By Amy Runge and Karl Rebay, Partners
Moss Adams Health Care Practice
As 2020 comes to a close, now is an opportune time for long-term care CEOs to reflect on organizational goals and establish priorities for the coming year and beyond.
While the COVID-19 pandemic has presented numerous challenges and operational disruptions, many organizations have proven resilient — proactively adapting and successfully accommodating new necessities as the pandemic continues.
For companies that have been able to weather COVID-19’s impact without severely draining resources, 2021 could pave the way to focus on growth and strategic diversification as long-term care demographics continue to change.
Below, we explore how CEOs can consider expanding their focus areas.
Strategic Diversification
As long-term care organizations pursue growth, many CEOs weigh the benefits of combining or affiliating with larger organizations. Many smaller stand-alone organizations are expected to combine with larger organizations to stay competitive, while mid-size organizations seek acquisitions or strategic affiliations.
While these strategies can certainly be effective, they can also prove limiting if a company only focuses on growth from a brick-and-mortar perspective. Other growth strategies, such as diversifying service lines, can present major opportunities if a company wants to expand at a broader level.
That said, determining how to shift service offerings can be challenging — requiring board members and senior leadership to think outside of the box and be comfortable stepping away from current understandings of how an organization operates.
The future of long-term care could very well reside not just in building more communities, but also in accommodating those who wish to remain in their current homes or a home-like setting. This would require organizations to focus on strategies that wrap services around numerous home settings, rather than requiring them to be located in one facility.
Incoming Baby Boomers
The number of people 65 and older in the United States is expected to increase to 55 million in 2020. Although the average admission age in long-term care communities remains around 84 years old, more Baby Boomers will begin to age into this population in the near future.
This generation is likely to enter with improved health, longer life expectancy, and more convenience and leisure expectations than previous generations. For the time being, many will likely want to avoid what they may view as a traditional old-folks home and continue their life with opportunity to travel and be active.
Organizations should consider how they can bring services to people who plan to reside in their homes longer.
Telehealth Expansion
To meet the needs of clients in a home setting, however that may look, telehealth will certainly play a crucial role.
Fortunately, technological advancements continue to drive telehealth services, and the COVID-19 pandemic quickly ramped up many organizations’ telehealth capabilities in ways that could prove beneficial in the long-term.
Smart-home features, such as night fall preventions, continue to expand and can often easily be installed in older apartments or homes. Virtual services for physical therapy and family visits have also become valued during the pandemic.
It will be important to determine which technologies your organization should focus on for the long-term and how they can be integrated into your current services as well as home settings.
Middle-Market Opportunity
Many organizations are investing heavily in upscale facilities that appeal to a wealthy clientele. At the same time, some mission-driven organizations work to support lower-income populations, and as such, are able to secure funding from the US Department of Housing and Urban Development (HUD) and other resources.
The Baby Boomer generation, however, includes a significant middle class that may not be well served by either of those types of facilities. While many Baby Boomers will have access to their Social Security and 401(k)s, not all will have the significant investment portfolios that often allow access to top-tier facilities.
Organizations should begin to assess how they can best service this expanding middle market by providing more affordable options.
Additional Concerns
Short-Term Strategy
It will always be important to strengthen your core services and remain operationally sound by keeping costs in line before pursuing new services or goals.
Certain challenges will need more immediate attention. Occupancy continues to be front of mind for many organizations—with a focus on how to counterbalance any turnover, especially during the pandemic. Empty beds or units will always have a major impact on your bottom line, so it’s crucial to maintain strong cash flow as usual.
Improving efficiencies and tightening operations should always be a concern, and the pandemic certainly underscored this need. Organizations should assess how they can focus on critical efficiencies—with an eye toward identifying root causes over quick fixes—while working toward continuous improvements.
Succession Planning
For organizations with aging leadership, succession planning should be front of mind. Organizations should proactively prepare new leadership to take over when current members are ready to retire or other unforeseen circumstances arise.
Succession planning should never be a reactionary activity. Timelines should be drawn years in advance so leadership can guide future leaders and set them up for success.
It’s important for leadership to identify up-and-coming staff who could be in the right position to take over. Promoting from within is often the most effective way to preserve an organization’s culture without throwing a company into disarray.
Promoting from within, however, may not always be an option for various reasons, so potential alternatives should also be evaluated early.
Moss Adams is Available to Help
For more information about strategically planning for your organization’s future, contact your Moss Adams professional.
Amy Runge leads Moss Adams Long-Term Care Practice and focuses on managing audits of senior living organizations. She can be reached at (415) 677-8264 or amy.runge@mossadams.com.
Karl Rebay focuses on providing high-impact health care advisory services to help organizations navigate and succeed in the rapidly evolving national health care landscape. He can be reached at (509) 777-0130 or karl.rebay@mossadams.com
Assurance, tax, and consulting offered through Moss Adams LLP. Investment advisory services offered through Moss Adams Wealth Advisors LLC.
