3 Ineffective Ways to Grow Your Community’s Net Operating Income

Ensuring your senior living community has a robust net operating income is vital for providing excellent care for your residents and keeping investors happy.

However, not all ways of growing your revenue or decreasing your costs are equal.

There are effective methods that improve your profitability—and there are decisions that provide short-term results at the expense of your long-term success.

Unfortunately, too many senior care communities attempt to improve their net operating income with temporary solutions.

Here are 3 ineffective ways to grow your net operating income, and an effective method that can support your community’s financial stability and sustainable growth.

Net Operating Income Mistake #1: Making Budget Cuts

When your senior care community’s revenue begins to dip, your first response may be to look for easy budget cuts. You may consider…

  • Decreasing your nursing and support staff.
  • Forgoing needed renovations and upgrades.
  • Reducing the variety and quality of foods your dining experience offers.
  • Restricting the number of activities and events at your community.
  • And more.

However, the temporary boost your revenue initially receives can ultimately harm your net operating income.

As you invest less in your community, your occupancy can suffer. While skipping an important renovation may improve your cash flow, at the same time, it may also decrease the experience your operation provides during tours.

As prospective residents (future sources of revenue) compare what your community offers to other locations, they may choose a competitor who presents a better living experience.

In the end, budget cuts lower the value your community offers for both residents and incoming leads.

Net Operating Income Mistake #2: Offering Discounts

Another temporary fix for improving net operating income is offering discounts to prospective residents.

Discounts are a common technique in the senior care industry. For instance, Senior Housing News cites data from the National Investment Center for Seniors Housing & Care (NIC), reporting that, at the end of 2016, new assisted living move-ins paid 10.7% lower than what their communities initially asked—due to discounts.

Financial incentives can seem an easy—and successful—way to prop up revenue. However, they can often…

  • Mask underlying problems creating your occupancy struggles.
  • Reduce the amount of revenue you have to reinvest in your community.
  • Focus your efforts on reducing prices instead of building your community’s value.

The result is a less-than-effective, and ultimately harmful, approach to growing your net operating income.

Net Operating Income Mistake #3: Relying on Ancillary Services

Another ineffective attempt to bolster financial success for your community is a reliance on ancillary services. As Senior Housing News reports, some senior living communities are compensating for decreased occupancy and are driving revenue with ancillary services.

However, don’t be fooled by the promise this strategy seems to hold.

Ancillary offerings are, by definition, secondary services. While you can count on residents to pay their rent fees, you’re not guaranteed that they’ll opt for supporting care services, additional meals, or garage spaces.

In the end, using optional services to improve your net operating income puts your community’s revenue on a shaky foundation.

Growing Net Operating Income without Compromises

Relying on budget cuts, discounts, and ancillary services can ultimately harm your senior living community, whether you’re a mid-sized operation or part of a large corporate chain.

The good news is you can grow your net operating income without compromises. The key is equipping your sales team to drive revenue by showcasing how your community meets the needs of prospective residents.

With senior living sales training, your sales director and sales counselors will learn proven methods for driving move-ins without financial incentives.

Stop relying on ineffective techniques to grow your net operating income, and foster long-term growth with senior living sales training and revenue growth coaching.

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