You've got questions? We've got answers

Share this content:
You've got questions? We've got answers
You've got questions? We've got answers

Q: Is there something really important that I should consider while budgeting for 2017?

A: Focus heavily on “organic growth.” My definition of organic growth is reducing expenses and enhancing revenues of existing properties. Three strategies:

  1. Enhance revenue. Sharpening your pricing strategies while staying competitive and market-responsive.
  2. Improve occupancy. The incremental profit margin for each additional unit occupied soars to approximately 65% for assisted living and 80% or more for independent living.
  3. Reduce expenses. As an example, a community consisting of 120 independent living and 35 assisted living/ memory care units operating at 90% occupancy results in approximately 50,000 annual resident-days. Reducing operating expenses by just $2 per resident-day, or PRD, would result in $100,000 of additional cash flow in 2017. The median operating expense bench- mark for the above defined community is approximately $112 PRD. A $2 PRD expense reduction would decrease operating costs by 2%.

The central budgeting theme for 2017 should be organic growth — getting more out of that which you already have. In fact, don't wait until 2017 to improve. Do it now.

Jim Moore runs a national senior housing and healthcare consulting firm based in Fort Worth, TX. He has written several books about assisted living and senior housing, including “Assisted Living Strategies for Changing Markets.”


Next Article in News

Sign up for newsletters

In Focus

April 25

Wellness goals

Monroe Township, NJ 

Residents at Monroe Village have been staying in shape by playing hockey during the NHL season and the Stanley Cup Playoffs.