How Assisted Living Can Make Smarter Pricing Decisions

Often, in pricing their various services, assisted living communities wind up “throwing darts” at random—and losing money because of it.

But accurately pricing assisted living services is more of a science than a shot in the dark, according to Dana Wollschlager, practice leader at Plante Moran Living Forward.

“We’re really, really good at taking care of our residents, and we’re even better at always saying ‘yes’ and giving them the services that they need,” Wollschlager said Tuesday at the 2016 PointClickCare SUMMIT meeting in Orlando. “We need to have a better handle on what it actually costs to provide those services.”

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Historically, assisted living communities have “secret shopped” other properties in their area to get a sense of what they should be charging for their services. In other words, assisted living communities are used to pricing their rent and services based on what others in the market are charging—but that’s not typically the right approach, Wollschlager explained.

“One of the pieces that has been missing is what it actually costs to provide those services,” she said.

Specific and realistic

It’s costly to care for assisted living residents—and it’s only going to get more so as they start moving in later in life and with more health conditions.

“The healthiest your residents are ever going to be, by and large, is the day they move in,” Wollschlager said. “We know they’re going to move through the system, therefore we need to have the means to track that.”

With that in mind, it’s important for assisted living communities to realize that they can actually determine how much their services cost to provide, and charge accordingly.

“We take every single service that [assisted living clients] provide to a resident, whether it’s in a care package or it’s a la carte, and we identify exactly how much that service costs,” Wollschlager said.

First, assisted living communities can determine what their costs per minute are for every direct-care staff member specifically, she said. This involves considering each employee’s hourly rate and benefits package. Then, the community can start calculating any overhead, factoring in all of the other staff and building expenses.

Communities can use this information to understand exactly how much their services cost per minute. All of this information will be for naught, however, if communities are unaware how many minutes their workers are actually spending providing various services.

One of Plante Moran Living Forward’s clients did, in fact, get this very wrong, Wollschlager explained.

“They estimated that they were taking about 10 minutes per escort round trip,” she said. “I’ve got news for you— you can barely do anything in 10 minutes with an older adult.”

Communities should recognize, for instance, if their employees are working in an eight-story building with “possibly the slowest elevator in the universe.”

“And you know how the escorts go—you go and get Millie, start walking down the hall, but then she has to put a puzzle piece in the puzzle, she talks to the bird, and says ‘Hi’ to the neighbor,” Wollschlager said.

In other words, it’s important to be both specific and realistic when it comes to what assisted living services are actually costing a provider.

Marketing matters

The need for assisted living providers to be specific and realistic about the services they provide extends to their marketing materials, Wollschlager said.

“I know we need to keep some of our marketing materials relatively simple, we need to be straightforward, but I would encourage you to be a little more intentional about what you’re saying to them,” she explained.

If a community’s marketing materials say it offers one hour of aid assistance per resident per day, the community should make sure it is sticking to that one hour and not going over it, Wollschlager said. And, depending on their needs, different residents will spend their hour in different ways.

“Now, I don’t know about you, but doing a morning assistance with dressing and grooming is a whole lot different than just going to Millie’s apartment and getting her a medication, and documenting and charting that,” Wollschlager said.

Breakfast preparation means different things to different residents, too. So does “light housekeeping.” Assisted living communities should actually define what they mean when they advertise things in their marketing materials—do they mean a bowl of cereal or two freshly cooked eggs and pancakes? Do they mean wiping down the counters and dusting the furniture, or three hours of apartment-wide cleaning every Saturday?

“We need to be more specific about what we’re going to provide,” Wollschlager explained.

It’s also critical to have specific thresholds that signal when assisted living communities can start charging residents more for the same services. This can happen if a service that used to take 15 minutes to provide now takes 20 minutes, for example.

“If we don’t define it, we can’t move residents through to the next care plan when we know that they’re going to continue to … need more services,” Wollschlager said.

Back pricing up with technology

Sometimes, assisted living communities find themselves with overwhelmed, overworked staff. In these situations, one of two things is happening.

“Either we’re providing more care than we have allotted for the resident, or I have super inefficient staff. And I’d like to believe that I don’t have inefficient staff,” Wollschlager said.

This is why it’s important to adopt a documentation tool, like PointClickCare’s electronic health record (EHR), to evaluate residents at every single care plan, she explained. And staff should be pressed to always, and accurately, document the care they are providing.

“All the technology in the world means nothing if it’s not used properly,” Wollschlager said.

Having a documentation tool that accurately measures how much care workers are providing to residents helps to guarantee that communities are charging residents appropriately, and that employees aren’t overworked.

“It’s easy to get frustrated with our staff, but my argument is also with the leadership,” she explained. “We can’t put this technology into our communities and not actually use it. And we need to hold our staff accountable. We need them to know that we’re actually looking at it.”

Written by Mary Kate Nelson

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