By Doug Fullaway, President and COO of Vigilan
Unemployment seems to be stuck around 10% and foreclosures are reaching record levels, casting a dark cloud over the business of senior living. Prospective new residents are more uncertain than ever about moving. Centers work hard just to hold census levels. And while there are signs things are improving, it is likely to be several years before there is a significant improvement. Every operator is driven to cut costs and with labor making up 60% or more of total operating expenses, it is the one thing that cannot be ignored. So chances are you have cut or will cut your labor costs. But how much can you cut and when have you cut enough?
The first step for most communities is to reduce the staff hours to some level or ratio that has worked in the past. It’s a logical place to start. This approach assumes that the level or ratio is the right level. But where did this ratio come from? In most cases, it comes from experience. And maybe that’s OK. But a closer look reveals some possible problems and opportunities. In a 2009 survey[1] we conducted of more than 90 nurses in assisted living, we found that the most common method used to arrive at staffing was a fixed ratio of number of staff per number of residents. But only 25% of those nurses felt this was the best method for staffing. The vast majority of the nurses felt that “acuity based staffing” was the best method. Why the discrepancy? The nurses told us that they just don’t have the tools to staff based on acuity and the ratio was a reasonable approximation. We decided to take a closer look to understand the consequences of staffing based on ratio instead of acuity.
A fixed ratio of caregivers to residents assumes that the services being delivered are the same over time. So we looked at the data for one community over a year, based on the acuity. This analysis could be done because this community had a standard time for every service task. For example, a task such as partial bathing assistance was given a time of 22 minutes. And each resident had an assessment that had only the service tasks that were needed by that resident. Assessments were done every 90 days and when conditions changed. We could see the acuity by resident and for the community for the entire year. When we took the actual acuity-based staffing hours and computed the actual ratio needed to provide exactly the hours needed, we arrived at a ratio of 3.25 residents/caregiver (or 0.308 if you prefer the more traditional caregivers/resident ratio). As a comparison, The State of Seniors Housing 2009[2] shows a ratio of 0.39 for comparable departments. When we applied the 3.25 ratio to the actual acuity here is what we found:
The number of hours based on ratios does rise and fall with the changes in census, but it is always higher and sometimes by quite a bit. This happens because the 3.25 residents per caregiver was selected as it matched the acuity and census average for the entire year. And when the ratio is applied to the actual census it is rounded up using the rule that if calculation showed point 5 (0.5) or more than another person was put on the shift.
If the ratio was reduced to 3.15 residents/caregiver then some of the “error” can be reduced, but the problem of overstaffing still exists because the ratio causes changes in staffing with changes in census but it ignores changes in actual acuity of the residents. Here is an example of how the acuity changed for one of the residents over time:
A fixed ratio per resident for staffing would simply ignore the changes that this resident experienced. Many communities that are using staffing ratios are most likely paying more for labor than they would if the measured the actual acuity and changed the staffing weekly.
Next month we’ll take a look at methods of staffing based on acuity that can be tracked and changed weekly.
About the Author:
Doug Fullaway is president and COO of Vigilan. Vigilan is the leading operational management systems company for independent living and assisted living providers who need an easier way to improve the quality of care and to profitably manage their business.
Doug has more than 30 years of management experience. In 2002, Doug entered the senior market by joining the executive staff of Vigilan and is the proud owner of several senior communities. Prior to Vigilan, Doug held positions in distribution, manufacturing, customer support, sales, and general management in the U.S., Europe and Asia. Doug earned his undergraduate degree in industrial engineering from Oregon State University, served as an infantry officer in the U.S. Marine Corps and graduated from the Harvard Business School.
[1] Study: Practices in Assisted Living, Vigilan, February 2009
[2] The State of Seniors Housing 2009, American Seniors Housing Association, 2009
