Long-term care facil­i­ties (LTCFs) have always oper­at­ed on razor thin mar­gins – then came the pan­dem­ic. The virus ripped through nurs­ing and assist­ed liv­ing facil­i­ties. Fam­i­lies trag­i­cal­ly lost loved ones and those who sur­vived were forced to live in iso­la­tion for their safe­ty, unable to have reg­u­lar vis­its with chil­dren, grand­chil­dren and friends. The emo­tion­al scar is still raw today, as the virus per­sists. Because of this, many elder­ly peo­ple have delayed enter­ing a facil­i­ty, caus­ing low­er occu­pan­cy rates, and thus tight­en­ing an already finan­cial­ly dire situation.

Low­er occu­pan­cy rates cou­pled with his­toric staffing short­ages have com­pound­ed care qual­i­ty con­cerns. Now with infla­tion, every­thing is more expen­sive, and facil­i­ties will require sig­nif­i­cant recapi­tial­iza­tion to upgrade inter­nal space for bet­ter infec­tion control.

Accord­ing to the Amer­i­can Health Care Asso­ci­a­tion and Nation­al Cen­ter for Assist­ed Liv­ing, which rep­re­sents more than 14,000 long-term care facil­i­ties, more than 300 nurs­ing homes have closed since the pan­dem­ic began, with an addi­tion­al 400 pro­ject­ed to shut­ter this year. And with the fed­er­al government’s COVID emer­gency fund­ing set to expire in July, the sit­u­a­tion will only get worse.

While there is no one-size-fits-all solu­tion, there are key steps oper­a­tors can take to run a finan­cial­ly ​“healthy” business. 

1. Hire a Strong Man­age­ment Team

Car­ing for patients and pro­vid­ing thor­ough med­ical advice are very dif­fer­ent skills than the savvy busi­ness know-how need­ed to suc­cess­ful­ly run a com­pa­ny. Inno­v­a­tive and engag­ing lead­er­ship is crit­i­cal in the face of unprece­dent­ed chal­lenges in long-term care. Admin­is­tra­tors should apply their ana­lyt­i­cal skills to address­ing these chal­lenges and cre­at­ing safe and healthy envi­ron­ments. Hire a CFO with proven results dri­ven per­for­mance. Iden­ti­fy admin­is­tra­tors who are high per­form­ing and are invest­ed in the long-term ​“health” of the facility.

2. Know Your Finan­cial Options

If your facil­i­ty has bal­ance sheet issues your busi­ness is at a stand­still. You won’t have the cap­i­tal to pay bills or make pay­roll for your staff. Under­stand­ing your finan­cial options soon­er rather than lat­er can help avoid finan­cial messi­ness down the road. Should you refi­nance? Can you work with a bank to ensure you have cred­it options? What are alter­na­tive finan­cial solu­tions if a bank denies your loan request? And while bank­rupt­cy has long been con­sid­ered a taboo top­ic, some­times it’s the right move. 

Don’t know what the best option might be? LTCFs should con­sid­er engag­ing a com­pa­ny that spe­cial­izes in finan­cial advice and invest­ment bank­ing to help nav­i­gate all options and opti­mize the finan­cial health of their orga­ni­za­tion. Hir­ing finan­cial experts to assess and address finan­cial chal­lenges will shift the bur­den of these fis­cal respon­s­abil­i­ties allow­ing admin­is­tra­tion to focus on their pri­or­i­ty — the man­age­ment of the facility.

3. Have a Go-For­ward Strategy

Once a busi­ness is sta­bi­lized it’s essen­tial to have a go-for­ward strat­e­gy. Is the busi­ness posi­tioned cor­rect­ly to sur­vive future chal­lenges? Is your facil­i­ty pre­pared to increase tech­nol­o­gy uti­liza­tion? Is there a strat­e­gy to col­lab­o­rate and poten­tial­ly parter with oth­er insti­tu­tions to improve lev­els of care? What com­mu­ni­ty out­reach ini­tia­tives is your facil­i­ty pre­pared to imple­ment? There are a num­ber of head­winds fac­ing LTCFs out­side of finan­cial chal­lenges that need to be considered.

Hope­ful­ly, we’ll nev­er see anoth­er pan­dem­ic in our life­times; how­ev­er, per­haps a com­peti­tor comes into the pic­ture and your facil­i­ty isn’t able to fill beds like before. Or, whether war­rant­ed or not, your facil­i­ty receives detri­men­tal neg­a­tive reviews online. As busi­ness­es (and indi­vid­u­als) know far too well, once infor­ma­tion is on the web it’s impos­si­ble to remove. And with care facil­i­ties, rep­u­ta­tion is everything.

Keep­ing these sug­ges­tions in mind can help LTCFs remain finan­cial­ly healthy for the long term.

Check out the arti­cle on McK­night’s Long-Term Care News.