CCRC optimizes cash flow with Price Point analysis
Saint Therese of New Hope, located on 11 acres in a suburb of Minneapolis, offers a mix of independent living, assisted living, memory care, and home health care services in a full continuum of care.
Operationally, St. Therese had a positive cash flow, but intuitively, the CEO and CFO knew that some service offerings may be losing money. Plante Moran Living Forward™ (PMLF) used its revenue optimization tool, Price Point, to help identify which of St. Therese’s products and services were problematic.
The objective of the Price Point analysis was to confirm that the pricing and fees collected for the rent and service packages offered to residents were commensurate with the costs of providing the care. The Price Point exercise gives owners and operators the information necessary to realign revenue and expenses based on real-time data and information.
PMLF’s team analyzed the facility’s operational overhead and service expenses and compared them to the revenue generated on resident rent and services. PMLF found that St. Therese’s assisted living program was not adequately priced, both for the base package of rent and services as well as a la carte services. PMLF identified losses associated with the nurse-provided medication management and administration, escorting, and laundry services.
PMLF’s thorough examination of St. Therese’s service packages and pricing provided the owners with the feedback needed to ensure their services are adequately priced to optimize cash flow. PMLF recommended solutions for recapturing that lost revenue, and now St. Therese’s leaders are implementing those solutions to realize savings.
Plante Moran Living Forward stepped us through a comprehensive review of our operations using their Price Point analysis, which provided us with a fresh and detailed review of our cost structure. Living Forward’s team was able to use the information generated to pin-point specific areas of loss and recommend revenue-enhancing strategies to improve our bottom line. – Barbara Rode, CEO & Mike Warden, CFO