Five Strategies to Increase Revenues in Assisted Living

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There are several key barriers to increasing revenues in assisted living, independent living and dementia care communities. Quite simply these seven reasons are the consistent challenges for care communities regardless of location, population or size.  They are:

  • Services are given away because of a lack of understanding of the balance of service and profit
  • Services are ill-defined making delivery documentation complicated and billing inaccurate
  • Assessments are out-of-date impacting the opportunity to add new services and potential revenue
  • Resident needs and interests aren’t tracked or measured to allow for new services to be introduced
  • Measurement of day-to-day operations is unstructured so you can’t see where change needs to happen
  • Lack of teamwork impacts communication and collaboration
  • Continual pricing reviews are not scheduled and are overlooked

Any of these issues can make the difference between a fully populated community that is operating at maximum efficiency with happy residents, confident families and satisfied, enthusiastic staff.   To this end, there are five strategies that care communities should embrace today to start down the path to increased revenue while building operational effectiveness.

 

Strategy 1:  Stop Giving It Away – Nothing in Life is Free

Nurses or care providers are giving people by nature.  They always want to give just a little more to make the day in a life of a resident more pleasant and comfortable – and more often than not, that care is undocumented. Giving without documenting is a big problem. Residents get services for free, and the community’s profitability suffers.

For example, when Mrs. Jones in room 103 needs help making the bed one morning the caregiver just steps in and helps.  It’s the human thing to do. But this human reaction is often not documented.  After all, it’s just this one morning, or just this one task.  However, Mrs. Jones might require this help every day, but unless it is documented, she may not get the care she needs in addition to it not getting billed appropriately.  This extra service comes at a real cost to the community.

Let’s look at it this way: If 60 residents receive an extra 10 minutes per day of care, that equals 600 minutes or 10 hours per day.  At a cost of $20 per hour this is $200 per day or $6000 per month.

It really comes down to the assessment.  Some of the best assessments have over 70 questions that help to create a high quality resident-centric care plan that leads to highly personalized quality care. Most paper-based templates limit choices with only 2-3 options for services, like bathing.  Paper systems lose the detail because nurses and caregivers just don’t have time to write everything down.

Converting to electronic-based assessments allow communities ultimate flexibility to add options or delete them.  For example, when one operator talked with caregivers about where time was being spent for things not shown on the assessment they learned that there were many hours being consumed sitting with some residents as they smoked.  A new service was added to the assessment to provide “smoking supervision” and revenues increased to cover the costs.

Strategy 2:  Use Time to Make Things Clear

Time is money and care communities understand this more than any other service business. More importantly, time is what residents appreciate and use to place a value on their relationship with staff and administrators.

Each service task should have a clear and concise definition as well as a standard time associated with it.  For example, “Standby Bathing Assistance” is a service often set at twice per week for 30 minutes each.  The 30 minutes can come from time studies and focus group discussions with families, residents, nurses and caregivers. The time allows for the care provider to take the resident to the bathing room, standby while they bathe, return the resident to the room and clear up the bathing room.

You can then calculate for each resident the actual standard time for all services provided and deliver an itemized listing in the invoice at the end of each billing period—not too much different from what you get when a mechanic works on your automobile.  This transparency makes it very easy to explain to the resident and the family. For example, here is an itemized listing where 5 minutes per day for a full month is a point.  It’s clear what is being done and what each service costs.

billing-detail-by-points

If you bill by levels or as a single price you may not want to send this kind of information out, but by having it available you will find it much easier to justify the charges that you are asking the resident to pay.

 

Strategy 3: Add New Services Based on Wants

One of the most overlooked areas for improving revenue is evaluating and analyzing the assessments for desires or interests vs. needs.  Many residents don’t ask for a service because they don’t even know it’s an option.  By doing more frequent or even informal evaluations of resident’s desires and interests, you may be able to add a service either to their plan or to the list of offerings with very little effort in creation or service delivery.

For example, in a community of 60 residents, over half of them may miss having a formal dinner every Sunday night. In the end, this isn’t much more than a menu change one night a week, yet can be billed at a higher rate than other dinners during the week. By increasing that meal by only $5.00 will yield $1,000 in revenue in just one month.

Traditionally, adding new services was seen as more work, thus more hours, and more staff to add new services. Because we are talking about adding new services to an assessment that may simply be missing for a single resident; or adding a service that may simply be a modification to current offerings, this type of evaluation of services is easy to implement and can be very cost effective if kept simple.

On community looked at the total amount of time for services for all of the residents and realized there was one group who took more time than most living in assisted living, but a little less time than those under dementia care. When they looked deeper they found that there was a higher level of queuing.  They realized these residents were in many cases married one of the couple was in the early stages of dementia.  So they moved them all to one wing where the rooms were slightly larger and made sure there was a caregiver always present to help.  The result was an increased level of service and revenue.  The service filled the ‘want’ of spouses not to be separated when one of them started to get dementia.

 

Strategy 4: Use Basic Merchandising Techniques

Sometimes it is not what you sell, but how you sell it. In retail commerce, merchandising means maximizing sales using product design, selection, packaging, pricing, and display that stimulate consumers to spend more. This includes disciplines in pricing and discounting, physical presentation of products and displays, and the decisions about which products should be presented to which customers at what time.  Offering or packaging services to your residents should be no different, along with how you price them, and how often that pricing adjusts based on time and demand.

Most communities price using levels of services.  There is often a single price for each type of room plus a charge for the level of care services.  There are numerous ways to price and package services and most approaches will deliver

solid results. Here are examples of communities that all priced using levels showing how their service revenues (i.e., not including rent) changed after they got serious about using software tools to charge for all of the services being delivered.

increase-mo-billing-multiple-communities

Silverado is a highly successful dementia care community that offers one price per month for a private room including all of the services regardless of the specific care needed.  Occupancies are in the high 90 percent range as demand is consistently high.

Peoples Retirement Community in Tacoma, Washington had been losing money for years when new owners took over and implemented a software-based management system.  Based on some careful mystery shopping, the owners learned that their rooms were larger than those of nearby competition.  That led them to change their rates to offer more square feet for the same rent dollar. At the same time, services were all unbundled from the room charges and the concept of levels was removed.  The packaging and pricing changes led to charges decreasing for a number of residents and increasing for some residents.  Only one resident decided to leave with this change and the remaining residents were very pleased with the new arrangements.  There was a renewed sense of fairness and value.  For Peoples Retirement Community, even when occupancy is down the community makes a profit.  According to the management team, none of the changes could have been made or implemented without a software management system that provided them with a complete view of the actual cost of delivering services to each resident.

 

Strategy 5: Get Off the Paper Trail

Paper management systems have one huge operational flaw: every single step is managed by humans. Indeed, humans are prone to error and even worse, procrastination when something seems complicated or time consuming.

In a care community, a paper-based system requires multiple steps increasing the likelihood of error. If a change is needed on an assessment, then it needs to be reflected on the service plan and the task lists.  Then the business office needs to be updated so that proper a proper billing can be made.  If any of these steps are missed or bungled, the billing is incorrect.

Just converting to using software is not a panacea. Software only works when the information in the system is up-to-date and easy to use.  Just like an airplane, someone has to fly it.   The most common reason that software fails is lack of commitment to use it and failing to implement training for all the staff.  With that commitment, a software system will provide actionable information that lets the care community run more effectively to drive revenue.

Software can also fail if the intended use is not the core competency of the application. For example, operational software is not always the best choice for a cost accounting system.   Likewise trying to use software designed for skilled nursing in an assisted living community can be counterproductive.

So to get off the paper trail you will need to choose a leader and involve your team so they actually fly the airplane.

 If You Build It, Revenue Will Come

 With an active team and a solid leader and a desire to improve you will see an increase in revenue.  The software is your platform for planning services, measuring the delivery, assessing all aspects of service requests, and merchandising your offerings.

Five Strategies to Increase Revenues in Assisted Living

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