The Covid-19 pandemic has placed a lot of burden on senior living operating budgets, with labor and food costs posing the greatest threats to their financial stability. Costs are high as senior living operators are leaning on overtime and agency workers to keep service levels up in the face of massive staffing shortages. Food costs have gradually risen over these past few months with there being little to no relief in the foreseeable future.
With growing pressures on senior living, organizations are adapting their existing budgets to try and lower expenses where possible.
This comes as no surprise that the senior living management is actively struggling with their operational budgets. Increasing operating expenses will affect margin growth over the next couple of months. According to a National Investment Center (NIC) survey, most of the survey respondents expected margins to grow between 1% and 5% in the year 2022. The situation has grown more volatile in recent years in the face of mounting global challenges.
Increasing costs will likely push senior living operators into raising their rates in coming years for the sake of maintaining margin.
Rising expenses have senior living operators looking for the best way of moving forward.
Get Creative Around Labor
For 2023 and beyond, senior living must work to lower staffing expenses by cutting down costs on agency staffing. This means senior living operators must channel their inner creativity around labor practices. One example is that of Frontier Management, and the new staffing model they employed to cut down on millions being spent annually on agency staffing and so, cut down on their use of third-party workers.
Another example is that of the New Jersey-based United Methodist Communities and their recent program to let workers work in senior living facilities confronted with staffing shortages. Under this program, workers from the company’s urban locations can travel to rural communities and work for twelve weeks at a time with their housing costs among others being fully covered.
According to the CFO of United Methodist Communities,
“It seems to be initially working and we are getting interest in the program. We’re really trying to get creative.”
At the end of the day, what will eventually help senior living staff in controlling and effectively cutting down on labor costs is trying to limit or outright end their use of agency staffing. Senior living operators must get creative and ensure adequate staffing levels with full-time employees at the facility, so that there is no longer the need to rely on agencies that prove quite expensive. Though monthly budget reviews are helpful in keeping track of cost pressures, senior living management must look to incorporate technology that simplifies daily provider workflows and makes them feel appreciated in their ongoing efforts.
Fortunately, care communication technology exists to help ease caregiver burden in senior living. Hucu.ai helps lower staff burnout, improve employee morale and appreciation from colleagues and patients alike only adds to the dedication with which they deliver the very best of care.
Difficulty with the Menu
In comparison to staffing, cutting down on costs in the senior living’s culinary department proves to be rather more challenging. Despite eliminating agency staffing, senior living is still bound by macro-economic trends responsible for increasing food costs and breakdown of supply chains. Despite that, senior living operators are becoming part of group purchasing organizations (GPOs) in trying to get better deals on goods and services. One example includes Frontier, which joined Pure Solutions (GPO) for more manageable sources (food, supplies and services etc.).
In the words of Jared Schei (CEO of Value First – GPO),
“Higher food costs are a ‘primary pain point’ outside of staffing and health care-related costs in 2022.”
Most food production companies are also struggling to make headway, in terms of meeting consumer demands. That is placing a great deal of pressure on the market. Dining services equipment and disposable, single-use items will remain as costly items this year. With food costs, nearly every category is double of what it was over the previous couple of years. The most costly ones, within the food category are meat, beef and poultry. The solution then, better menu planning in senior living, on the basis of changing prices will help account for increasing food costs in the future.
Senior Living Needs More Proactive Solutions
Senior living organizations need proactive solutions in order to effectively manage costs in this inflationary environment. Some key strategies that can be taken into consideration are engaging their residents in ways that prove interesting to them.
(1.) One example is Meatless Mondays: which would serve the two-fold purpose of supporting the environment and health and would save on meal costs at the facility. Going meatless once a week will not only benefit seniors in terms of better health, but will also help the facility in cutting down on costs.
Meat-centered meals can easily be switched for vegetable-based meals or other plant-based proteins. This will help senior living in cutting down on costs, as plant-based diets are cheaper and healthier compared to meat. Many seniors are environmentally conscious and will take pride in supporting a small action that is better for the environment.
(2.) Another strategy senior living facilities could look at is the elimination of agency staff wherever possible and also reducing overtime through more timely hiring from internship programs and high schools. Internship programs stand to benefit employers in senior living. They are pathways to a senior living facility finding qualified staff and saving money at the same time. Interns at facilities have secured full-time positions, thereby saving facilities both time and money that would have been spent advertising these positions.
(3.) One possible strategy for improving efficiencies and lowering the overall costs of operations in senior living is to invest in creative technology solutions. Open means of communication boost an organization’s operational efficiency. If not, important things will easily be lost or overlooked by the management. This makes it easier to streamline operations and exchange ideas or information between staff and resident members.
Senior living must invest in care technologies that automate caregiver workflows, streamline all internal processes, reduce burnout and turnover and ultimately lower the costs involved in doing so.