Health Dimensions Group CEO: Learn The Ins And Outs Of Your Market Before Downsizing

October 21, 2021, Alex Zorn, Skilled Nursing News - As skilled nursing operators across the country try to find the best path forward for their facilities post-COVID, one option being considered by many, including the leadership team at Minnesota-based Health Dimensions Group, is a reduction in licensed beds.

“A lot of providers right now are either being forced to resize or choosing to resize,” HDG Principal and CEO Erin Shvetzoff Hennessey said during a Prime Care Technologies’ webinar on resizing operations based on data on Thursday.  “Right now we have a 170-bed standalone skilled nursing that we can staff safely at about 120 [beds] and that’s with begging for agency staff that we’re starting to see shrinking in availability.”

A recent LeadingAge survey of Minnesota long-term care operators showed that more than 20% of the state’s caregiving positions are currently vacant and nearly 70% of care centers are limiting the number of residents they can serve due to limited staffing, up from 40% just two months ago. 

Such a dramatic reduction in the available market has forced Hennessy to reconsider what HGD skilled nursing facilities should look like moving forward.

“We’re seeing a different patient mix, we’re seeing increasing labor expenses and a lot of our communities are operating at a loss or barely breaking even,” she said.  “So you have these different pressures coming at you so you’re either getting forced to resize to reduce expenses to survive, or you’re getting resized by the labor market.”

On top of servicing more than 2,200 residents in its 41 senior communities across seven states, Health Dimensions Group is a leading consulting and management firm that provides insights and services to post-acute, long-term care and senior living providers. 

Hennessy recommended that operators make sure they have all the right information about the past, present and future of their market before making any long-term decisions about resizing.

This includes conducting a workforce assessment, understanding the workforce of the service line, looking at projected labor costs and possible tax benefits of reducing and looking at adjusting fixed fee contracts.

“If you have a $10,000 a month housekeeping contract but you have a wing closed, what can you do temporarily to save some expenses,” she asked during the webinar.  “I encourage you to be aggressive on going after contract reductions.”

Hennessy also suggested that operators look at redoing their strategic plan before making any long-term decisions.

“We’re redoing our plans in our communities,” she said.  “This is where you’re going to make that decision on how long you’re going to resize, where you’re going to resize and you’re going to tie back service lines to your mission, vision and strategy.”

She described market demand studies as upfront expenses that “pay for themselves” and help inform operators on the best plan forward.

“Understand what’s going on in your market because resizing doesn’t always mean serving fewer people, it could be resizing certain parts of your organization,” Hennessy said.  “You may increase your assisted living or you may have fewer people living in your community but more using your home health or other ancillary business.”

She said operators should look at their current demand and make short-term operational decisions based on acuity, labor per patient days and look five to 10 years out at how many people are going to need their services based on age, demographics, wages, average home prices and more to see what the service needs are. 

“It’s really a mix of a few various data sources where we can look at historical census and publicly available databases,” Hennessy said.  “If you’re in an over-bedded skilled nursing market but an under-bedded assisted living market, that helps you make that decision.”

Take into consideration what is being offered at your facility and if there are any new products that could be of interest to you, she added.

“Check in with city and county planners, understand if anything else is being built,” Hennessy said.  “A lot of things were put on hold but you don’t want to redesign your service lines if there’s something new being built on the next block.”