What we'll see in assisted living this year—a year to get stronger
What we'll see in assisted living this year—a year to get stronger
Drop in housing prices keep prospects skeptical. Housing prices may actually decline further. If you look at the latest graph of the Case-Schiller Index, it projects another 20% drop in home prices.
Or you may prefer to listen to the two professors Carmen M. Reinhart and Kenneth S. Rogoff of the National Bureau of Economic Research. Their book, “This Time is Different,” looks at the financial crisis over the last 100 years and proves the point that time is NOT different. They show that housing prices on average fall from the peak by 35%. If you believe this, then we only have another 10% drop in housing prices in front of us.
I don't know which of these views is correct, but it is very unlikely that housing prices will increase, so the mindset of the prospective customers is going to remain sour. What can you do? Sharpen your team's selling skills, demonstrate value and deliver differentiation. We have heard that the communities that remain successful stress the basics of high-quality care and services and have a strong organizational infrastructure.
Managing staffing levels to acuity. There are two forces at work here.First, you must deliver what you promise. That means the right balance of staffing to do deliver services properly. Second, lawyers are showing an increasing interest in cases that prove a resident was injured or harmed because the staffing was not adequate. I have read many blogs posted by law firms suggesting that it's easy to ask for documents “showing how the defendant arrives at the staffing level and how they manage against it.”
What can you do? Review and document exactly how you arrive at your staffing. Budget-based staffing doesn't work. Staff your community based on changes in census and acuity of the residents. Use time standards to document and report. All of this can actually increase your profit without losing sight of delivering quality care to your residents.
There will be more assistance in living services offered. Many assisted living companies also offer independent living. Independent living is really “assisted living in denial, ” and that creates even more difficult challenges with census. Offering concierge services helps both differentiate one community from another, but it also greatly helps the bottom line, as those services offered can be profitable. What can you do? Ask yourself if you should offer alternate services.
Unions will push harder. Union membership used to cover 33% of the working population in the U.S. and it is now under 10%. Union leadership sees the senior market as a growth opportunity. It is gaining share in many states. What can you do? Get ready by reviewing how you are taking care of your employees.
Regulations will get tougher and increased fines may follow. My company builds reports that support regulations in 50 states and the provinces of Canada. We see a trend that is very, very clear: the regulations are getting tougher. What can you do? Be sure you have a means of tracking the changes needed and then make them happen. Know exactly who in your organization is responsible to review and ensure compliance.
Medicaid cuts are a reality. States are in debt and raising taxes is not pleasant. Medicaid is about 40% of most state budgets so it is one place that government officials have to look to balance the budget. With the change in Congress, looking to the federal government to bail things out is going to get harder. What does this mean for you? Quit giving free services to Medicaid residents. If you are not being paid for the services, then you are giving them for free. Show social workers how much work you are really doing to take care of Medicaid residents and give them the data they need so you can get reimbursed for the work you really do. This will also get your staffing aligned so you are not wasting money on overstaffing for unpaid services.
Use of sensors will rise. Whether communities implement alarms or other motion sensor technology, facilities are finding huge value in technology that doesn't require increases in labor to implement. In fact, leading communities have found that using sensor technology actually saves labor to check on residents. For example, Well Aware has created a wireless monitoring system that can provide a higher level of service for the increasingly demanding resident. What can you do? Study and visit communities that are using these systems to see if they might be of value to you.
Points, not levels, will become the norm. Many communities use levels for pricing, but we have seen a trend to use pricing based on points. Can you imagine going to get your car repaired and being told you need to pay for Level 3 Service? No, they give you a detailed listing of parts, supplies and labor that is very detailed. You pay for the exact products and services you require. You may not like the price, but you pay because there is great clarity and you can see the value. That's what drives people to use points.
Points allow communities to more accurately track services and bill accordingly. Points allow care staff to more accurately document services that ends service creep. For families, communities can more accurately share what services their family members have needed and received. How can you make a system-wide change? Find another company that is pricing based on points and visit them to learn if it could be helpful for your company.
Census will remain as a huge challenge. As I began this essay, we have learned that prospects are reluctant to move as their home values have declined. They will remain uncertain and skeptical. But in many cases, residents have moved out to live with family and that is putting additional pressure on filling those rooms.
Your competition has empty rooms and they will cut deals to get your residents. Staying at home with in-home care will seem to be easier and for some will be less expensive. What can you do? Get creative. Help your prospects understand the monthly cost of staying at home versus living in your community. Offer to cover interest costs on a line of credit to cover the period of time while a house is being sold.
It's not going to be an easy year, but if you are alive and operating now, chances are very high that you can do better in 2011 than you did in 2010. Tough times pass and the toughest do get stronger. This is the year to get stronger!
The author earned his MBA from Harvard Business School, owns several senior communities and is the president and CEO of Vigilan, a management software company for senior living.