How Operators can Drive Operational Efficiencies so that More Seniors can Afford Senior Living
And Learn 3 Creative Ways to Reduce Expenses
We recently discussed in the Bild Book Club the topic of Where is the Most Optimal Price Position for Your Seniors Housing Community or New Development based on Chapter Four of the book Confessions of The Pricing Man, How Price Affects Everything by Hermann Simon.
We also discussed how it can impact your Seniors Housing Community to consider changing its position and what that actually means to operators and investors. Let’s face it, there are risks to changing your pricing strategy including changing your overall business model from quality to high-volume as well as branding and market positioning. MOST importantly, we know that pricing dictates what market segment you will serve.
Now let’s play with some of the ideas presented in the grocery store scenario in the previous article that showed how you can implement higher efficiency, lower costs and capital management when considering your pricing position.
These ideas are excellent to workshop or discuss with your leadership or team. The goal is to help you consider these ideas BEFORE you make any changes. So, grab a notepad or even a napkin, some of the best ideas begin with simply jotting down your thoughts!
ACHIEVING HIGHER EFFICIENCY IN SENIORS HOUSING OPERATIONS
Just yesterday, I was reading an article in The Week magazine about the trend in business to cross-train people for dramatically improved efficiency.
The article featured Sky West Airlines who advertises and hires for “cross-utilized” agents capable of ticketing, marshaling and servicing aircraft and luggage (wow!).
THAT means, companies today are looking for people who can be all, do all, and pivot on a dime to solve any problem. While it’s not ideal in some cases, it’s working for some employees that can provide the variety needed to stave off boredom and improve efficiencies.
On your notepad, write down ideas of how you might cross-train within your own organization. I’ll start with three quick and easy ideas we’ve used with some of Bild & Co’s clients:
- Combine maintenance, landscaping, and even transportation.
- Use your activities director to support sales, outreach efforts, move in coordination, and let them take the lead on customer experience while cultivating resident referrals.
- Make a list of all roles and all tasks in a given day. Draw arrows where roles and prospective tasks might fit. Consider an employee task force to help with ideas and you will get faster buy in!
LOWERING MONTHLY COSTS
If industry leaders in seniors housing are suggesting we reduce annual rental rates by $10K per year to tap into more seniors, here are a few ideas to make up the difference:
- OUTSOURCE care needs during slower times to an “uber style partner” such as Caring On Demand who charges fractionally versus by the hour. Tell them Traci Bild with Bild & Co sent you!
- CROSS-TRAIN employees to do multiple tasks as previously mentioned.
- You can also LEVERAGE residents as volunteers for simple tasks as it also gives them purpose. I’ve seen residents do a fantastic job of conducting tours, leading activities and more. Most importantly, they love it!
- Gain more BUYING POWER by joining Group Purchasing Organizations (GPOs) and leverage groups like Senior Living Smart for discounting typically only available to big companies.
CREATING CAPITAL MANAGEMENT EFFICIENCIES TO REDUCE OPERATIONAL EXPENDITURES
For a community to thrive, it needs to maintain a healthy gap between income and expenses. To do this, it’s important to maintain production levels while also controlling costs. Here are some great ideas to start with:
- DISCOUNTING: Offer a nominal discount for residents who wish to pay for the full year in advance. You would be surprised how many people are willing to do this.
- CUT WASTE: Review variable spend quarterly to ensure they are still viable. One area we see a lot of waste when we conduct research for our clients is in marketing
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- Use call tracking lines on all marketing spend campaigns to ensure you are receiving leads and if not, cut it.
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- Train your sales and executive directors as well as your director of nursing how to conduct effective outreach to drive quality referrals that close four times faster. This costs NOTHING and yields a much higher conversion.
- PRE-PAY for services you utilize in exchange for a discount; creating more margin.
HERE’S THE DEAL
The operators who figure out how to deliver an incredible resident experience in an affordable way will immediately tap into this large middle market we are hearing so much about.
To make it happen, the operator will need a clear, significant and sustainable cost advantage over its competitors without sacrificing what’s most important – the resident experience.
Hermann Simon states in his book, Confessions of The Pricing Man, that the key to make this happen is to establish an acceptable (not minimal) level of value to the customer, delivered with the highest cost efficiency.
He also states that this type of decision places special demands on executives and management and only those with the will and the nerves of a Spartan should venture into the realm of low-price positioning. I beg to differ. Yes, it takes courage and risk tolerant leaders who are able to learn from mistakes quickly while pivoting fast; but the reward is a sizable middle market of seniors who need to move but can’t afford it so, it’s worth trying to figure out.
At Bild & Co, we have long-term solutions with guaranteed results. The best part is, we strive for a 5% occupancy increase—with many clients seeing occupancy jump 8 to 10% in growth. Our team of growth experts are excellent at researching, analyzing and recommending strategies that help you increase efficiency while promoting growth.
To your success,
Traci Bild
To learn more, BOOK AN APPOINTMENT with myself or Jennifer Saxman, expert Senior Housing Sales Consultants or schedule a Mystery Shop to gain better insights in both sales and marketing effectiveness.
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