By Mike Andreasen, VP/Financial Planning and Analysis at LCS
Numbers and metrics. They can be your best friend and your biggest challenge when it comes to making critical business decisions to benefit your senior living community, the resident experience and your bottom line. Here’s a breakdown of 5 steps to help transform the way you use data to add clarity, provide accountability, and to drive financial success at your community.
- Eliminate guesswork.
Data now available allows boards of directors and community leaders to move from experienced-based decision-making to more analytics-based decision-making. It’s no secret that sales and occupancy are key metrics that drive top line revenue and impact the bottom line. Use data to gain insight into what’s driving wage and expense ratios, per resident-based staffing, budgeting across different departments, and how they affect your community’s financial performance. Compare your revenues and expenses against industry benchmarks and trends, and track changes over time. Do you have operating tenets and a strategic plan to achieve them? The most successful senior living communities transform their data into metrics that provide meaningful insight, and they make it part of their operating discipline – not just something to explore when there’s an issue.
- Get leaders on the same page.
Your dining director uses a yellow notepad for their budget and expense report. The accounting department uses a ledger. Your nursing administrator uses a different report form, and so does your director of housekeeping and environmental services. Use a system with the same sets of info and reports, with clear standards and measures, so you can all have a conversation around the metrics and look at them in a way that’s understandable and actionable in order to ensure aligned leadership and accountability.
- Maximize cost-saving opportunities to benefit residents.
Senior living community leaders can often misinterpret lower expenses as a positive variance, while not understanding that, based upon community census count and mix, they should have experienced significantly more savings than they did, or are potentially under investing in key areas that drive resident satisfaction. It’s important to understand what costs are driven by level of occupancy versus fixed expenses. Maximizing cost-saving opportunities yields the ability to invest more in the physical plant, which benefits residents, keeps you more competitive, and furthers your success down the road. Late reaction to expense or margin pressure can lead to bigger headaches long term.
- Let your data tell a story.
How you present data is equally important as the data you’re actually collecting. That doesn’t mean the details don’t matter, but don’t get buried under a mountain of data that can leave you overwhelmed and unable to free your mind to execute on priorities to achieve your mission. Communities we work with say that’s one of the biggest benefits of Life Care Services’ Insight Dashboard™. One of the largest, most comprehensive databases of operational statistics in the field of senior living, it allows communities to:
- Measure your cost management structure against others locally and across the industry
- Identify outliers you may not be aware of
- Streamline the metrics that matter most to your team, and receive them in real time to influence business decisions
Having a tool like the Insight Dashboard, provides clarity to data, and ensures that leaders are monitoring performance. This can help predict potential cost creep, and avoid delayed reactions to expense or margin pressures that can hinder financial and operational success. Senior living boards of directors say this type of tool builds trust and confidence in community performance.
- Embrace data.
Better analytics and metrics = better resident experience and staff engagement. The data available includes analytic systems to optimize sales and marketing performance, identify spatial and flow efficiencies at your community, and monitor the key metrics of resident satisfaction. It’s important for your leadership team to draw connections between metrics and how departments impact one another. In an industry of caregivers, help stakeholders see how data, metrics and accountability allow your community to make critical business decisions easier and faster, so staff can get to what’s most important – caring for seniors.
Learn more about the data, analytics and areas of expertise we provide for communities.
See you at LeadingAge!
I have the pleasure of presenting at the upcoming LeadingAge Annual Meeting and Expo in Indianapolis. Please join me, along with David Lewis, executive director at Capital Manor, and Tim Cain, VP/director of operations management at Life Care Services, on Wednesday, November 2, from 12:00 to 1:30 p.m. for an educational session, “Using Metrics to Drive Financial Success.”
The panel presentation will discuss key metrics at communities that impact financial performance. We’ll cover concepts and practical applications to drive action, and how the right metrics help tell your story when reviewing performance with a board of directors and other key stakeholders. It will also include a case study with the executive director of a community, showing how these practices increased its NOI from $900K to $3.6 million annually, grew cash on its balance sheet by over 60%, and raised occupancy from 75% to 96%.
Let’s meet up at LeadingAge at Booth #3815, or contact us to put our experience to work for you.
About Mike Andreasen:
Mike joined LCS® in 2013, bringing more than 15 years of financial planning and analysis experience with publicly traded companies including Sprint and John Deere. Mike oversees financial planning and analysis, corporate reporting and strategic planning, tax and treasury. His team helps communities find ways to gain greater insight into their performance, and then translate that insight into operating results. Mike holds a master’s degree in business administration from the University of Iowa.