By Steve Moran

It should be “occupancy covers all wastefulness.”

I was recently talking to my friend and mentor, operator Mark Rockwell, about how the right leader can have a massive impact on the bottom line of a senior living community / senior living organization. During that conversation he said that the idea that “census covers all sins” is a complete lie.

Here Is Why

In our personal life, as well as our business, we have stuff we signed up for, stopped using, and are still paying for. Once in a while, something will happen that will cause us to clean this stuff up, but it is never when cash flow is bountiful and the bank account is flush.

This is the problem with high occupancy. Cash flow is good, likely even great. It feels like it does not matter if you are paying for a few things you don’t really need. But what gets missed is that over time, if you have a few of these things, it can mean hundreds to thousands of dollars a month in your personal life and tens to hundreds of thousands of dollars in a single community.

Spoons

He gave me a single example. In his 50-unit memory care community, they were purchasing spoons, used to give medications, from a national senior living supplier, paying around $1 a spoon and purchasing a couple hundred of them a month.

The equivalent spoon could be purchased from Amazon for $0.10 per spoon. That is saving nearly $200 per month, or $2,200 per year.

You might be thinking, that’s nothing when your revenue is $100,000 per month — hardly even measurable. But what if there are 20 things like that, where you’re overspending $44,000 a year? And what if some of them are costing $1,000 per month instead of $200?

The Other Side of the Equation

The other side of this equation is lost revenue. When occupancy is high and cash flow is already good, it is easy to deliver supplies and not charge for them, or even to provide care and not charge what you should. What is fair and right? It can add up to many tens of thousands of dollars per month at a single community.

Occupancy First

There is no question that occupancy should be the first place to go when your goal is improving the financial performance of a community. But when you have won that battle, when cash flow is good, this is the right time to fine tune the rest of what you do.

It will reap hundreds of thousands of dollars in benefits each year, in each building.