Cash Flow Archives - Moore Diversified Services, Inc.

To Understand What Works, Drill Down

Posted on September 30, 2016July 6, 2018 by MDSadmin

[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.

Yet 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:

Revenue
Expenses
Net operating income
Profit margins
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 sub-par 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

More Wage Pressure Could Be On The Horizon!

Posted on August 28, 2015July 16, 2018 by MDSadmin

In a proposed plan by the White House, more exempt employees will be eligible for overtime compensation.

Not long ago I wrote a piece on the impact of increasing wages through both higher minimum wages and entry level wages in Is Your Business Prepared for the $15-An-Hour Entry Level Worker? Now, you should not only consider the impact of rising wages for hourly workers, but also potential wage impacts related to exempt employees. The proposed plan by the White House would raise the threshold of wages in which exempt works are eligible for overtime compensation.

The Proposal

A recent White House Proposal will increase the number of exempt employees eligible for and entitled to compensation for overtime work beginning in 2016. The new regulation increases the minimum pay for overtime-eligible exempt employees from $455 a week to $970 a week, or $23,660 to $50,440 on a yearly basis.

Currently, hourly and salaried employees making under $455 a week or $23,660 a year are generally eligible for overtime compensation for hours worked in excess of 40 per week. If this proposal goes into effect, it will increase the eligibility for salaried employees making up to $50,440 a year to be eligible for overtime compensation. This will more than likely have an effect on most department managers and some administrative personnel currently employed at senior living communities who have previously been ineligible for overtime due to their exempt status.

Changes To Be Considered

If the proposal is approved, this will create a need to start doing a few things differently for the exempt employees making under $50,440 per year. The first thing would be to start tracking these newly eligible employees’ time closely, even if they work off-site or from home. If the employee consistently works overtime, the changes that can be considered will include: whether to institute a no more overtime policy, increase the employees pay to $50,500, or convert them to an hourly rate and adjust for overtime normally worked.

Policies for communicating with these employees during off hours by phone, text, or email will also need to be evaluated. It would also be prudent to consider the impact of employees who might cover for others due to no-calls, no-shows, or other absences. If the coverage situation happens at the end of the scheduled work week, then this employee would more than likely have already worked enough hours to be eligible to an overtime situation.

Definitive Action is Needed

It may be tempting for management and employees alike to take a laid-back view on this emerging situation. If you don’t get anything else from this article, the one piece of information you should remember is this: I can assure you that you will be better off planning ahead for the proposed rule change. Don’t be tempted to procrastinate, and don’t simply make a handshake agreement with an employee and think that nothing needs to be changed because everything will work out in the long run. Unfortunately, it doesn’t always work out, and the cost can add up. The cost of the overtime work, penalties, time other employees will spend on this, and possible litigation will cost you more than it would have to initially just do be prepared from the start. Not to mention the hassle of having the Labor Department in your business for goodness knows how long.

Be Proactive

Let MDS help you evaluate the possible impact of wage increases in your community. I can work with you and your team to calculate your financial expose based on potential changes in over-time regulations for exempt employees. A proactive approach will allow us to develop alternative pay plans and work schedules to minimize the financial and service impact on your organization.

While we don’t know where minimum and entry level wages will eventually land, I will also help your team run “what-if” scenarios based on several factors to estimate the impact of multiple levels of increase. Putting this all together will help guide management’s approach to evaluating and setting monthly service fees, and service packages designed with minimal impact to the organization, its residents, and staff members.

Don’t procrastinate on these important wage-related issues. There is still plenty of time to design a well-rounded solution that has minimal impact to your organization.

As an update to the entry level worker pay story, the New York Wage Commission has endorsed the planned hike in fast food workers to $15 per hour.

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.

Is “Cost Creep” affecting your income statement?

Posted on July 28, 2015July 16, 2018 by MDSadmin

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.

Use Correct Wage Rates

One of the first steps to stay ahead of cost creep is to make sure that your employee’s loaded wage rates are correct and appropriate. When loading an employee’s wage, you want to include their regular base wage, benefits, overhead, indirect time allotments, and an appropriate profit margin. Once you have accounted for all of these factors you will arrive at the appropriate loaded wage rate on which to base your monthly service fees and tier levels upon.

The base wage is just like it sounds: the face amount at which you pay the employee. If the employee receives any benefits, what is that cost per hour they work? We generally see this in the 25% to 35% of the employee’s base wage. Overhead can be a little more complicated, but think of it in terms of how much do you need from each employee to fund the director of nursing, human resources tasks associated with the employee, funding of Executive Director, meal programs, and so on. MDS generally see this range in the 15% to 25% of the employee’s base wage.

Indirect time is the time a caregiver spends on the clock but not performing hands-on resident care. This could relate to paper work, charts, meetings, breaks, training, and other unrelated tasks. Most time and motion studies have shown that the average caregiver will be productive, i.e. providing hands-on care to a resident, approximately 80% of the time, so this is what MDS generally uses unless an individual case can be made showing more or less. Profit margins will vary depending upon your company’s goals and the level of care provided at your community.

Once you have developed your loaded wage rate for caregivers, about half of the battle is over. Next double check all MSFs and tier ranges at your community to make sure they are in line with the amount of care provided at each level.

Monitor the Care

Now that you have your loaded wage rates and pricing up-to-date, it’s time to monitor the care being provided. Each resident should have a care plan and fall into a category of care, from a base rate (generally the MSF) to a Level 3, 4, 5 depending upon the care levels your community provides. Make sure that ALL residents have an up-to-date care plan and are billed an appropriate amount for their specific care level. Double check time for tasks performed to make sure they are within a reasonable range.

Next we can look at the number of minutes resident care providers are on the floor. First take a quick snap shot of total weekly minutes your staff is providing—don’t initially worry about shifts, just the total number. This is a simple calculation of taking all full-time equivalent (FTE) resident care employees (remember this is FTEs not bodies), multiple that times .80 or 80% efficiency. You can substitute your community’s exact level of efficiency if it is different. Then multiply this number by the hours of a typical shift at your community. This could be 7, 7.5, 8, 12, or something else if your community has a unique schedule. Then multiply by the number of days the typical resident care employee works to reach a normal work week.

To compensate for employees who work different shifts, you either need to calculate separately and add up, or do a weighted average for your community. For example, the equation for a 7.5 hour employee who works 5 days a week at 80% efficiency would look like this: (hours x days) x efficiency factor = hours of direct care provided. Here is our example: (7.5 x 5) x .80 = 30. The (7.5 x 5) = 37.5 represents the hours per day and days per week the employee is on the clock and available to provide care. Then we multiple the 37.5 x .80 or the number of total hours available times the efficiency factor, in this example 80%, to arrive at a net 30 hours of direct care provided by this one particular employee. This should be repeated for each FTE, not warm body, on your schedule each week.

Reconcile the number of minutes of care your residents require verse the number of care minutes you put on the floor each week. It’s important to remember that these two numbers may not be equal due to shift scheduling, shift irregularities, and overlaps, but this is a great place to start making sure that they are in relevant proximity to each other.

Silent Killer

Cost Creep is the silent killer in Senior Living, especially Assisted Living, Memory Care, and Nursing Care. This is a great exercise to run frequently in order to make sure that things don’t quickly get out of hand. This is a problem that will not only affect your Net Operating Income (NOI) and Cash Flow, but also your Terminal Value. If you are shorting yourself $100,000 of NOI per year, that can equate to a $1 million reduction in terminal value for your community.

Here at MDS we have been dealing with the “Cost Creep” phenomenon for many years. Having worked with many Senior Living communities of all shapes and sizes over the years has allowed us to develop an unsurpassed knowledge base and many tools to look at the Cost Creep situation from all sides and develop solutions best suited for our clients. Our experience with this and other industry issues are unsurpassed.

Call me directly at your earliest convenience and let’s discuss how MDS can help your community work through Cost Creep and other operational matters that might be holding up your income statement.

Next Webinar: “How To Recruit Top Talent Into Your Community”

Roy Barker’s next Webinar, “How To Recruit Top Talent Into Your Community,” will be Thursday, August 20 at 1 p.m. Roy will use his 16 years of experience in the Senior Living industry to share unique tips for finding the best talent to manage and care for your residents. Recruiting the best talent means more than simply posting job listings online. Find out how you can be proactive in searching for the top candidates, rather than passively waiting for whoever comes to you. Register for the webinar by clicking this link.

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

Strategic Planning Series Webinar Recordings

Posted on December 12, 2014 by MDSadmin

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.

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.

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

Posted on October 17, 2014September 16, 2018 by MDSadmin

Once an effective training and development program is established and utilized by the organization it can begin seeing increases and benefits in the following areas: productivity, motivation, quality, job satisfaction, commitment (employee retention), and reduced absenteeism.

In order to provide the training and development that reaps these many benefits, it costs money, time and other resources. Paid human resources are used to plan, organize and teach training sessions, mentors take time from their own duties to mentor newer employees, training materials must be printed and/or compiled in electronic format, and fees must be paid for seminars, classes or workshops. Organizations recognize there is a cost for training and development.

In today’s competitive business world, most organizations are looking at ways to reduce expenses in order to increase profits. Unfortunately, when training is only looked at as an expense, it can be the first category to go to the chopping block. It is suggested that businesses need to accurately analyze what these training programs are worth. While most organizations compile data and trends on advertising campaigns, sales department activities, and other activities that they can directly tie to increased revenue, it can be difficult to determine a Return on Investment (ROI) on employee training and development.

Training Makes Employees Feel Valued

Research has shown, however, that when employers invest time, money and resources in their employees with training and development the employees develop a commitment to the organization. The employee feels the organization/employer values them as a worker, values their skills and values their contribution. Research has also determined that with training and development the employee believes the employer cares about the employability of the employee. (Agrawal)

In contrast, some employees have been known to say they “saw it coming” before they were fired or let go. This can be the perception when an employee is struggling and/or not performing well and the employer distances themselves from the employee; does not offer help (training/development), keeps adding additional workload, tells the employee not to worry they will eventually “get it”, etc. In other words, with ongoing training and development the employee does not feel the employer is leaving them to “sink or swim” on their own or that the employer is not “creating” a reason to fire them.

Which Came First …?

Another comment that represents the crux of this argument: “Positions that have a high turnover rate (such as tech support) are often viewed by management as not worthy of proper training.” (Green) It is “the chicken and the egg” type question. Are these positions not worthy of training due to the high turnover or is a high turnover due to the lack of training? Another point of training is to evaluate if you have the right person for the right job. Sometimes you may have a talented and capable individual but they are just in the wrong position. Continued training and development, including evaluations, can determine strengths and weaknesses and what persons fit best with various positions.

Training and employee development is not just for the employee but is as beneficial to the employer as well. For those employers that view training as an expense, a trade-off for production or just plain wasted time, they may not have an effective training program in place. Also if an employer’s turnover is high, they may need to evaluate how they train new employees, evaluate existing employees and what programs are in place to develop employees to be productive members of their organization. Employers that are successful in reducing employee turnover embrace training and employee development as a necessary tool to further their organizational goals.

We featured this excerpt from a research paper that Kim Jimenez had written on employee training and how it relates to employee engagement/retention. Employee turnover is a real cash expense that effects your business in many ways. MDS can help in employee orientation and training in order to help create and retain the best staff possible.

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.

References

Agrawal, Archana. “Employee Development and Its Affect on Their Performance.” International Journal of Marketing, Financial Services & Management Research (2013): 99-108. Web.
Green, Allison. www.askamanger.org. 19 05 2012. Article. 05 09 2014.

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

Posted on October 14, 2014September 16, 2018 by MDSadmin

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.

Investment – Not Expense

Therefore, employers need to view training and employee development as an investment in their employees which benefits both employee and employer rather than just an expense to reduce. Employers could also view this investment in training and employee development as an avenue to reduce employee turnover, in addition to, higher employee performance which benefits the organization as a whole.

Training and employee development takes many forms. There is no one training program that will fit every employee or organization. Each organization will need to determine its needs, the needs of its employees and how to address those needs in the most efficient and effective way. Some of the various components of employee training and development can include: new hire orientation, job specific training, mentoring/coaching, in-service training, continuing education, and seminars/conferences.

Orientation Alone is Not Enough

No one component itself will constitute a complete training and development program, but a combination of these components will address the various needs of both the employee and organization. For example, most organizations will have some sort of new hire orientation. And while this is a key component to any training and development program, it has its limitations as a stand-alone program.

A study published in 2008 states that while employee orientation is a necessary first step and that orientations “successfully conveyed the organization’s message on quality management initiatives and employees learned a great deal about quality management practices within the organization. The issue, however, is that transfer of learning did not take place at the desired levels after the employees returned back to their work stations.” (Akdere and Schmidt) The key to an effective program will be ongoing, continuous development using a combination of training and development components.

We featured this excerpt from a research paper that Kim Jimenez had written on employee training and how it relates to employee engagement/retention. The second part of this report will be in our next post. Employee turnover is a real cash expense that effects your business in many ways. MDS can help in employee orientation and training in order to help create and retain the best staff possible.

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.

Reference:
Akdere, Mesut and Steven W. Schmidt. “Employee Perceptions of Quality Management: Effects of Employee Orientation Training.” 2008. The Education Resources Information Center (ERIC). Web. September 2014.

Be an Appreciative Rock Star!

Posted on October 2, 2014September 9, 2018 by MDSadmin

I love music. I can’t sing or play an instrument, but I do love music and music trivia. Recently I had the good fortune to see a great band, one that has been around for many years, at one of my most favorite venues in the entire world, the Casino Ballroom in Hampton Beach, NH. It was a terrific show and fun was had by all, (including the guy sleeping in our car when we came out! For those who follow me on Facebook, you understand, and for those who don’t, that is an entirely different story.)

But, as we were leaving the concert we walked by the band’s bus. I was very surprised and saddened to see what happened next. Although there were only about ten fans around, two of the band members ducked their heads down attempting to hide from us. The sad thing was that, although most of us were old enough that we were past the “star-struck” stage and autographs don’t mean that much to us, there was a young man there who had been waiting patiently to meet the band and possibly get an autograph. It was troubling that they couldn’t have taken 10 minutes to sign a few autographs and mingle with their fans. It would have done wonders for their image. They seem to have forgotten how and why they had become so successful … fans liking them and their music.

With a Little Help From My Friends

It made me think of the senior living industry and other businesses I patronize. People like to be known and recognized. I go to a couple little local restaurants and diners where I know the owners. They never fail to stop by and say “hey” and make you feel welcome and appreciated for your patronage. I have befriended a manager at a national chain and he never fails to stop by my table and talk for a few minutes and even comps my meals most of the time. If I see these people on the street, in a different environment, they still speak and we treat each other as friends.

The same holds true for residents and their families in Senior Living communities. They think of you as the “Rock Star” of your community. They want to be known and feel like they

know important people. They want to feel that they are important and meaningful in the community in which they live, to feel like they count for something and are appreciated. Some residents don’t have a lot of outside interaction and the staff of the community may be all the outside interaction they get in a day’s time.

Rock On

I know there are days that we feel we just can’t speak with another person or we will explode. Can’t face a certain person because they always have a complaint or want to talk for 20 minutes. And there are those days we are so busy with other things that we just blow by our residents without giving them the time of day, but we have to remember why we do what we do.

It is important to remember they are the reason we are there (because they pay a monthly service fee). I think it is very important for staff members to be present, visible, engaging, and attentive. There are those who work in offices, behind closed doors, who have to put forth the extra effort to get out and be seen among the residents. It is important to remember that when we step out from behind the confines of our office that we try and clear our minds and anticipate running into residents who will want to engage with us (good or bad, long or short.)

Be an appreciative Rock Star, put on a smile and say “Hi!” to as many residents as possible every day. We never know, that might be the only smile they see that day.

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.

Conduct a S.W.O.T. Analysis Before You Need a S.W.A.T. Team!

Posted on September 30, 2014September 9, 2018 by MDSadmin

You have the ability to take your business wherever you can imagine. The first step in any journey is planning. The old mantra goes, plan your work and work your plan. Those are great keys to success. Develop a plan and then focus and stick to it. Not that it won’t need tweaking and adjusting along the way, but as long as you can stay focused and true to your mission and goals, you can accomplish anything in life and in business.

The first part of planning any journey is to decide where you’re at currently. I was raised back in the day of paper maps. Every summer my grandparents would take us on vacation and I would be the navigator. About a week before we left my grandfather would sit down with me and a map and we would not only map out our primary route but we would also have a secondary route as well. The very first step of this process every year would be pointing to the reference of Fort Worth, Texas on the map and he would say “this is where were starting from”.

Current Location

It’s the same way with business. You have to know where you’re at before you can develop a great plan leading to your desired goals. That is the beauty of the S.W.O.T. analysis or Strengths, Weaknesses, Opportunities, and Threats analysis. It’s a great process to perform in order to start the planning process and create your roadmap or strategic plan for success. This analysis works well for evaluation of products, departments, strategies, or an entire company.

The first part of the analysis, the S.W. (or strengths and weaknesses) portion, is an internal view of the product, department, or company. You are looking for and listing strengths and weaknesses of the target you’re evaluating. It can vary depending upon what you’re evaluating, but here are a few examples.

Strengths could include:

What does your organization do best?
What’s unique about you product, staff, company, or etc.
To what resources do you have access?

Weaknesses could include:

Employees not trained
Substandard customer service
Sales process too complicated

The second part of the analysis, or the O.T. are the opportunities and threats you see, which is a view of the external. These are the opportunities and threats created by or posed by outside forces to your product, department, company or whatever you are evaluating. Again, this will depend upon what you’re evaluating, but here are a few examples.

Opportunities could include:

New trends
New markets
Organic growth possibilities

Threats could include:

Existing competition
New competition
Competitors’ use of new technology

Planning Tool

While this was a very condensed overview of a S.W.O.T. analysis, you can see the value in performing one before beginning your strategic planning for 2015. It is also important to get buy-in for those who will be participating. It is advised to reach outside of your executive team and chose employees to participate from different departments and levels in the company. To ensure open and honest dialogue, employees will need to feel the environment is safe and they may speak freely.

Schedule a series of meetings over the course of a few weeks instead of one long session. This will help keep everyone focused on the task at hand and not worrying about day to day activities. Make sure there are no cell phones and only interruptions for true emergencies.

Keeping the sessions positive is a MUST. Even though you may uncover some things in which you were unaware or are troubling, look at this as an opportunity. Had you not conducted the S.W.O.T. analysis you might not have discovered challenges until it was too late. Draw on the message in my last blog about balance, when things seem out of control, there are still opportunities to be had.

I would enjoy working with you and your professional team to help you conduct both a S.W.O.T. analysis and a business wellness checkup, as well as moderating your strategic planning sessions. These two tools will be a great way to kick off and jump start your 2015 strategic planning process.

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.

Where Do I Start?

Posted on September 23, 2014September 9, 2018 by MDSadmin

As you start your strategic planning for 2015 you might ask yourself “where do I start?” You have a lot of areas that you would like to tweak and improve as you start into the new year. Two great starting points are a financial wellness checkup and a SWOT analysis (SWOT is an acronym for strengths, weaknesses, opportunities, and threats).

The financial wellness checkup will give you a great base to start thinking about areas where you could sharpen your focus to improve your operational and financial health. A SWOT analysis will give you an opportunity to look at your departments, community, or company’s current strengths and weaknesses in order to develop strategies to take advantage of new opportunities and to defend against threats. In this blog I cover the financial wellness checkup and I will discuss the SWOT analysis in a future blog.

Benchmarking

It follows the old adage and answers that question where do I start? Of course, from the beginning! But where is the beginning really? There are so many different moving parts to your organization and there are so many different areas that you would like to change as you move forward. This is why it’s important to establish a baseline of where you are at today. This is where financial benchmarking comes in. Financial benchmarking has become a priority with senior managers in the senior living industry to determine where they are today and more importantly to chart a path of where they would like to be next year and in the future beyond.

It’s like going to your family doctor for a checkup and finding out your blood pressure, cholesterol, and sugar levels. Once you know what these levels are then you can begin developing a plan to make the desired changes in things like your lifestyle and/or diet in order to achieve optimal levels prescribed for you.

It’s much the same way with the financial wellness check and benchmarking. You look at your revenues and expenses based on different line items and departments, then compare them against generally accepted industry benchmarks. This boils down your complex operations to a few high-level numbers that are more easily managed. It is also recommended that you convert your revenue and expenses into a per resident day (PRD) basis this allows for a much easier comparison. You will want to be aware of the variance between your current year budget and your current actual spent year-to-date. It is also recommended that you look back over the last 3-5 years at changes in budget and variance year over year.

Making Needed Changes

Once you have compared your actual operating financials to the benchmarks the areas that need the most attention will come to light. This will provide you with a roadmap of where the most impact can be made in adjusting your operating budget, if necessary. Then you can dig in with further analysis of areas in which you would like to improve or change. This would be a great opportunity to use the SWOT analysis to help facilitate change and direction.

Another drain on a community’s financial health that we often see in the senior living industry is “cost creep”. This is basically the uncompensated care provided to the residents of your community. It is important to stay on top of resident care plan and evaluations to ensure your revenue for resident care matches the expenditure for actual care provided. MDS has a couple of templates that allow us to take a high level look at the minutes of direct care staff you are providing to your community and see how it compares to expected care provided and revenue based on current resident acuity.

Kick-off 2015 Strong

As you can see, conducting a financial wellness check is a great way to kick off your strategic planning for 2015. It will give you a snapshot of where you are today and also provide valuable information to incorporate when planning for the future. I would appreciation the opportunity to work with you and your professional team in conducting this financial wellness check, providing assistance with a SWOT analysis, and help moderate your 2015 strategic planning sessions. Let’s get you on the calendar today before too much time slips away.

MDS also offers a “shared executive” retainer program. As a retainer client, we can help monitor your operation metrics, provide important commentary on the industry and your business, and become a strategic partner in the success of your operation throughout the year. This has become a very popular program with our existing clients because of the tremendous value added through MDS’ staffs’ many years of experience in the industry delivered to you at a fraction of the cost. I would be happy to discuss your individual situation and develop a customized “shared executive” plan to suit your needs.

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.

What Really Happens During a Community Visit?

Posted on September 16, 2014September 8, 2018 by MDSadmin

Every now and again I get out of the office and visit senior living communities to mystery shop. Some of these are on behalf of clients interested in what the competition is doing, and some are for the client community’s management to see how well the front line is performing. I am still amazed at both the good and the bad, and on a recent trip I experienced some of the best and the worst senior living communities have to offer.

The Good

As I got out of the car at one community I could hear fire truck and ambulance sirens. When I walked in there was a definite buzz. I was greeted in the lobby and asked to have a seat for just a minute. There was a stand up team meeting in progress in the lobby. It turns out that a resident had over cooked some toast and filled the building with smoke. Instead of panicking, the staff huddled for a couple minutes and then jumped into action. When the meeting broke up, I was taken on a tour and was very impressed with the way this situation was handled. The administrator never broke a sweat, lost her cool, or made a big deal of it. She handled it like a pro.

By the way, this community was way off the beaten path. It was a modestly appointed, 100+ resident community. However, it was 100% occupied with a wait list.

The Bad

On the same trip I went to a competing community. This community, while comparably priced, was at the opposite end of the location and design spectrum. It had a great waterfront location on a point right off a main highway. In addition, the building design, amenities and fixtures were fabulous, exactly like you would expect to find in a resort lodge.

I walked in about 3:30 pm to find a lady – a paid employee, not a resident – sitting behind a desk in the lobby reading a book. I asked if I could tour the community, and while she had a nice big smile, she proceeded to tell me that the person who would typically show me around was busy with a resident mixer. However, I could come back tomorrow or the next day. No attempt was made to accommodate me at the time of my visit.

If I were an out-of-town prospect, with only a small window of opportunity to check out communities, they would have just lost my business. It was no surprise to find the community had been in operation for two to three years and still only had a 50% occupancy rate.

What’s Going On in Your Community?

How is your staff interacting with your prospects and current residents? Are they expressing the kind of attitudes and culture in which you want to be known? Do you have the right people in the right positions? Are you communicating your expectations as well as the responsibilities involved in each position? Are you providing enough training and mentoring to your employees? Do you stress enough that communities are built around residents and their families?

If you don’t currently monitor or mystery shop your own community to see how your potential residents are being treated, you should consider doing so! You might be extremely surprised at what you find. Give me a call and I will be happy to set up an audit of your community’s sales and marketing programs and processes. I can provide you with a candid and unbiased assessment of how your team is doing. I can also provide you with the training and resources needed to take your team to the next level.

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.