Multifaceted Benchmarking Establishing Market Position

As the population over the age of 65 becomes an increasingly larger portion of the U.S. population and health care reform is fully implemented, impacting the senior living industry, competition will heat up to meet the growing demand for senior housing and services and the needs of the local health care systems. Consider it a two front approach to the market. You will need to be attractive to your future customers, and you will need to be just as attractive to your referral sources, the health systems in your area. Such competition and environmental changes can breed innovation by accelerating your facility’s strategies for growth, capital improvements, and systems enhancement and integration.

In order to compete effectively for market share, senior living facilities must understand their market positions in comparison to their competitors. Benchmarking against others is essential to identifying opportunities and improvements. But what factors should you benchmark in order to establish, grow, and sustain your market position?

You also need to develop benchmarks that can be shared with your referral sources in the market to show them that you are the best of the best in the market. Do not let the Five Star Rating system be the only benchmark they rely on.

In truth, the industry has been slow to generate and publish any real standardized market metrics, whether related to programs, services, physical plant, or quality. Left without an accepted or reliable way to compare services, business processes, and sales and marketing efforts, senior living leaders must find their own ways to define and establish a strong market position.

One of the best ways is by understanding consumers’ expectations and changing medical needs, understanding the local health system’s need for benchmark data, exploring trends in senior living facility design and services, and then assessing your own systems and processes and facilities and amenities accordingly.

Understanding Consumer Demand
The best place to start is with a study of the trends that are being driven by consumer demand. The demand from consumers is for residential style assisted living, dedicated memory care units, and neighborhood-designed nursing homes.

Most commonly included in the list of consumer demands are private restrooms, larger rooms, storage space, higher-quality amenities, more room for common areas, technologically advanced therapy equipment, and continuum of care located on one site.

To be competitive, senior living facilities must incorporate these and other trends in living units across the continuum, especially:

• Larger living units, with plenty of in-unit storage space. More square footage is a greater concern to consumers today than it was several years ago.
• All private living units, with private restroom and shower in the unit (even in memory care).
• Separate rooms for sleeping and lounging.
• Full kitchens in frail elderly assisted living, and even small kitchens in memory care units.
• Plenty of natural light in units.
• Dedicated and properly designed memory care assisted living units.
• Resident-centered care in long-term care.
• Person-centered meal programs and restaurant style dining.
• Impressive common areas, to create a “wow” factor that includes activities and services that appeal to consumers.
• Wellness programs for active adults and persons who need rehab.
• Gathering places such as coffee shops, spas, exercise centers, stores, and other relaxing places.
• For memory care, gathering places that help calm and sooth agitated individuals.

Understanding Competitive and Other Market Forces
In order to be competitive in their market positions, senior living facilities must recognize the moves in the industry that are occurring while understanding what the future holds. You need to gather the market data and attributes for the competitors in the market and create a benchmarking dashboard that indicates your relative position in the market, which will help you identify the areas of significant need and create strategies to address each. You need to apply a scoring and ranking process to quantify whether you are really comparable and competitive. Comparing things such as your room size, number of private rooms, quality of the therapy gym, and meal plans and dining program will help you understand your relative market position. These assessments will assist in identifying deficiencies in your products and services and establishing a plan of action to correct the problems before they become a significant market barrier.

From demographic reports, Medicaid and Medicare cost reports, and other publicly available data sources, you can determine your market share. How much of the market do you serve and are you in the lead or behind the competitors? The dominant player in the market will likely receive the lion’s share of the referrals.

In addition to market-related benchmarks, you should include quality benchmarks and mine for quality data from the MDS and other internal databases and create benchmarks to share with discharge planners and other referral sources to prove to them that you are the best of the best in the market.

In addition to the environmental factors mentioned above, a better understanding of your market position will be important to ward off factors that are completely out of your control. Some of these factors include:

• The consolidation of the industry to large corporate chains—if you desire to remain relevant to your referral sources and the consumer, knowing your market position and making improvements will be vital in competing with the larger chains. Many referral sources will desire to contract with these entities under the assumption that they will be a lower cost provider.
• Real estate investment trusts and private developers will become more prevalent in the market—these entities will likely build new products in your markets in the next five to ten years. Your products and services need to be up to date to compete effectively.
• The private pay market will shrink and public pay (Medicare, Medicare HMO, bundled payments, Medicaid) will represent a larger percentage of payors—you need to know the impact on your operations as the payors shift.

Armed with this knowledge, today’s senior living facilities can map out sound strategies to establish their market positions and increase their overall profitability. Here are several market position strategies to consider:

1. Expand the continuum of care. The stand-alone nursing home cannot be financially viable. Instead, a continuum of care enables residents to remain in the community as long as possible. In other words, it provides your facility with strong customer-retention opportunities.
2. Diversifying your payor sources and meet consumer demands by developing a robust memory care program. It’s the single greatest demand in the senior living industry for the foreseeable future (and, it’s primarily private pay).
3. Make judicious capital investments. Study, plan wisely, and change to meet consumer demand.
4. Position yourself as a preferred provider/partner to hospitals in order to capture more Medicare referrals.
5. Form partnerships with complementary entities to offer services to your consumers that you don’t want to fully own/manage. This could be with the local referral sources.

Market Benchmarks

Matter Today’s environment demands that you better understand your market position relative to your competitors and are able to share the data with your referral sources. For you to compete effectively, know the market position of your facility and have the data to share the story.