To call the senior living sector financially pressured is an understatement in a not-yet post-COVID environment marked by escalating costs, negative margins (-4.8% expected by year’s end) and projections of 400 nursing homes going out of business in 2022.
Things were tough even before the pandemic, and worsening circumstances have the industry scrambling to find advantages wherever possible. There’s no magic bullet, of course, but one thing owners can do is review their policies and practices and take remedial actions against the risks where they can.
One issue that’s been a longstanding problem with healthcare generally and was no doubt aggravated by developments in the last two years has been that of deferred maintenance.
Among some organizations, it’s a risk strategy – one way to extend their infrastructure investment. More commonly, though, it’s simply a response to stretched resources. When funds are tight, repairs are delayed.
There’s a ripple effect. A boiler goes down and heat and water supplies are affected. A malfunctioning elevator jeopardizes resident care and safety. Ultimately, reserves are impacted, people are disrupted and capital budgets are decimated.
Many in the senior care business may well be grappling with is the simple financial cost of such delays. Every dollar conserved by deferred maintenance results in a $4 jump in future capital investment costs. And those are direct per specific asset costs. Indirect costs may drive those costs up more than 15 times what the original repair cost.
Three solutions to manage the issue
Deferred maintenance is a financial metric that reflects limited investment in a facility. Reversing the trend takes a strategy built around the organizations priorities, not just needs, but in terms of asset management. Which projects best reflect the biggest needs and money that will be spent right?
Here are things to thinking about to manage the risk effectively:
1. Prevent problems with predictive maintenance. Predictive technology is invaluable for maintenance of high-risk assets. Investing in software and sensors that monitor equipment performance 24/7 facilitates analytics that signal when maintenance is needed. Vibration and oil analysis and thermal imaging are examples.
At the same time, computerized maintenance management software is invaluable for everything from shift schedules to contractor management.Materials bottlenecks and shortages of crucial spare parts are unacceptable for an institution that is responsible for the health and well-being of a vulnerable population. Inventory management software offsets materials outages as well as wasteful storage habits. It’s also smart to register and track assets to be better prepared to handle issues like theft and duplicate purchasing.
2. Prioritize patient-critical assets. Wheelchairs, emergency generators, lifts and support structures, HVAC systems and security systems all are important, but some more than others. Setting up a value hierarchy, combined with OEM recommendations, should guide testing and inspection schedules.
3. Audit and assess maintenance performance. Done regularly, this has a number of benefits. Not only does it reinforce a culture that supports maintenance, but tracking performance measurements is helpful to satisfying external auditors with reliable data.
The past two years have been harder on the senior living sector than any other in recent history. It comes together to make a solid case for improved asset management as the industry sharpens its practices to emerge whole in the years ahead.
Jim Burke is a vice president and senior risk consultant on Hub International’s Risk Services team. He has over 30 years of experience in professional safety and risk control consulting with direct, practical experience in a broad range of diversified business operations. He specializes in safety management process development, risk minimization and mitigation strategies and development of best practices across the broad range of risk considerations.
Opinions expressed in McKnight’s Long-Term Care News columns are not necessarily those of McKnight’s.
