As the COVID-19 pandemic pushed senior living and care expenses to an all-time high, at a pace greater than what resident fee increases can absorb, taking the time to trim unnecessary costs and implement operational efficiencies has become more important than ever, speakers said Wednesday at the 2021 Ziegler LeadingAge National Virtual Senior Living CFO Workshop.
“2020, as I’m sure it did for everyone, brought some real challenges in terms of managing labor costs,” said Garrett Midgett, chief financial officer at Springpoint Senior Living. “We had a lot of staff who were concerned to come to work, which really ramped up quite a bit our use of agency nursing.”
Add to that the fact that agency costs skyrocketed last year compared with years past made even attempting to use an agency cost-prohibitive for many operators, noted Amy Harrison, chief financial officer at The Kendal Corp.
“We’re seeing CNAs upwards of $75 and $80 an hour,” Harrison said. “That’s a significant pull on resources that was not in the plan for any of our affiliates.”
In response, operators often have a few different options to help reduce costs elsewhere in the organization, Midgett noted. Those can include paring back employee benefits, decreasing staff or enacting rate increases for residents.
“We made the difficult decision to pair back on our pension contribution costs last year, but we think it’s going to have to be a combination of all three of these things moving forward in order to overcome current challenges,” he said.
Still, the pandemic has offered the long-term care industry a few bright spots when it comes to trimming costs, Harrison noted. With more people aware of the sector as a result of pandemic news coverage, operators soon may be able to leverage new partners that the field hasn’t worked with in the past to save costs in some areas. She also noted that the increased use of telehealth has helped decrease her organization’s transportation costs, and she said she doesn’t see that trend going away anytime soon. Midgett added that COVID forced his communities to move to a two-seating dining system, which has saved them money on staff costs.
Multisite providers also should be sure to take advantage of group purchasing to leverage their scale and save money on necessities such as personal protective equipment and food service supplies, said Hank Keith, CFO of Westminster Communities of Florida.
“At least once a year, if not more, we have an employee whose sole job it is to rework or rebid contracts, and we’ve seen some steady downward movement as a result,” he noted. “I recommend rebidding out your contracts or joining a group purchasing organization if you can. There is a lot of value in it.”