The handful of continuing care retirement communities (CCRCs) that have struggled financially or even declared bankruptcy aren’t an indication of the entire sector, many of which have been able to “weather the ‘perfect storm’ of economic collapse in 2008,” according to a recent article in the March/April 2012 LeadingAge magazine.
The article highlights three LeadingAge members who talk about what’s essential for financial stability (financial controls, an awareness of mission, appropriate marketing and pricing, and salary and management structure) and tell how they achieved successful turnarounds.
At one Florida CCRC, Gulf Coast Village, a newly-hired executive director addressed problems of over-staffing by eliminating several positions, along with renegotiating insurances, outsourcing executive financial work, and using an outside service for benefits and payroll.
Gulf Coast Village also changed its pricing to reflect economic conditions, and by 2010, the community’s margin had climbed to 18%, up from 2005′s 6%.
In another example, the CEO and board of National Lutheran Communities & Services worked to eliminate a $4 million deficit by dramatically reducing overtime, restructuring salaries, and implementing a new, performance-incentivized management structure. NLCS also improved business operations, including billing and documentation, and was able to get higher Medicare reimbursement, the revenues from which nearly equaling the organization’s deficit.
New marketing strategies were also employed, including price and rate structures and even changing the name of the organization.
The third turnaround features Presbyterian ministry Sunnyside Communities. The organization’s executive director worked to improve financial reporting and did some cost-cutting and operational restructuring, along with re-pricing, moves that “definitely helped” put the communities on a course to steadily and continually improve their bottom line.
“Having stabilized their financial situation, CCRCs are turning to the future and what the market is beginning to demand,” says the article. Read the full piece, with more details about each turnaround, at LeadingAge.
Written by Alyssa Gerace