Surviving and Thriving in a Belt-Tightened Economy

1. Surviving and Thriving in a Belt-Tightened Economy Oklahoma Association of Homes and Services for the Aging (OKAHSA) 15th Annual Meeting, Educational Seminars & Exhibition March 10, 2010

2. Reality Check • Front door is essentially closed—CDS predicts IL occupancy at most CCRCs will decrease over the next 3 to 5 years EXCEPTION: creative, equity-based models where developers are willing to buy residents’ homes

3. Reality Check • Moving through the traditional “continuum of care” may not be the best strategy moving forward Moved OPPORTUNITY: Aging in place (lengthening each resident’s stay) and establishing your own home care services. One equity-based CCRC generates $2M in revenues annually through home care.

4. Strategies to Thrive and Survive

5. Set goal to provide seniors the RIGHT: SERVICES (maximize my independence) PLACE (my own home) TIME (before I lose function) PRICE (what I can afford) Client Vision

6. Be the leading innovator in developing and operating comprehensive services for older adults regardless of economic or functional status Organization Vision

7. Rationale

8. Mission • Holistic • Addresses unmet needs • Partners with the community • Compassion expressed through choice

9. Market • Community continuum targets 100% • Strategy breeds community support • Driven by community education—not selling

10. Business • Creates the structure to take risk • Provides new funding for the most expensive • Reduces fragmentation and waste

11. Six Tipping Points forFinancial Success • Maximizing Occupancy (Market Share)—May not be possible • Premium Pricing (Value)—Mayhave to discount • Lean Organizational Structure • Effective Capital Management • Optimizing Information Systems • Efficient Staffing

12. Best PracticesLost Revenue Reporting Definition—determines maximum revenue at full occupancy (100%) and identifies reasons for the vacancy (unit not ready for occupancy or Resident temporarily in another care level). Purpose—focuses management on financial advantage of small increases in occupancy.

13. Best Practices • Consider alternate forms of fee increases (e.g., percentage versus per person dollar amount) • Concentrate on superb resident communications • Total costs of operations • Market value of services • Extra charges

14. Best Practices • Implement an effective POS system • Consider flexible dining plans that minimize meal credits • Implement level of care pricing in Assisted Living

15. Best Practices • Centralize Facility Operations to include Maintenance, Grounds, Housekeeping, Laundry, Security and Transportation. • Schedule Kitchen staff so that cooks open and close. • Empower Charge Nurses to lead Care Teams to serve specific Residents and consider returning nurse leadership to direct patient care on the floors.

16. Best PracticesCapital Management • Boards should require that management provide annual reporting on projects against projections until stabilized. • Repositioning should first focus on programming improvements prior to capital expenses (only when unavoidable).

17. Best PracticesOptimize Information Systems Wireless call systems which signal a pager POS system integrated with receivables Electronic medical record combined with service tracking system (i.e. CareTracker or DaRT Chart) , which helps maximize reimbursement under Medicare and case-mix Medicaid Eliminate time-consuming manual processes

18. Overall Staffing Targets Target salaries and benefits to be around 40-45% of net revenues

19. FTEs by Level of Service

20. Facility Operations • Target 50,000 square feet per maintenance FTE • Target square feet per housekeeper • ILU = 30,000 • Assisted living = 20,000 • Health center = 8,000 • 60 pounds of laundry cleaned per productive hour

21. Facility Operations • Blend security and 24-hour maintenance • Create a balance between technical, skilled and general staff • Regularly evaluate contracted versus internalizing services

22. Dining Services • Target meals per labor hour • Health care = 5 • Assisted living = 4 • ILU = 2 to 3, depending on type of service • 40% of labor should be part-time

23. Dining Services • Dining staff should clean all dining rooms and kitchens • Nourishment costs should be charged to health care • Implement Liberalized Geriatric Diet Manual

24. Environmental Services • Create schedules so that: • There is only one housekeeper per apartment • Housekeepers clean units on same floor or in the same area (villas/cottages) on the same day • Detailed cleanings are incorporated into regularly scheduled cleaning times

25. Laundry • Create drying capacity that is 150% of washing capacity • Establish cart exchange system • Maintain 5 turns of linen • Close laundry on weekends

26. Hours of Care per Resident Day

27. Best PracticesResident Centered Staffing • Assisted living and health care—12-hours shifts (7 days in 2 weeks). • Benefits • Minimizes number of shift changes. • Eliminates shift overlap for CNAs. • Staffs the same number of people. • Provides consistency of staff. • Prefers full-time staff.

28. Best PracticeResident Centered Staffing Sample Schedule

29. OperationsFacility Benefits Reporting to the same people at the beginning and end of shifts Residents served by the same nursing staff increases consistency of care CNAs and nurses are on the same team and have the same days off, which reduces call-offs due to peer pressure

30. OperationsFacility Benefits • Improved recruitment • More staff to feed evening meals and return residents to bed • Less shift-to-shift complaints—problems are easier to resolve with only two shifts • Less wasted time for reporting with only two shifts—units are quieter at 3p

31. OperationsFacility Benefits • Scheduling is simple—just fill in names each month and adjust for vacations and/or holidays • Less complaints • Working long stretches • Too many weekends—12-hour shifts gives off every other weekend (Fri/Sat/Sun)

32. Employee Buy-InTime Off • More days off in a two-week pay period (e.g., 7 days versus 4 days) • Never work more than 3 days without 2 days off—3 day stretch is only once every two weeks • Employees have a long weekend (Fri/Sat/Sun) every other week

33. Employee Buy-InIncrease Control Can plan their schedules since the days off are known in advance Only need to use 24 hours of PTO to be off for 7 days at a time Feels more like working part-time with full-time benefits

34. Employee Buy-InImproved Resident Care • Consistent full time staff • Residents receive care from the same 4 CNAs and 4 nurses • Increases productive hours of care due to elimination of shift change

35. Sample Operational Goals

36. Partner/Merge/Affiliate • Stand alone, non-profit, long-term care will be even tougher • Dress the Pig for Sale—including Lipstick • Challenged organizations seek debt capacity, economy of scale, and management • Strong systems seek strategic advantage and ROI

37. Questions 1501 Greer Lane Signal Mountain, TN 37377 423.517.0567 ▪ 423.517.0568 Fax dan.gray@consulting-cds.com www.consulting-cds.com