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How Data Analytics Can Improve the Financial Performance of Seniors Housing Portfolios

While technology solutions are aplenty, driving actionable insights from data is still lacking in the industry.

Considering that nearly 70% of the population in the U.S .who are nearly 85 years or older will need a form of long-term care during their lives, the need for investment and examination of the financials of the U.S. senior housing market operators is prudent.

Post Covid-19, there is an overall uncertainty on the long-term impact of supply-demand trends, including seniors housing occupancy rates. There are also other critical challenges, such as financial, operational and strategic issues which demand attention.

And while technology solutions are aplenty, driving actionable insights from data is still lacking in the industry. Especially when we look at financial performance of seniors housing there is a huge opportunity to leverage data to support not only targeted decision making, but also understand metrics related to your environment, efficiently plan for the long term and improve overall investment and operational gaps.

The hidden treasure for financial transparency and performance

It’s no secret that data analytics is prevalent across industries, from sports to e-commerce to manufacturing, so why should the seniors living industry be an exception? Currently, there are missed opportunities due to limited/ lack of use of data analytics in the industry. A case in point is that a lot of the financial reporting processes today are still manually done, Excel-based and time consuming.

With modern data and analytics solutions, it is possible to streamline facility, operational and financial processes—which can boost the bottom line—and provide actionable insights and better capabilities. 

By developing and deploying analytics capabilities, facilities can also enhance the need for devices and their utility by collecting large datasets of information from residents to then target their resources. For example, when you use EHRs or electronic health records you can better track incidents such as falls, cardiac arrests and hospitalizations, and recognize aspects of your facility that may be contributing to these outcomes and help minimize risks and find a targeted resolution. Data analytics can help examine large datasets of EHR information to provide value-based care. Intuitive dashboards can make key financial metrics readily available organization-wide, allowing decision makers to get a bird's eye view of the real-time challenges to positively impact return on investment (ROI).

There are several financial performance metrics which are utilized by seniors housing operators to evaluate their success and make educated decisions regarding operations and investments. These indicators include revenue, expenses, net operating income (NOI), profit margins, occupancy rates, rental rates and ROI.

The access to core financial metrics allows organizations to take important decisions in a volatile market, mitigate risks and provide critical information for quick decision-making.

Here are some use cases of data analytics to improve financial performance in the senior living industry.

•           Deliver customized solutions that will drive real value for investors, operators and customers

•           Stay ahead of the competition with competitor analysis and corrective measures across sales reporting, market developments and occupancy 

•           Predict revenue growth and analyze new geographies and vicinities for new facilities 

•           Keep health records up-to-date and provide accurate critical personal health information to further analyze for in-depth interpretation

•           Increase lead conversion, monitor and improve quality standards and policy compliance

•           Identify red flags that are causing problems, missed opportunities and forecasting solutions for future trends 

Leveraging analytics for financial success 

In the same vein, when it comes to examining the financial performance metrics it is important to understand that data analytics is the key driver to ensure growth in the industry.

Occupancy and rental rates: 

Occupancy rates and rental rates are essential indicators of seniors housing property demand. With these indicators, operators might modify prices or marketing techniques to attract new residents or maintain existing ones. The use of business intelligence and visualization tools can provide tremendous insights on predicting move-outs, perform competitor analysis, increase lead conversion etc. 

An example of predicting churn of residents is by analyzing the profile of occupants and bucketing them into different profiles based on possible risk, then taking preventive measures. Effective indicators can provide information on the number of inquiries and pipeline for occupancy, including total leads, sales and cost per leads.

Revenue management: 

When it comes to revenue management, by using predictive analytics it is possible to ensure that better investment decisions are made by analyzing the revenue and gauging critical aspects of operations, such as revenue-per-occupied room, facilities provision, what-if scenarios, pricing models for various services, etc. Other metrics can include performance indicators that can help gauge occupancy, scheduled move-ins and check outs.

For example, Priority Life Care, a management company for seniors houding based in Indiana, uses data analytics to make informed decisions on matters like monitoring daily revenue reports and adjusting operating budgets for the community to target move-in needs and recover lost revenue.

It is important to have these metrics in place, as well as set goals to measure successes and build a strategic plan to include tactics, strategies and goals to achieve targets.

Funding sources, operating and capital expenditures: 

The backbone for funding sources, operating expenses and capital expenditures (CapEx) is data analytics, which will help with the following.

•           Analyze funding sources and provide important insights into the financial health and stability of seniors housing operators. For example, operators who rely heavily on debt financing may be more vulnerable to changes in interest rates or other economic conditions. Conversely, operators who have a diverse mix of funding sources may be better able to weather these types of challenges.

•           Analytics can provide deep insights on critical components, such as operating expenses, including wages and benefits for staff, utilities, maintenance and repairs, insurance, and other day-to-day expenses, how to maintain profitability and generate returns for investors, managing insurance costs, etc. This results in improving profitability, maintaining investor confidence and providing high quality care to residents.

•           To manage CapEx requirements, seniors housing operators may use a variety of strategies, such as securing financing through loans or partnerships, prioritizing investments based on potential return on investment and implementing cost controls to minimize unnecessary expenses. By managing CapEx effectively with the use of data analytics, seniors housing operators can position themselves for long-term growth and success.

Unlock your technological potential 

In a competitive environment, coupled with market complexities, it is important to harness financial and operational data and analytics to achieve success industry-wide. By bringing in a trusted IT partner with deep domain understanding of data and analytics solutions you can ensure your organization has the right network, infrastructure, analytics applications, tools (data management, data visualization), cloud-based solutions, planning solutions etc. in place to collect data, analyze and report. Technology is ever-evolving, it’s up to you to decide how best to configure your needs keeping healthy financial outcomes in mind.

Varun Garg serves as senior vice president of Polestar Solutions, a data analytics and enterprise planning firm.

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