Nursing a sick facility.

You don't have to write off a troubled community

IN TODAY'S MARKET, NO SENIOR HOUSING COMMUNITY IS IMMUNE from the sub-par performance virus. Markets are maturing and competition is intensifying. A better-educated, more demanding consumer presents additional challenges. Indeed, the sector itself, which is not merely alive and well but growing, is contributing to the performance problems of some communities: rapid advances in the state of the art favor the latest and greatest communities over even well-established ones with good reputations.

One of the most significant challenges for the owner of a troubled community is recognizing that the community is, in fact, sick. As with one's own health, early symptoms can be either ignored or addressed. Lack of early detection causes communities to fail when appropriate corrective action could have saved them.

Troubled communities are similar to personal health emergencies in other ways as well. Negative cash flow is like uncontrolled loss of blood. Unstable operations are similar to irregular heartbeats. The actions needed to turn around a community in the throes of a fiscal crisis are strikingly similar to how EMS would respond to a personal medical emergency.

Stabilize the patient

Many owners of troubled communities are so caught up in addressing the symptoms that they don't look at the disease. Your inital focus should be on making changes at the causal level. Frequently there are multiple problems and conducting triage analysis will help you decide which to attack first.

Check for vital signs

To take corrective action, ask yourself the following:

* Is your age- and income-qualified market of sufficient size?

* Have you realistically defined your primary market area?

* Has your market area changed because of the passage of time and the encroachment of competition?

* What is the level of competition, both now and in the foreseeable future?

* Do you have a sufficient number of potential marketing leads that, properly explored, can translate into closed sales?

* Are there serious misperceptions about your community in the marketplace that are having a negative impact on fill-up?

* What are your community's strengths and weaknesses?

* What are your competitors' strengths and weaknesses?

* Have you implemented a lost-prospect analysis?

* Are your staffing, operating, and financial ratios in line with industry benchmarks?

Create a care plan

A financially ailing community may need both short-term medication and a new long-term operating strategy. For every community there are maybe 50 worthwhile strategies that can be used as part of a turnaround approach. About half of these can be implemented with relative ease. The other half are likely to be difficult, painful, and expensive, although in some cases, bitter pills may be necessary for survival. Among the strategies are:

* engaging in laser-focused market positioning by asking, "What business are we really in?"

* trying not to lose control of your referral pipeline as new players enter your market.

* exploring additional sources of revenue such as tiered pricing, rehabilitation, home health satellites, and expanded campus and outreach services.

* extending average length of stay by redefining admission and discharge criteria or adding other components of the continuum.

* exploring market niches such as Alzheimer's, respite care, and "catered living."

* creating an understandable, equitable, flexible, and market responsive pricing structure.

* getting creative with affordability, including resident spend-down and semi-private rooms.

* establishing best practices and benchmarking initiatives across the board, making detailed comparisons on a local, regional, and national level.

* repositioning your community through cosmetic changes or modifying the physical plant. Adaptive re-use from one product type to another sometimes may be the only solution to a product that is no longer appropriate in a changed marketplace.

* establishing a sales and marketing program. It's a must if you want to spur new, qualified traffic to your community. And remember to conduct lost-prospect surveys: they can yield invaluable marketplace intelligence.

Many troubled communities fail when fundamental and focused corrective actions might have breathed new life into them. With business acumen and the courage to change, you can turn a sick property into a healthy success story.

Jim Moore is president of Moore Diversified Services, a Fort Worth-based senior housing and healthcare consulting firm, and author of Assisted Living 2000.