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April 2017 — Health Care Properties Quarterly — Page 21
Senior Housing & Care
T he importance of having a
proper budget whether in a
new startup, acquisition or
management contract can-
not be stressed enough. A
budget is a comprehensive, formal,
coordinated, detailed, quantitative
plan that estimates the probable
expenditures for acquiring and using
financial and other resources for
the organization over a specific time
period. It provides us the valuable
tools for planning, staffing, supplies,
census and return on investment.
All corporations to small individual
businesses need to provide a realis-
tic annual budget to determine the
most efficient and effective strategies
for making money and expanding
its asset base. Budgeting can help
a company use its limited financial
and human resources in the most
efficient manner to provide services
to the senior living population.
A good and thorough understand-
ing of how the budget process works
is a must for the individual commu-
nity leaders to use as tool to man-
age their department managers and
staff on a daily basis. Budgeting also
allows the business owners to assess
the manager’s performance during a
specific time assigned. It is of great
importance because the manager’s
compensation is quite often tied with
the manager’s performance during
the year.
There are different kinds of bud-
gets that fall into various catego-
ries. The financial budget in most
cases includes
the capital expen-
diture budget. A
capital expenditure
budget relates to
purchases of plant,
property or equip-
ment with a useful
life of more than
one year. A cash
budget includes
the balance sheet
and cash flows set
during a specific
12-month budget
period. Census is
the greatest factor to help the man-
agement team meet their goals on
a daily, monthly and annual basis.
If the marketing and sales teams do
not network with other providers,
hospitals, chamber of commerce,
senior groups in the community,
purveyors and general public, census
will not increase to meet the revenue
projections.
• Communication. Corporate goals
must be understood by all and the
best source of information will be
their community leaders. Each exec-
utive director works with his team to
develop a budget he feels can be met
using past and present performance.
The budget is reviewed with the cor-
porate staff and adjusted or approved
as needed to meet realistic goals.
• How do budgets help? Using bud-
gets, dashboards and data matrix
helps to alleviate potential problems,
which allow management to make
adjustments before
significant losses
are realized. Man-
agers can make
immediate changes
to staffing, supply
inventory, census,
etc. This gives man-
agers an opportu-
nity to open doors
to develop innova-
tive ideas and ser-
vices adjustments.
During changing
economic condi-
tions, managers
may increase activities in one area
and reduce in others to meet overall
budget goals.
• Projections. Companies must pro-
vide a realistic projection and not
overly ambitious goals by using an
up-to-date market study. Inflating
budgeted sales figures or using the
wrong sales forecast or rents that are
too high will cause problems. Over-
stating sales projections will lead to
problems with other departments’
financials such as cash flow, income
statement and balance sheet.
If managers are not given the
chance to participate in preparing
for the budgets, the employees will
perceive the budgets as being too dif-
ficult to follow. The leadership must
maintain supportive and cooperative
relationships with staff of all levels.
This will lead to increased productiv-
ity, satisfaction and morale. Using
good communication in the budget-
ing process will help ensure corpo-
rate goals.
• Goals should be challenging. Goals
need to be financial and nonfinan-
cial, challenging and reachable to
encourage everyone in the company
to be part of the present and future
goals and successes. A good leader
emphasizes not only financial goals
but also how important nonfinancial
goals are to the company’s success.
Using historical data is important in
helping to gain an understanding of
how to meet future economic goals.
Identifying and engaging all employ-
ees to participate must be done in a
genuine, respectful and professional
manner.
Businesses should conduct month-
ly meetings with the community
staff to discuss any variances in their
financials, fix if inaccurate and make
necessary adjustments.
An accurate budget is extremely
important in starting off any com-
pany with a proper financial founda-
tion. Even using the best processes,
calculations, history and market
studies, things can change quickly.
Using daily, monthly and quarterly
benchmarks help every company
increase or reduce as needed. Hav-
ing community-level managers in
the development of the budgets gives
them a personal interest in succeed-
ing and fulfilling the company goals.
Staying involved with local and state
organizations as well as elected
officials keeps the company ahead
of the competition. s
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HAYDE N B E HNKE PAM PYMS
Managing Director
Dave Kolbet
Director of finance,
Vivage Senior
Living, Lakewood
Mark Osweiler
Senior vice
president, WellAge
Senior Living,
Lakewood