who the resident has a personal relationship with to the assisted living provider.  This important legislation will certainly change and enhance referral patterns in the future.  Anything related to new lead (or prospect) generation is always a high-priority topic in our business!

Other recent developments include legislation in Missouri

(HB 1847 – Assisted Living) that would change the admittance requirements for assisted living by adding a requirement that an individual be physically capable of negotiating a normal path to safety with minimal assistance.  This will most likely affect the admittance and retention of high-acuity Seniors.  I wonder what the Fair Housing and Americans With Disabilities Act will have to say about this.

If you would like more information on the “continuing care at home” concept, lead generation, referral strategies or if you are dealing with a current challenge and need some assistance, contact MDS at mdsresearch@m-d-s.com.

by Roy Barker – Director, Special Projects

In a recent blog I was discussing the value of senior living properties advertising in newspapers. I provided data from a recent survey on what percent of certain age groups, income levels, and education levels still read the newspaper daily. I saw the following information in the latest Allstate/National Journal Heartland Monitor Key Findings. The information was dated May 2012. I thought it was interesting and I wanted to share with you.

 

Americans’ ratings of their trust in information sources:

Public TV & Radio – 75%

Newspapers – 71%

Cable News – 70%

Network News – 64%

Magazines – 57%

Talk Radio – 53%

Company Websites – 51%

Advertisements – 37%

Blogs – 34%

Social Media Sites – 30%

by Jim Moore – President, Moore Diversified Services, Inc.

The Senior living industry involves a myriad of questions. Some have easy answers – some do not. Here are two very important questions:

1. Do you really know the true cost of a vacant unit?

and . . .

2. If there was a cost-effective approach to answering this question, would you consider pursing it?

The National Investment Center (NIC) reports independent living occupancy of approximately 89% in 2012. While these figures may appear generally acceptable in these difficult times, the bottom line impact of filling just one more vacant unit is very significant. At 89% occupancy, many communities serving the needs of just one more resident would not likely have to buy more raw food or hire an additional full-time equivalent employee. For every additional occupied unit, one could assume only about 30% of the additional monthly service fee would go for new, incremental operating expenses. This is because the fixed and most variable costs are probably already covered. So approximately 70% of the additional monthly service fee represents a very high incremental profit margin; new cash that drops right to the bottom line.

For an independent living operator with a typical baseline monthly service fee of $2,400 per month, the 70% incremental profit margin results in new cash flow benefit of $1,680 per month ($2,400 x .70) or a $20,160 annual increase in cash flow for each additional occupied unit. Filling five more independent living units would create an annual increase of over $100,000. A community also charging entry fees would obviously have an even greater positive impact. Different Senior living products like CCRCs or assisted living would experience similar types of favorable impacts and would be significantly influenced by a different number of revenue producing units-beds.

But that’s not the whole story. Owner/operators considering refinancing or divestiture in 2012 and beyond brings into focus the concept of capitalized value. The annualized additional cash flow of $20,160 capitalized at 8.5% reflects a value increase for a single property of approximately $237,000 . . . for just one more occupied unit-bed. Occupancy enhancement would likely be realized at less than the annual (first year only) cost of filling just one more vacant unit.

There is a third question. Since the potential cost-benefit is significant, is it prudent to not pursue this substantial opportunity?

If you want more information – initially at no obligation – contact Jim Moore at jimmoore@m-d-s.com (www.m-d-s.com).