reinventing the ccrc

8/8/2019 Reinventing the CCRC

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Ziegler Senior Living Finance

SHARON BROOKS

President & CEO, SB&A Integrated MarketingPartner, Brooks Adams Research

[email protected]

ZIEGLER CAPITAL MARKETS Dat e

Reinventing The CCRC

11th Annual National Senior Living CFO Workshop April 29 May 1, 2009

Part of the Ziegler CFO Workshop SeriesSM


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Objectives

Alternative Session Title: The Frugal CFO s Guide t oIncreasing Occupancy and Revenue!

How can CCRCs deal with poor occupancy and/or dated

facilities, and re-tool their services/products WITHOUTengaging in expensive repositioning projects?

This session will provide attendees with revenueenhancement alternatives.


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Define Expensive

Whats the cost of empty residences?


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Define Expensive

Whats the cost of continued falling census?


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Two current real life examples:

90% Occupancy

Unrealized Entry Fee Revenue = $9,680,000*

Unrealized Monthly Fee Revenue = $662,496*

Marketing Budget: $435,000

74% Occupancy

Unrealized Entry Fee Revenue = $18,022,000*

Unrealized Monthly Fee Revenue = $2,246,400* Marketing Budget: $365,000

* These amounts dont include anticipated attrition


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Dont tell anyone, but.

The marketing task is never completely accomplished in

our field

Jim Collins flywheel and doom loop are real and they

can both be found in marketing

Yesterdays no big deal is todays the sky is falling


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Typical Scenario

Years of strong marketing performance without high

investment in capital improvement or marketing

Slow decline and denial

Rapid increase of competition from 2000 to 2005

Rapid proliferation of other options

Dramatic impact of the last two years real

estate and stock market busts


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Typical Scenario

Attrition has been higher than normal

Wait list is soft

Suddenly occupancy has fallen below 90%

Amenities are not up to par

Residential finishes are not up to par

Marketing staff is not aggressively sales focused


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Top ten signs your amenities arent up to par

Mauve and teal

Queen Anne furniture Plastic or silk floral stuff everywhere Signs Cutesy stuff The only pool you have is an

old billiards table Theres a fan bike in your fitness center Big brass chandeliers Heavy draperies Lots of wall paper borders


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Top ten signs your residences arent up to par

Oak cabinets

Sheers or skinny mini blinds No washer and dryer A kitchenette Big speakers for the community PA Pull cords 7-foot ceilings Small windows

Choppy floor plans Little wooden check to see if Im dead knobs


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Whats a CFO to do?

Cash covenants vs. marketing covenants

What if I spend money and nothing happens?

Marketing has a two-mile long list of demands and

theyre holding our sales projections hostage

How do we justify cutting back on staffing and servicesand then spend money on window dressing andexpensive advertising?

Oh, by the way, marketing is demanding more oftheir fellow staff members, and people arestressed out and fed up.


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Priority # 1: Stop throwing good money after bad

Stop implementing knee-jerk changes

Dont build new old

Get some expert advice


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Priority # 2: Audit/Research

Find out whats really driving your occupancy problems

Changing demographics? Financial options? Health care options? Pricing?

Program? Home sales challenges? Product issues? Poor marketing and sales?

If you dont know the REAL problem, youre likelyto waste money on the wrong things Develop a short-term plan Develop a long-term plan


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Priority # 3: Button up Marketing

Make sure that when you do spend money, you wont

sacrifice your hard-earned ROI with poor sales practices Identify your brand and market position

Recognize that marketing is a system

Spend more on marketing, but spend it wisely Dont neglect Internet and direct e-mail marketing its

a great value

Youre faith-based, right? So have faith. It cant allbe tracked immediately or perfectly. Find someone youbelieve in and partner with them. But watch closely,and hold the team to task.


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Key Marketing Issues

Order takers wont make it in this market

Training Job description should be SALES not community relations

or management

Can you afford a non-selling DOM or should yououtsource that function?

Lead management

Critical success factors

Working hours and compensation structure Time management and accountability

Other responsibilities


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Priority # 4: Identify and implement allof the free and cheap changes that you can make

Clean up clutter throw away, stow away

Take down signs Landscaping Paint Fresh flowers and live plants Open up windows replace heavy drapes with plantation

blinds or shutters Artwork on the walls More light New furniture in key spaces and in models


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Free and Cheap Changes (contd)

Smiles

Energy Great programs

Creative events that are FUN

Resources for home sales support and moving Staged or full models

A small incentive menu that lets buyers know youre ontheir side


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Free and Cheap Changes*

New financial options that will make a difference

100% refundable? Traditional?? Rental??? AOTA???? Modified life care for those with LTCI? Free days or discounted health care?

Service options

Dining options that allow more freedom Monthly dining credit Any venue, any meal, guest meals, even catering

*Consult your actuarial and financial feasibility experts


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Priority # 5: Address the two 800- PoundGorillas: The Housing Market and Portfolio Losses


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Whats working?

Understand and befriend the customer


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Whats the consumer thinking?

Its too dangerous to do anything

If I wait a year or two, my home value will return My portfolio is down I shouldnt liquidate anything

Can I even afford to do this?

What if my children lose their jobs? I cant make any more money Im vulnerable

What if this community goes bankrupt?

I cant afford for Mom to go to AL Illkeep her here at home


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Whats working?

Educating the consumer


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Whats working?

Selling security

Enhance health care benefits rather than cut prices


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Whats working?

Home sales support programs

Brand your program

Partner with respected realtor or relocation firm

Full menu of services

Potential to evolve into home- and community-basedservices

Introduce services EARLY


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Whats working?

Delayed entry fee payment

Bridge loans

Promissory notes

Rent until sale

Discount incentive for immediate entry feepayment


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Whats working?

Guaranteed buy programs

Equity lock


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Whats working?

Back to the basics

The value proposition: Certainty in Uncertain Times

Security

Financial predictability Health care in place

Control of future

No burden to children Sense of community

Freedom


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Whats working?

Working harder

Critical success factors

Follow up

Relationship building and trust

Referral source education

Strong lead management


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Whats working?

Investing more

Senior living must invest in marketing

Study national benchmarks

Compare cost of lost revenue

Systems marketing!


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Help your clients re-think things

The real estate boom was irrational exuberance

Not in synch with fundamental predictors of real estatepricing: construction costs, rental rates, demand,

interest rates, employment

Fueled by predatory/irresponsible lending


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Your home was still a great investment!

1985 Purchase Price $ 80,000

2005 Paper Profits $500,000

2009 Sale Price $400,000

Profit 400%

Annual Profit 11%

Annual Gain $ 21,300


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2005 level pricing wont return for a long time

The market will stabilize and re-index to thefundamentals

Slow, steady growth from that point


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In a way, the CCRC decision is easier you wont be

leaving an investment that is rapidly appreciating soyoure free to make the right decision without feelingthat youre sacrificing too much


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Remember:

Prices are local and regional

Media doesnt necessarily apply to your unique situation

Homes ARE selling every day; 4.9 million homes sold in

2008 You CAN sell your house if you approach it armed with

the facts


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The bottom line life goes on through all sorts of

economic times. People are born, get married, buy andsell homes, have children and retire on their ownschedule not that of the economy


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The key is planning ahead, patience, good advisors, and

astute thinking. Dont sit back and see what happens

Make it happen the way you want it to.


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When youre ready to enjoy the lifestyle, freedom and

peace of mind of a CCRC, good advisors and goodplanning can ensure that your home wont prevent youfrom enjoying the best life has to offer.


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Preparing for the Recovery

Build your brand

Educate your market

Take time for strategic planning and research

Take advantage of opportunities to renovate and re-

configure


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Preparing for the Recovery

Recognize that the world will never be the same

Change will be more rapid

Competition will be tougher

Professional marketing and sales will be more important

than ever


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Priority # 6: Residences

Focus first on the place where people will spend most of

their time in their home


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Touch them where they LIVE

Washers and dryers

Walk in showers or spa tubs Color palettes

Open up the floor plans

Small jewels Closet systems Beautiful kitchens

Flat screen TVs

Built in storage


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Priority # 7: Merchandize what you DO have

What do you have that the consumer LOVES?

Merchandize it well

This requires creativity and an engaged staff work withHR and include training in your investment category


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Transform

An empty lounge into a coffee bar in the morning and a

wine bar at night An auditorium into a cultural arts center

An empty room into a Brain Gym

A rooftop into a garden An activities calendar into an events series or a 360

program

A country store into a boutique


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Transform

A bathing room into a spa room

A cavernous dining room into three dining options: buffet,waiter served, exhibition kitchen or station dining

Dark halls into bright halls even if its only pale yellow orvanilla white paint, surface mounted cove lighting and light

colored artwork A model apartment into a vision of the future

A marketing office into an information center

A wing of small apartments into a Catered Living

Neighborhood with higher service level and added fees

Your expertise into a home- and community-based

services spin-off that generates revenue inside and out


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Priority #8: Pick a few great investments

Let your research be your guide

Renovate the area or areas that are most important toyour prospects

Include first impressions in this category

Make sure that its part of a professionally led long-termmaster plan


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Giving Up is Not an Option

I see too many people willing to settle for 85% occupancy

Marketing is not a mystery or a voodoo exercise its asystem; it WILL work

You cant afford to lie down and let the truck roll overyou

Its better to make more than to spend less

Fight for your market share


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Ziegler Senior Living Finance

Questions & Answers

11th Annual National Senior Living CFO Workshop

B.C. Ziegler and Company is registered with the National Association of State Boards of Accountancy(NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. Stateboards of accountancy have final authority on the acceptance of individual courses for CPE credit.Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150

Fourth Avenue North, Suite 700, Nashville, TN, 37219-2417. Web site: www.nasba.org. Attendees areeligible to receive up to 12 credits for attendance at the 2009 Ziegler AAHSA National CFO Workshop. Noprerequisites are required for this group-live educational conference. Program level is basic.

For more information regarding administrative policies such as complaint and refund, please contact ouroffices at 410-884-8300. Fees for this workshop are detailed on the registration form.

2009 B.C. Ziegler and Company Member SIPC and FINRA

reinventing the ccrc

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