Jim Moore, president of Moore Diversified Services (a senior housing consulting firm) wrote a good article in the December Assisted Living magazine (why McKnights doesn't publish their magazine articles online is beyond me) where he discussed his recommended New Year's Resolutions for senior housing businesses.
One in particular that jumped out for me was what to do about decreased occupancy rates.
Due to typical resident turnover, most assisted living facilities on average need to refill about 50% of units during the course of a year (much higher for facilities with poor customer satisfaction). If you figure the average assisted living facility charges a base rate of about $3,300 per month, Jim says:
"the incremental additional operating expense cost of occupying just one additional unit at a relatively high occupancy is approximately 30% of that $3,200, or $960. That means for each vacant unit, about $2,240 per month would go right to your bottom line as additional profit and cash flow. That is a cash flow impact of about $26,900 per year".
BTW, depending on the amount of additional care you need these "base rates" can rise well above $6,000 and for end stage Alzheimer's residents it is not uncommon to see monthly rates in excess of $8,000.
To reduce these vacancy rates, Jim suggests (and we 100% agree) that you need to "redouble your occupancy enhancement efforts", even if that means spending more money. The rationale for investing more in marketing is to fill the pipleline to avoid the high opportunity costs of vacant units.
In this slow economy when margins are already lower for assisted living facilities the gut instinct is to slash the marketing budget but it's a huge mistake. Marketing should not be stopped and started. The reason is because there is a lag time between campaigns and sales. Suspending marketing creates serious gaps in your prospect pipeline - something you can't just kick-start when good times return. It's not a faucet whereby you turn it on and realize immediate leads/sales.
Another reason why assisted living facilities must invest in continuous marketing campaigns is that unlike most businesses, you must capture people at the time they need your product - unlike say a car, people who need assisted living don't have the luxury of delaying their purchase until their personal financial situation improves - they need it now and if you are not on their short list or if they are not aware of you, you lose the sale opportunity.
And lastly, don't limit your marketing to just local advertising. Big mistake.
Often times the "buyer" of assisted living is a son or daughter who is making the purchase on behalf of their aging parent(s) and they may live out of state or outside your local market. For these reasons, having a search-optimized web site and a strong online presence is critical so as to be found by people out of state who are searching the Internet for resources.
And lastly, your marketing strategy should also focus on "referal targets" who also play a role in the buying decision for assisted living - e.g., discharge planners, case managers, rehabilitation centers, physician offices, geriatric case managers, etc.
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