The family secrets that hold back long-term care

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John O'Connor, editorial director, McKnight's Long-Term Care News
John O'Connor, editorial director, McKnight's Long-Term Care News
Several years ago I called some industry experts with a simple request. I asked if there was a place where I could find some basic benchmarks about industry spending. Didn't think I was looking for anything that was really off the wall, just run-of-the mill budgeting-type stuff.

Things like: what is a typical budget for a 100-bed facility? How do facilities typically carve up their budgets? How much of a typical facility's budget goes to areas like labor, physical plant purchasing, software, etc.? Essentially, I was looking for the sort of information that players in many other real estate classes take completely for granted.

Turns out I should have tried something simpler, like asking bluesmen to reveal their harp playing secrets. Now it is possible I asked the wrong people and/or looked in the wrong places (and if you can tell me where to find this stuff, please do).

It wasn't long before I hit more dead ends than a blind mouse in a maze. In a final desperate act, I asked a person who prepares tax information for a local facility if I was stupid, or if something else was going on. As only a friend can, he let me know that something else was going on, but that did not change the fact that I remained stupid. Thanks, buddy.

That “something else” turns out to be a general reluctance among providers to share the so-called secret sauce: how they spend their money. These are the industry's family secrets, and the prevailing mood is that they are not to leave the room.

In some ways this is an understandable sentiment. Why let the competition —  or the government — know what you are up to? At the very least, you might lose an edge. And the worst case scenario? Let's just say that things could get a tad uncomfortable for some operators. So I let it go.

Then last week I had a more troubling conversation. A guy who watches this field more closely than most let it slip that the challenge extends beyond purchasing habits. In fact, basic benchmarks about execution are largely a mystery as well.

Is there a dollar amount that a well-run 20-facility chain with an average of 100 beds should be taking in? Or spending? Apparently not. Individual firms certainly have their own quotas, but industry-wide data that can be used for comparison purposes? Lotsa luck pinning those numbers down.

It should be noted that some companies do include very general numbers in their earnings statements. But here the information tends to be extremely cryptic and qualified. (And again, if someone can point me to this information, please do.)

The irony here is that more data analysis than ever is being used in this field. And in some selected areas, the information is extremely good. Moreover, thanks to NIC MAP, we have unprecedented access to information like new construction, occupancy rates and relative competition.

But at a time when this field is trying to woo institutional investors, we often can't let these potential partners know how to distinguish truly well run communities from those that simply claim to be well run. This is largely the residue of a sector that feels others cannot be trusted with its proprietary information.

Family secrets are understandable. And some may serve a purpose. But as far as senior living is concerned, the practice seems to be causing more harm than good.

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Daily Editors' Notes

McKnight's Daily Editor's Notes features commentary on the latest in long-term care news. Entries are written by Editorial Director John O'Connor on Monday and Friday; Staff Writer Tim Mullaney on Tuesday, Editor James M. Berklan on Wednesday and Senior Editor Elizabeth Newman on Thursday.

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