In the face of declining occupancy, reduced payments and the shift toward value-based payments, it’s clear that post-acute care and long-term care operators and managers need an agenda for change – a clear plan. Business lifecycle models show that all markets go through introduction, growth, maturity and decline. The post-acute care and long-term care markets are declining in many regions, and the service itself (nursing homes, home health care and seniors’ housing) is in late maturity, early decline. What can be done to respond effectively to these changes? What is the change agenda?
The changes outlined below will be reviewed in detail in an upcoming webinar I will be hosting for Harmony Healthcare International entitled “Not Your Mother's Nursing Home.”
Change #1 - From Custodial to Visionary
Many post-acute and long-term care managers are called “administrators”. The very title suggests a custodial role or day-to-day routine. Those who live this job on a day-to-day basis know that there are intense daily pressures to manage toward regulatory compliance, budgetary constraint and human resources challenges. In spite of these day-to-day pressures, it’s never been more important to add “visionary” to this job title! What is the vision for your post-acute operation? Will you become an integral part of a value based payment system (Accountable Care Organization – ACO)? Will you develop horizontal and vertical strategic alliances with others in your marketplace area? Will you train and groom your staff and facilities to focus on a particular population health challenge in your marketplace area such as Alzheimer’s or diabetes? These questions would not typically occur for an “administrator”, but become an integral part of a visionary approach to change.
Change #2 - From Happy to Loyal
“Satisfaction is cheap – loyalty is priceless” should become a mantra in the post-acute sector. Customer and consumer satisfaction is measured and achieved by managing expectations, and effective interpersonal behaviors – sometimes called “smile training”. Without belittling importance of customer satisfaction, the far more important and valuable customer attitude is loyalty. The research is clear that happy customers may, or may not be loyal customers. Loyalty is achieved by effective service error recovery – making a mistake and recovering effectively. Most other service sectors (entertainment, leisure and financial services, for example) understand these principles and practice them. It is imperative that staff and managers in the post-acute care sectors adapt these management principles. Very often, this is a cultural shift requiring significant intervention because of a history of sweeping problems and errors under the rug for fear of reprisal and even litigation. This is indeed a “culture change”, quite distinct from the popular use of the term which implies a change in the physical environment. This is a change in the human environment; more difficult and more important.
Change #3 – Efficiency – not Evisceration
With greater demands on providers, declining markets, decreasing payments, it’s inevitable that good fiscal managers will look to see where economies can be found. Staff or human resources typically represent 60 to 70% of the operating budget, so this is a logical place to look. Cutting staff, however is fraught with difficulties. We can anticipate pitched battles (these have already started to develop in the hospital sector) between “management” and “labor”. It’s extraordinarily important for operators and managers in the sector to develop greater efficiencies without eviscerating staff. The challenge is that most managers don’t know, or do not have good data about, the activities of their staff. Hotels and grocery stores have better deployed technology for asset tracking (including human assets) than seniors’ services. Why? The typical answers are because there’s no money to pay for technology, and it appears to this author that the technology which is available in the sector is expensive, and lacking in many regards. Managers and operators in the sector need to demand from vendors and technology suppliers the type of inexpensive sophistication that will allow them to better deploy their most expensive assets – their people.
Change #4 - Innovation & Differentiation
Customers don’t want and very often, resist long-term care. We are “selling” something that people need; for the most part, they don’t want it, they need it. Because of this, and a few other factors, there’s been precious little innovation and differentiation in the sector. One of the biggest markets is for the care of persons with Alzheimer’s and related disorders. However, I would challenge anyone to tell the difference between one Alzheimer’s care center and another. Your prospective customers and consumers may be able to tell the difference once they visited two or more centers (test this with mystery shopping), however precious few centers have used effective branding in this growing market.
Technology is an area where long-term care providers have lagged other sectors, and which can provide both innovation and differentiation. Vision, loyalty, efficiency and differentiation will be the hallmarks of survival for post-acute providers.
Irving Stackpole is the President of Stackpole & Associates, Inc., marketing, market research, customer service and sales training firm. Founded in 1991, Stackpole & Associates applies scientific marketing principles to develop practical solutions to clients’ challenges. Stackpole & Associates develops methods and designs that produce unimpeachable data and actionable recommendations. You can contact Irving at istackpole@StackpoleAssociates.com or 1-617-739-5900, extension 11.