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I’ll never forget the day I made a big mistake and yes, it’s going to make you cringe; I put regular gas in my diesel fuel tank. There, I said it out loud! I was rushing, distracted, and not paying attention. Swooping into the gas station I saw the green handle, grabbed it, and started filling my tank, or so I thought. That’s until I was a mile down the road and my car started acting funny jerking back and forth. So, I pulled over. When it would no longer turn on at all, I called my husband Dave and said, “something’s wrong with the car, it won’t turn on,” to which he pondered a moment because it was a newer car and replied, “did you happen to get gas recently?” to which I responded, “Yes, why?”

Dave quickly surmised that I had put the wrong gas in the car and what I love most about this man is that rather than making me feel worse than I already did he said, “first, are you okay?” and upon confirmation that I was fine, arranged to have the car towed away.

$2,000 later which was cheap considering the alternative and worse-case scenario of replacing the entire engine; my tank was cleaned out, diesel fuel put back in, and a life lesson fully instilled: Never put the wrong fuel in the tank!

Which leads me to the focus of today’s blog topic: Incentives. Yesterday I was reviewing the Senior Care Investor and on page 16 read, “these days, almost everyone is discounting because the name of the game is census, then worry about margin.” Interesting. I pondered that statement and when I woke up this morning thinking of how best to convey the insanity of this business strategy to assisted living owners and operators, the fuel disaster came to mind. Revenue is the fuel of any business and while discounting is enticing for short-term results, the long-term implications are serious. I’m not here to shame you but to provide big picture perspective on assisted and independent living, memory care, and active adult discount practices. My goal is to help senior living owners and operators pivot from discounting toward alternative options that produce better results for your portfolio of communities and the many residents served.


It’s time to decide on your sales and marketing strategy, big picture; do you want to sell on value or rate and no you can’t sell on both. It’s time to decide so you can move toward the outcome you seek. When a caregiver hears that assisted living care will cost them $51,000 per year, nearly half of the average income of a family living in the United States and close to double the income of adults over 65, clearly there will be a moment of pause. People simply are not prepared to hear this. The knee jerk response of senior living operators and their salespeople is to offer a discount.If you sign up by the end of the month, we’ll give you $500 off your monthly rent for a year!” Operators think it’s a good business move because it allows the community to fill vacant apartments faster (or that’s the assumption). While discounts may work in the short-term, they do not work in the long-term.

Oftentimes that $500 discount is the margin, and the first 12 months of residency will be at break-even or even a loss. The remaining 10 months of what makes up an average stay in assisted living (22 months in total) will be at a three to five percent increase over their move in rate which may or may not provide a return; depending on how steep the initial discount was. I understand operators need to pay the bills and discounting can help you do that, but as an operator, it’s going to catch up with you. As they say, you can’t keep kicking the can down the road. Part of the problem is that operating contracts between owners and their management companies are set up ineffectively, with no incentive to produce investor returns. Senior living operators will get their 5% (on average) of revenue no matter what the bottom line is. That must change.  Move in discounts don’t impact operator income but instead the owners they serve. As you can imagine there isn’t as much urgency to work on the business, equipping salespeople to properly sell, when they can work in it and still come out the same. It’s the assisted and independent living, memory care, active adult, and multi-family owners that need to demand change and help operators pivot toward smarter sales strategies that will drive move ins at market rate rent with margin, so the business is healthy and sustainable for the long-term.


During the Great Recession assisted living operators offered discounts in exchange for move ins because the real estate market was a disaster. The most common incentives offered were to waive the community fee that ranged from $2,500 to $5,000 and to provide a discounted rate for the first three months of residency. Both incentives had short-term impact.

Today we are seeing discounts that span the entire stay; it’s a flat out rent drop. During the Great Recession the average length of stay was three years so there was time to make up margin. Today, it’s just 22 months leaving no time to recoup what’s been given away. Not only are operators undermining the value of seniors housing, but odds are those discounting are still underperforming. Even if a community achieves higher occupancy, lowered rates damage the value proposition and negatively affect performance.

ProMatura analyses have found that communities with the highest performance values aren’t always the ones with the lowest rates. Rather, they have the best-performing sales teams.From my perspective,” says Wylde, “you don’t discount rates. You improve your personnel.”

Yet operators tend to take path of least resistance which means dropping rate when the reality is they need to equip their sales and marketing directors to build value, problem solve, and advise rather than please prospective buyers. There are many ways to drive occupancy that don’t involve discounting and while I would love to say don’t discount at all, I know that message will not be well-received. So, let’s look at an alternative option to discounting that will help people solve their funding problem and create urgency, spike move ins, and all while keeping the bottom line intact.  


Most if not all independent and assisted living, memory care, active adult, and multi-family operators are looking to move the needle on sales.

While the most common approach is discounting which has dire consequences on a business, consider options that are not permanent and that allow time to recover margin; all allowing you to get back to market rates quickly. Most buyers who move in at a discount would have bought anyway without them.

If you must discount, consider the following incentives that allow recovery:

  • Moving allowance or apartment upgrades.

  • Prepay discounts. Prepay will help to keep your accounts receivable current. If a new resident pays rent up front for 12 months, they receive a discount up front creating a win-win.

  • Bundled deals. One rate all inclusive of rent, care fees, meals, transportation with margin built in.

  • Seasonal sales. Save discounts for those times that prove tougher to sell like the holidays.


For example, if you currently have a 40% gross margin, and you are considering a 10% price increase, you can sell 20% fewer units and you will still have the same total gross profit dollars in the end. So, sell 10 units at current rate or 8 units at a 10% increased rate to achieve the same gross profit. Why are we discounting again?

Keep your best-selling items whether it’s your two-bedroom apartments or those close to the elevators and dining room competitively priced if not at a premium. If you have ten one-bedroom studios that have been sitting empty for six months, smartly offer short-term discounts or incentives on those.

Alternatively, if you have a 35% margin, and you decrease price by 10%, you must have a whopping 40% increase in unit sales to end up with the same total gross profit dollars. This is important to know if you are considering a discount offering to increase the volume of move ins, especially if it has a low gross margin to begin with. As you can see, the free market blesses those with high margin. A decrease in selling price will probably increase unit sales. But, if you have a thin 30% gross margin and you drop your prices 20%, you must triple your unit sales (i.e., increase unit sales 200%) to have the same gross profit dollars. Keep this in mind if you’re lowering prices to increase sales.

That means rather than selling 10 apartments, I now need to sell 30 to have the same gross profit dollars. No wonder seniors housing sales and marketing directors are burnt out and exhausted! They are working harder than at any other time in history.


There are over 400 programs that provide financial assistance for elder care.  Help comes from federal, state, and local governments, the VA, non-profits, private organizations, and as many as 50 other agencies. The large number of sources and different and often conflicting qualification rules makes determining one’s eligibility a challenge yet taking the time to dig into what’s available in your local markets can be a game changer as it relates to the bottom line. It also builds incredible value with prospective buyers because they see you are trying to help them fund a move!

If operators spent as much time educating their sales and marketing directors as they did plotting the next discount offering, they would be in a much better financial position. While occupancy is trending up incrementally right now it’s likely at the cost of margin, meaning a wash.

We must pivot and use 4Q21 to strengthen the sales team’s ability to sell at market rate rent meaning they must not only learn how to build value but also problem solve financial shortfalls prospective buyers have. Here are six funding tools that can be used and even if there is no qualification, the effort will impact the relationship with the prospective buyer tenfold:

  1. Aid and Attendance Benefit

There is financial assistance for assisted living for veterans in the form of a pension called the Aid and Attendance Benefit. As of 2021, this program can aid up to $1,936 / month for a single veteran and up to $2,295 / month for a married veteran.

  1. Veterans’ Directed Care Program

A second option for veterans can be used in independent living communities, but not assisted living communities. The Veterans’ Directed Care program gives the participating veterans considerable control and latitude with how their care funds are spent. Under this program, personal care attendants can be paid to aid veterans residing in independent living.

  1. Reverse Mortgages and Home Equity Lines of Credit

Reverse mortgages and home equity lines of credit (HELOC) are two options homeowners have for using their homes to help pay for assisted living. To use a reverse mortgage, for example, the individual must be married and their spouse must continue to live in the home as reverse mortgage rules state that a home must be owner-occupied. do not have this limitation.

  1. Life Insurance Policies:

There are five different ways life insurance policies can fund care while the policyholder is still alive. However, not all five options are available to all policyholders, nor do they necessarily make economic sense for everyone. That said, life insurance is one of the most under-utilized of the self-payment options for assisted living.

  1. Assisted Living Loans

Assisted living specific loans, when used appropriately, provide families with great flexibility. Assisted living loans are designed for short term financial gaps typically for periods of less than 2 years. They are ideal when families have unexpected assisted living costs and are waiting for other resources to become available. Read a detailed analysis of the costs and benefits of assisted living loans here.

  1. Long Term Care Insurance: Partner with insurance agents who sell this.

A small number of families are fortunate enough to have long term care insurance, perhaps 5% of American seniors. A more detailed discussion of long-term care insurance is available here and an even better move is to partner up with long-term care agents for referrals to those who do have LTC!

Why discount when resources are available, and it’s not even proven a shortage to move ins exist? You can also use the Assisted Living Financial Resource Locator, an interactive tool that consists of a series of questions which are used to narrow down the many options of the financial assistance program database to only those that are relevant to one’s specific situation. To implement this in your own communities, start here.

While funding options vary by state and even city, it’s likely that the sales and marketing directors responsible for move ins are unfamiliar with these tools and are even less comfortable speaking about finances. Imagine if just 25 percent of your move ins qualified for some sort of funding that didn’t come out of your pocket. What impact would that recovered loss have on your net operating income?


With the economy rebounding faster than expected, the bigger question to ask is do people really need discounts or are your salespeople offering them because it’s easy? Your sales and marketing staff will do what you train them to do.

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