Unlock the Hidden Value of Business Operations

by Jeff Shaw

By Seth Walker

When I was brought aboard SRI Management by CEO Don Bishop, I was determined to prove the immense value that lies within business operations. To make this happen, I knew I needed to start by introducing tools that better measured key aspects of the operations and in as close to real-time as possible. 

As an operator and third-party manager, I’ve discovered that improved business operations can drive significant savings and add value for owners and investors.

Focus on the business aspects

Traditionally, senior living has revolved — as it should — around caring for people, with operators primarily focused on enhancing the resident experience. Conversations were often centered around care, activities, dining and cleanliness, while business office functions like human resources and finance were often overlooked or considered necessary headaches.

Yet, in our increasingly complex business landscape, streamlining these operations and harnessing the power of new technology can greatly improve performance and generate cost savings.

Recently, we transitioned most of the onsite business office manager’s responsibilities to offsite, third-party services and shared business operations specialists. It became clear that expecting a single individual to excel in accounts payable, accounts receivable, billing, payroll and human resources was becoming increasingly challenging.

Our approach leveraged the expertise of offsite specialists focusing on a specific area for an entire division. Furthermore, we embraced Yardi’s full-service module and expanded our electronic data interchange (EDI) invoicing capabilities, allowing us to process around 95 percent of our invoices without manual coding. As a result, we achieved remarkable savings of 50 to 60 percent by eliminating the need for a full-time business office manager onsite.

Eliminate agency labor

Last summer, during the height of agency usage across the industry, we looked hard at our human resources processes to find ways to eliminate it in every community in our portfolio. We focused on three initiatives: recruiting, onboarding and scheduling.

We asked our corporate marketing team to review our job postings for recruiting. We found that many job postings needed to be optimized to appear in searches. For example, a resident associate would not appear if somebody searched for a caregiver.

Additionally, we found that the older the posting, the lower it would appear in the search. To counter, we implemented a process to update postings weekly, drastically improving our search rankings. Once implemented, we saw application volume increase almost instantly. 

For onboarding, we focused on the time between when candidates applied and the time they officially started work. In sales, the time it takes to contact a potential prospect is called “speed to lead.” We took this same approach with our recruiting and called it “speed to need.” 

We found our existing process was taking an average of eight days. During this time, we competed with businesses that could onboard an employee the next day. By making minor tweaks to the process and running certain onboarding steps parallel instead of sequentially, we could reduce that time to a target of 48 hours.

The last focus point to eliminate agency labor was in scheduling. 

While we had electronic scheduling available to us, most of our communities were still using a manual process for scheduling. This traditional manual approach could be more flexible for shift swapping, callouts and identifying holes in schedules. 

We moved to a system that required all communities to utilize electronic schedules if they were using agency staffing. Then, open positions were identified and offered through the scheduling app to existing employees. 

We found that we were underutilizing our existing staff who were willing and able to pick up more shifts once they were notified far enough in advance. We saw a dramatic decrease in agency shifts within the first week of the initiative. 

Beginning in 2023, we took this one step further and moved to Smartlinx for scheduling, which can automatically schedule four weeks at a time in seconds.

The power of reporting

Beyond enhancing community operations, these improved business operations have proven invaluable for owners and investors. 

Over the past five years, we’ve witnessed a shift in preference among larger institutional investors that traditionally favored larger operators and managers for their communities. These investors now actively seek out smaller regional operators, recognizing their ability to leverage local knowledge and provide a personalized touch that improves overall performance. 

At SRI Management, we experienced this firsthand as we expanded from a dozen communities, primarily owned by local investors in 2015, to over 40 communities today, with the majority now owned by institutional investors.

Nevertheless, institutional ownership comes with heightened reporting requirements that can be challenging for smaller, regional operators without extensive accounting and analytical resources. Meeting tight reporting deadlines, delivering customized reports and fulfilling detailed ad hoc data requests are expected from operators by the owners. To address these needs, operators have two options: hire more staff or invest in automation and efficiencies to achieve more with existing resources.

Initially, we relied on manual processes using Microsoft Excel. Eventually, we progressed to large workbooks populated by running extensive data sets manually. While this improved speed and accuracy, it also led us to our current breakthrough.

Today, we leverage Microsoft Power BI for most of our internal and external reporting needs. Power BI seamlessly extracts raw data from various systems such as Yardi, WelcomeHome, Paycom, Smartlinx and Google Analytics, consolidating them into a centralized database that updates automatically.

We can effortlessly generate individual reports and customized dashboards for owners, operators and executive directors, providing a comprehensive overview encompassing everything from sales and occupancy to labor.

Investing in business operations can yield additional revenue streams for operators, adding tangible value to back-office infrastructure. 

Recently, I was asked whether we would witness the rise of another senior living giant. My answer: probably not. Senior living is fundamentally a local product, with few customers associating a community in one market with the same brand in another. Consequently, we saw a notable shift from national to regional operators within large investment firms.

Nonetheless, there is undeniable value in the scale of business operations. Local operators can benefit significantly from leveraging an established business office infrastructure. 

This realization prompted us to establish SR Operating Partners, facilitating joint ventures between local operators and SRI Management’s existing back-office backbone. This year, we proudly launched our first ownership venture, SRI-Midsouth, encompassing eight communities across four states.

By merging local operations with national back-office support, we have discovered the perfect fusion that benefits owners, operators, and, most importantly, the residents we deeply care for. This innovative approach could disrupt the industry, offering the best of both worlds and unlocking hidden potential in senior living business operations.

Seth Walker is a Certified Public Accountant who previously worked for Deloitte and PwC in the financial due diligence arm of mergers and acquisitions. He now is CFO of SRI Management, which operates over 40 independent living, assisted living and memory care communities.

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