Assisted living providers are frequently integrating other services into their programs. This is especially true with larger programs (25 or more residents) operating in commercial facilities. Included in these living centers are outpatient rehabilitation programs, adult day care centers, counseling centers, geriatric education libraries and more. This provides for a wide ranging approach to serving a community’s long-term care needs, especially as it relates to seniors.
Many providers in the contemplative stage and others redeveloping existing initiatives hire professional marketers and public relations professionals to educate the community on what their program has to offer. Others have to write well defined business plans in order to help secure the financing for your growth and diversity campaigns.
We have long recommended that before composing the total picture, isolate your income to operational divisions. In this way you can keep a more defined look on your expenses and income as they are segmented into departments. Some call this the retail approach and it is really meaningful when one area has to financially cover another for a time.
For example let’s say that you are operating a 50-bed assisted living program or contemplate doing so. The average monthly revenue per resident is $6000.00 so at capacity your revenue is $300,000.00 monthly with an annual operating gross of $3.6 million from assisted living fees. Having considered the expenses associated with food, staffing, insurances, physical plant operations and marketing you arrive at a monthly expense of $3,720.00 per resident so you need $186,000.00 to break even each month or $6000.00 from 31 residents. It is easy to figure out what it takes to break even.
So what can we rely upon from our other divisions when our resident census is at 25 and we are $36,000.00 away from breaking even each month? Well let’s conclude for the moment that our rehab clinic downstairs generates a profit of $75.00 per patient visit. Do you see where we are going?
If we divide $36,000.00 by $75.00 we get how many patient visits are required to offset the deficit this month in our assisted living division, which would be 480 visits for the month. Of course if we are seeing patients an average of 3 times per week each, you need 37 patients to be seen on that schedule. (3 x 4.33 is an average of 13 visits per month, per patient allowing us to arrive at needing 36.9 patients to be seen in order to arrive at 480 reimbursable visits).
You likely also have an adult day care center with its own revenue stream on the premises, a medical transportation service and more. Regardless of how diverse you are, our goal is simply to demonstrate the importance of knowing how each department can rely upon and support the other when needed.
Of course we know you will be busy aggressively marketing the program and ensuring each division operates at capacity most of the time. This will make inter-departmental financial reliance outside of the norm.
Keep working hard to use innovation to make your work the success you know it can be. Just be sure you keep an eye on those dollars.