Uncategorized Archives - Page 15 of 15 - Moore Diversified Services, Inc.

Modest Reductions in Operating Expenses Results in Significant Increases in Your Bottom Line

Posted on July 3, 2012October 15, 2018 by MDSadmin

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

In an earlier blog, I asked whether Senior living professionals really know the bottom line cash flow (the opportunity cost) of a vacant unit. (See blog dated June 23rd) The results surprised many readers. Now here is another critical question.

Can your operating expenses be reduced by just 1% or 2%? A typical 150 unit independent living community at 89% stabilized occupancy operates with approximately 48,910 resident-days per year (150 units @ 89% stabilized occupancy = 134 units x 365 days per year). Typical independent living operating expenses are currently benchmarked at approximately $50 to $70 per resident-day (PRD) – exclusive of health care. This range is obviously influenced by resident acuity, services offered and local operating expenses. An operating expense reduction of just $1.50 per resident-day (PRD) or about 2% is frequently reasonable to achieve. With 48,910 annual resident-days, the $1.50 PRD results in a cash savings of over $73,000 per year that will go right to the bottom line.

Owner/operators considering refinancing or divestiture in 2012 and beyond brings into focus the concept of capitalized value. The additional cash flow of $73,000 capitalized at 8.5% reflects a value increase for a single property of approximately $860,000.

Operations optimization would likely be realized at just a fraction of the annual (first year only) potential operating expense cost savings. Different Senior living products like CCRCs or assisted living would experience similar types of impacts, but would be significantly influenced by a different number of operating units-beds.

The key question is, Is it prudent to not pursue this substantial operations optimization opportunity?

Filling Up Just One More Unit Can Make a Big Impact!

Posted on June 23, 2012October 15, 2018 by MDSadmin

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).

Are Newspapers Still a Good Form of Advertising for Senior Living Communities?

Posted on June 18, 2012October 14, 2018 by MDSadmin

by Roy Barker, Director – Special Projects

Recently the question was posed, “Are Newspapers still a good form of advertising for senior living communities”. The simple answer is yes with a few general caveats. Careful attention must still be paid to the design of the advertisement, the general message to be conveyed, the placement within the sections of the paper, the day the article runs, and of course the circulation of the newspaper in the targeted area. Recently while doing some client research I came across a 2011 Pew Survey “The State of Media” which provided data gathered by Scarborough Research Data. The following statistics will interest any senior housing marketing department.

The percentages reported are of those nationally who read any daily newspaper yesterday:

Age
65+ – 60%
55-64 – 50%
45-54 – 45%

Income
$150k + 53%
$100k to $149k – 46%
$75k to $99k – 45%

Education
College Graduate – 46%
Some Post Graduate – 49%
Post Graduate Degree – 54%

Here is the link to the full report, 2011 Pew Survey “The State of Media”

Another report that stated that only about 41% of 65+ use the internet and email, while 35% of those 75+ use the internet unassisted, I am sure these numbers are a lot higher for adult children decision makers.

As a person of the adult child decision maker age (that was really hard to admit), and someone that is fairly receptive of technology with access to a PC, laptop, ipad, and iphone, I still read at least 2 daily newspapers, a few weeklies, and a few select periodicals. I am also a lot more apt to act upon advertisements seen in a newspaper or magazine than those I see on the internet.

As a Senior Living Operator Are You Prepared For The Future of Senior Living?

Posted on June 13, 2012October 14, 2018 by MDSadmin

by: Roy Barker, Director – Special Projects at MDS

As a senior housing operator do you find yourself simply managing the day to day activities in your community and neglecting long term planning? Between the constantly changing resident’s needs, family matters that require immediate attention, dynamic staffing needs, dealing with vendors, and the changing economy, when do you find time to perform real quality strategic planning for your residents, staff, and facility in general? While trying to put out the operating fires of today, can you really afford not to plan for the future? Well the future is upon us!

As you know all too well, resident profiles are constantly changing. But what are you doing to stay on the leading edge of what it takes to attract and retain senior residents today and in the future? While resident entrance ages are going up, today’s seniors are more sophisticated. They also want more services and amenities than those residents in the past. According to some reports, the average entrance age of Assisted Living residents is actually younger than those of Independent living residents. While these shifting resident demographics are an entire set of challenges themselves, they do not even address other changes that operators must now deal with such as Accountable Care Organizations (ACOs), declining reimbursement rates, depressed home prices, and a generally stagnate economy.

Let MDS help you navigate the changing landscape by providing you with a structured Strategic Planning Process. We can help you navigate the changing senior living landscape and provide direction for your organization to stay on the leading edge of what senior housing has to offer.

Paying for Senior Housing and Long-Term Care

Posted on February 28, 2012October 14, 2018 by MDSadmin

The topic of how to pay for senior housing and long-term care has garnered its share of headlines. Below are two more recent articles featured on SeniorHousingNews.com

Will the Nation Go Broke Paying for Senior Housing & Long-term Care?

and the follow up article

Will the Government Enlist Private Capital to Subsidize Senior Care?

Residents, Finance, The Government, Oh my!

Posted on October 5, 2011 by MDSadmin

The basic and seemingly simple questions “Who is our target market?” and “Can they afford to live here” becomes more and more complicated as the economy tries to find some stable footing. Moore Diversified Services has summarized the three economic classes of senior consumers and who may or may not qualify for your monthly fees and who may need government assistance. [September 2011 Strategy of the Month – Senior Living Affordability Strategies]

Many seniors depend on programs such as the HUD section 202 to provide affordable apartments. As Appropriations Committees for both the Senate and the House work out complicated budgeting issues, it leaves the senior housing industry wondering “Where do we and our potential residents fit in to all these negotiations?” The house and the senate are about $230 million apart on their figures in regard to proposed funding for Transportation, Housing and Urban Development (THUD).

It appears the number may fall in between as the two “chambers will have to come to a compromise on their respective proposals before a final bill is brought to the floor for vote.” (John Yedinak – Senior Housing News)

To read more about government funding of the HUD section 202 program and what this program provides see the following articles from Senior Housing News:

House Appropriations Committee Gives $600 Million for HUD Elderly Housing in 2012

Senate Slashes Funding for Senior Housing for 2012

MDS Blog to address current topics in the Senior Housing Industry

Posted on December 22, 2010 by MDSadmin

Coming in 2011, MDS is excited to begin a new blog to update and inform you about current industry topics, trends and issues. We hope to help you navigate your way into a prosperous and successful year. If there are any specific topics you would like to see addressed, please feel free to leave us a comment or send your suggestions to blog@m-d-s.com.