Colorado Assisted Living Association (CALA)

–Tom Kinrade, CALA President (Excerpt from the CALA August 2010 Newsletter)

What makes a successful Assisted Living Facility?
Every once in a while I get telephone calls that go sometthing like this:

“I’ve heard that opening an Assisted Living Home is an easy way to get rich, can you tell me what’s involved and how I can do it? I think that I want to open a few of those homes like yours.” “I just got my license for my home from the Health Department and I don’t have any clients, can you send me some residents.”So that got me thinking, just what it is that makes some operators successful while others fail.

Basically we all have the same opportunity and we all know that this is not a “way to get rich quick”. After working with and knowing many owners of ALR’s both small and large, I have observed that it is not just “luck”, many successful owners share some common traits. Here are a few qualities that I believe are important.

Customer service. Simply defi ned, customer service means taking care of your customers. It seems that this should be a no brainer but that’s not always the case. Remember, if you don’t take care of your customers, you won’t have a business. Many companies incorporate customer service into their business culture through training.

Attitude. As the owner of the company, you must have a positive attitude and accept 100 percent of the responsibility for the results of your business. When you accept responsibility, you can act to make the necessary changes to accomplish the desired results. But remember when success is achieved; make sure you’re generous in giving credit to others within your organization.

Business Plan. A complex business plan isn’t necessary to achieve success. A simple one-page document will do, but it should be well thought out and executed. A good business plan defines activities and behaviors of your business organization. Without it, you don’t have any idea what to do next or where your clients are going to come from. A good plan should include a financial plan and a marketing plan. Be careful here, sometimes you can get so hang-up on developing the prefect plan and never get started putting the plan into action, start before you’re ready, a business plan is a continuously developing process, some things will fall into place as you go.

Staying on course. You need to stay focused on your goals and measuring success as defined by your plan. Do not overreact to economic changes; you may have to adjust your plan to a shifting economy and changing reimbursement rates.

Risk. You can’t be afraid to take calculated risks with clear outcomes. Most owners who take risks do so because they recognize an opportunity and they understand that they have to be able to respond quickly to that opportunity. We live in a changing economic situation, successful operators understand that being in business is about managing and responding to that change. Companies that succeed embrace change and respond to opportunities presented by the changing circumstances.

Financial. Many operators are so busy running their business that they forget to collect the money or under charge for their services. A common lament among small-business owners: “If I’m making so much money, why am I always broke?” The successful owner understands their costs and balances the services they provide to the fees they charge. The problem often boils down to the difference between net income and cash flow. Net income is the bottom line, or the profit or loss that is recorded on your income statement after accounting for all business costs and expenses. Cash flow is money that has been collected and is available for you to use. Operating cash flow is the lifeblood of a company and the most important indicator that lenders and investors use to measure a firm’s financial health. Successful owners understand this.

Sales and Marketing. Every company’s approach to sales is different. Some depend on building referral partnerships and strategic alliances; others have a more direct approach with a team of sale people. But, successful owners know that the concept of marketing ones business is a process that never ends. In many cases one empty bed is the difference between making a profit or not. Even when their facilities are full the successful operator is still marketing, promoting and keeping their name in front of the public.

Training. Because we live in a world of continuous change and government oversight, it’s more important than ever to implement a culture of continuous learning. For many owners, continual investment in training is a major contributor to success. For training to be successful, however, you must keep on top of the latest trends in the industry and continuously monitor what happens within the state regulatory agencies. One of the best ways to do this is through organizations like CALA.

Association. I have been told for most of my life, “If you want to be successful, you have to associate with successful people”. Every successful business owner that I know has a trusted advisor. They know they can’t know everything and they searched out other associates that they can trust to talk to and bounce ideas off of. This is another important reason for joining organization like CALA.

Work/life balance. Successful business owners understand that every person has just 24 hours in any given day and how they spend this time directly impacts how effective they’ll be in growing their businesses. Don’t forget to take some time for yourself, in a time of cell phones and computers it is hard to get away completely and many of us want to stay in touch. BUT, everyone needs some down time too.

–Tom Kinrade, CALA President (Excerpt from the CALA March 2010 Newsletter)
“I have a pet peeve”.

It’s a problem that most ALF owners have already had to deal with or will have to deal with in the future. It’s a serious problem for some of our elderly residents and probably going to get worst as the U.S. recession continues.

The problem: Financial Manipulation and Abuse of the Elderly.

This involves unauthorized use of an elderly person’s funds or property by a family member. An unscrupulous family member may misuse an elder’s personal checks, credit cards and accounts; steal cash, or income checks. Co-mingle the elder’s funds or forge the elder’s signature and even engage in identity theft.

According to the adult protection agency: “Caretakers and loved ones typically start with small crimes, such as stealing jewelry and blank checks, before moving on to larger items: coercing confused seniors to sign over the deeds to their homes, change their wills or liquidate their assets. “Because of Alzheimer’s, dementia or overmedication, [elders] don’t know one document from another and sign whatever is in front of them.” The adult protection agency also reports that even when caught, prosecuting a family member can be extremely difficult. “Family members have a built-in defense if they get caught, which is ‘Oh, she wanted me to have all that money’, it’s hard to overcome that defense. We need to prove the individual didn’t have the capacity to understand.”

Our company had financial losses of over $35,000.00 in 2009 due to family caretakers and POA’s misappropriating resident’s funds.

The scenario usually goes something like this: The resident is private pay, the POA reports that the resident is running out of funds and will have to go on Medicaid soon. The Medicaid process is started and as the case manager investigates, she finds some very strange transactions have taken place with the resident’s accounts. We had one case where all the resident’s funds were put into the son’s personal account, including over $150,000 from the sale of the resident’s home. Those funds were then used by the son for his personal expenses. The State denied the Medicaid claim for a period of two years. Meanwhile there are no funds available to pay for the residents care. In another case the daughter, who was the POA, used the resident’s funds to remodel her (the POA’s) personal condo. It started out as a loan but when the daughter lost her job the funds ran out too. The resident is the biggest loser in these cases; she/he is left with no money and no home. The facility ends up with a non-paying resident and a problem of where to go next.

How do you protect yourself as a business owner? Most of our friends with large facilities have financial departments with policies that guard against such loses. It’s the small to medium size ALF’s that I see having the biggest problem. We don’t always dig deep enough into the financial records of the resident. Usually it’s just a question like “do you have funds”. If the answer is yes, the resident moves in.

You have to protect yourself and your business. You have to know about the resident’s financial situation. Ask questions, you have a right to know. You also have to know the warning signs of trouble. The key is to identify the problem and act upon it before it is too late. Are checks bouncing, are payments starting to come in late? These are signs of trouble to come. If you suspect at problem with financial abuse get the adult protection agency involved. It’s your job to protect your residents.

In a study published January 5th, 2010 in Business Week Lifestyle

Senior Resident

it was reported that “Assisted living facilities for older people are most often located in areas with higher levels of income, education and home values”.
It goes on to say that “These findings aren’t surprising because private dollars have fueled the growth of assisted living facilities, write the researchers. However, the findings do mean that people with lower incomes, minorities and those living in rural areas have fewer living options as they age”.

However, what was not reported in Business Week, but was discussed deeper in the actual report published in the January 2010 issue of Health Affairs was the fact that:

“To date, states have been slow in expanding Medicaid coverage for services in assisted living facilities. Many states have small programs under which Medicaid pays for personal care and medical services in assisted living, but few assisted living residents receive these public supports” the report continues “Although there are important noncost considerations in expanding Medicaid-financed care in assisted living (such as strong consumer preference), any proposed expansion is accompanied by important fiscal caveats.” The report further states that; “ Assisted living has the potential to serve as a cost-effective substitute for higher-intensity nursing home care for some people. Yet policymakers are concerned about the moral hazard likely associated with offering people an array of long-term care services, especially attractive options such as assisted living. A key issue from a state budgetary perspective is whether assisted living coverage can be structured to increase substitution away from Medicaid-financed nursing home care while minimizing substitution away from unpaid care by family and friends.”

Operating an assisted living home is like any other business, if you can’t make enough income to pay the bills and the employees you can’t keep operating, no matter how good your intentions are.

Colorado is one of the states that fund assisted living services through its Medicaid wavier program. This is a great program for those who need but cannot afford assisted living services. However, recent state budget cuts and increased licensing fees may threaten that program. It has been my experience that there are more elders on or applying for Medicaid and looking for assisted living beds then there are quality beds available. I believe that this is a direct result in the facilities cutting back on the number of beds that they are allocating to Medicaid as a result of state funding cuts. It’s always a difficult choice when it comes to public funding for social services but I believe there are ways that this could be done without increasing the funding short fall. Some of those choices are not popular and none would happen over night.

First we need to tighten down on the financial qualifications of those applying for Medicaid. Protecting assets in a “trust” for anyone other than a spouse or dependant child should not be allowed. The Elder has worked hard and saved to provide for their retirement not for the benefit of their adult children. We also need to increase the penalties for those in a position of trust (including the adult children) that convert the elders funds to their own use. To many times we have seen elders that run out of funds to pay for their care and cannot qualify for Medicaid because the family has misappropriated funds. This form of financial abuse often goes unpunished.

We also need to look at the best use of the Medicaid funds. By lowering the reimbursement to assisted living facilities serves to redirect elders to more expensive (two to three times the cost) nursing homes. As reported in Health Affairs, “Assisted living has the potential to serve as a cost-effective substitute for higher-intensity nursing home care for some people”. I would add, for many lower income seniors.