COVID-19’s severe impact on the long-term care industry has forced many providers to resize operations while they weather the storm — but the key to succeeding depends on how well operators know their market and whether they set realistic projections for post-pandemic performance.
“You have these different pressures, so you’re either getting forced to resize to reduce expenses to survive or you’re getting resized by the labor market, and we’re seeing that in a lot of communities,” Erin Shvetzoff Hennessey, CEO of Health Dimensions Group, said Thursday during a presentation in partnership with Prime Care Technologies.
The conversation centered around how providers can evaluate and reinvent their operations and key strategies to ensure financial success. Before making the decision to cut operations, Hennessey stressed conducting market demand studies and workforce and wage assessments to develop an accurate picture of what’s actually needed.
“Really understand what’s going on in your market because resizing doesn’t always mean serving fewer people. It could mean resizing certain parts of your organization,” she said. “Don’t just reduce on the whole, really reduce by service line and understand where the demand is. If you’re in an over-bedded skilled nursing market but an under-bedded [assisted living] market, that helps you make that decision.”
Once those analyses are completed, operators should be realistic about their revenue and expense projections. She said many operators tend to be very hopeful about their organization’s ability to bounce back revenue-wise. Sometimes, “we need to pull back a little bit,” she said.
The same goes for expenses. She said one aspect that often gets overlooked is department head or overhead reductions that can go a long way.
“These changes are harder to make … but if you dropped in size by 30%, you also need to reduce overhead, high paid positions, which is harder but that actually gets more bang for your buck,” Hennessey explained. “I would argue that your quality and your outcomes are driven by that frontline staff, lower-expense staff than department heads. We all need good leaders, but the No. 1 indicator of resident success is the relationship with their nursing assistant.”
Any resizing decisions made by operators — including for how long and where they’ll resize — should be wrapped into the provider’s overall organizational strategy and strategy plan.
“Be as ‘planful’ with expanding as you are with reducing,” she said. “Sometimes you get put in these difficult positions and your instinct is to reduce, but be ‘planful’ about expanding service lines, as well, and that hopefully … will drive your vision and your big goals.”
There are risks when it comes to resizing, she noted. They include demand from the broader continuum to take on more patients and financial risks, but she stressed providers be transparent and keep good relationships with other stakeholders, like lending partners and staff.
“It’s a lot to evaluate and I would just encourage [providers] to look forward,” Hennessey said “We’ve been to heck and back as a profession.”