By Candace McMullen, Executive Vice President of Consulting and Business Development
The COVID-19 impact to the senior living industry was dramatic. We have paid the price both figuratively and financially. Our staff worked daily to respond to the changing guidance, communicate process changes, procure PPE, provide meaningful resident life activities and coordinate remote visitation opportunities. We worked diligently to keep COVID out of our facilities and then shifted to managing the devastation of outbreaks.
As senior living providers begin to emerge from the toughest battles of our careers, we find ourselves in a very different place than a year ago. While the target may have shifted, the battle is far from over. Significant occupancy challenges and increased costs for staffing and PPE have created major financial strain. Providers received state and federal grants, but the amount was less than what was needed to compensate providers for the full COVID impact. There is widespread fear throughout the industry of continuing catastrophic impact.
At the one-year anniversary, we continue moving forward with so many unknowns. Will COVID continue to morph into variants uncaptured in the existing vaccinations? How much longer will we need to absorb the additional PPE and testing costs? Will we see further relief grants to help sustain operations? There are still uncertainties, we must refocus our attention and efforts to areas that we can impact for stabilization.
Expense Reduction Strategies
· Now is a great time to refocus on accounts receivable. COVID disruptions, quarantines, and isolation have impacted business office functions. A deep dive into your accounts receivable will give you confidence in your billing processes or identify opportunities for improvement that will directly result in better cash flow. This is an area of operations often overlooked but with significant impact, both good and bad.
· With decreased occupancy, historical staffing patterns might be too costly to maintain. Make sure your facility is staffing to census and care needs. Monitor your hours per patient day judiciously as labor is the majority of any provider’s operating costs. Do not overlook your ancillary department staffing for opportunities for cost savings. At 50-70% occupancy, the same number of activities staff, social workers, dietary staff, etc. are likely unnecessary. All vacant positions should be reviewed.
By addressing the facts before us, we can modify operations. These are necessities, some of which are unpleasant. We can remain hopeful that, one day, these adjustments will be looked back upon this time from a stronger and more stable perspective.