Despite hopes that the rising tide in occupancy rates would lift all boats for the seniors housing industry, many operators with full properties still wrestle with revenue volatility that hinders financial performance.
This phenomenon can be especially perplexing for investors who cut their teeth on other commercial property types where fully leased properties typically deliver healthy returns. Intent on their property’s real estate fundamentals, they risk overlooking the impact of clinical care on the bottom line.
“Revenue volatility tends to be opaque for a lot of operators because it’s in the clinical world that turbulence happens with the residents, and they aren’t monitoring resident care,” says John Shafaee, CEO of ALIS by Medtelligent, a seniors housing software provider. ALIS by Medtelligent increases visibility into that clinical world with its electronic health record (EHR) and operational platform ALIS (pronounced “Alice” and standing for Assisted Living’s Intelligent Software), a web-based platform designed to solve the everyday staff scheduling, compliance and reporting challenges senior living communities face.
Few seniors housing owners systematically track key performance indicators (KPIs) for the quality of care their residents receive, Shafaee says. That explains why many owners fail to connect financial issues like revenue volatility with root causes in the delivery of clinical services.
Moves out of the community, for example, are a clinical performance indicator because they often denote deteriorating health or injuries that leave residents requiring more advanced care. When clinical teams fail to avert negative outcomes in substantial numbers, owners incur rent losses and expenses to lease and prepare the temporarily vacated units for new occupants.
“Operators can get into a situation where occupancy is telling them one thing, but length of stay is relatively volatile,” Shafaee says. “Essentially, those operators have a clinical issue that creates a revolving door, and it changes the nature of the building operation. That shows up in financials as volatility in revenue; some months the buildings are doing great, and other months they are not.”
KPIs for Healthy Properties
For clinical teams, ALIS offers digital tools to better manage risk, optimize staff time, ensure regulatory compliance and enhance resident wellness and safety. These platforms enable seniors housing decision-makers to collect, consolidate and analyze data about how well their properties meet residents’ care needs. This transparency helps administrators judge the effectiveness of program adjustments in the pursuit of clinical excellence, ultimately boosting financial performance by keeping residents healthier and in place longer.
At the property level, this technology helps care teams overcome staffing challenges by allocating personnel and resources more effectively. Intuitive dashboards make it easier to input or even automatically track tasks like medication distribution and wellness exams. Analytics can flag concerning behavior patterns, potential medication issues and other risks, alerting staff to perform wellness checks and potentially prevent many negative outcomes.
Care management software can also enable decision makers to compare the resident care trends at their properties to industry averages or from property to property within a portfolio. To facilitate benchmarking, ALIS offers cost-free access to their ALIS 500, a set of average key performance indicators compiled from 500 client properties chosen to span a range of property sizes and geographies.
“The ALIS 500 is there to give operators some basis for comparison,” Shafaee says. “Someone who knows their own indicators can see if they are performing above or below those averages for things like falls and hospitalization rates. They can easily compare move-out destinations and stay on top of assessments, care level distribution and a wide range of KPIs.”
While ALIS generates a wide range of indicators to gauge clinical service delivery and overall property health, Shafaee advises seniors housing operators to at least track fall rates, hospitalization rates and 90-day move-outs. Of those three, the latter is often the most telling.
“The percentage of residents that move out in the first 90 days tells you how well you’re servicing new arrivals during their adjustment period,” he says. “And it highlights whether you are a fit for the types of residents you’re bringing in.”
In the Care Business
Attention to clinical excellence is relatively new to the industry, Shafaee says. After half a century of managing assisted living communities purely as hospitality properties, a growing number of owners now view clinical care as essential to their business. He attributes the shift in perspectives largely to operator experiences during COVID-19 lockdowns, when resident care was a deciding factor in how well property populations weathered the pandemic.
“Focusing exclusively on rental income is not sustainable anymore,” Shafaee says. “Seniors housing has been a real estate game for a long time, but the care component has risen to overshadow just filling beds.”
For those seniors housing operators choosing to embrace the healthcare aspect of their business, clinical excellence offers a means to drive financial performance. Toward that end, advanced technology platforms are readily available, offering tools to organize and align resident care efforts from the property to the portfolio level.
“Residents are coming in with higher acuity, and a majority of your financial success today is tied to what happens with the residents and how the community cares for them,” Shafaee says. “Organizations that have realized it’s not just a hospitality business but a healthcare business are putting tools and practices in place to address those wellness needs.”
— By Matt Hudgins. This sponsored content was written in conjunction with ALIS, a content partner of Seniors Housing Business.
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