4 Practical Ways to Build Financial Flexibility into a Senior Living Master Plan

by | Jul 16, 2020

Guest blog by Craig Witz, President of Witz Company

Our series on the master planning process explores the necessity of conducting market research before starting a master plan for a senior living start-up, repositioning or expansion. We’ve also explored the importance of asking the right questions to understand critical design considerations before architects begin to draw.

While we will discuss more details in the upcoming webinar “Team-Based Master Planning: The Most Efficient Way to Bring an Expansion or Start-up Community to Reality” on July 30, this article presents a few practical ways your project can build in financial flexibility, even at the beginning of the master planning process.

Once your organization has established the crucial market research and design considerations before starting a senior living master plan, it has a good hold on two of the three key elements: demand and design. This piece is all about making the third element—dollars—feasible by making project choices that yield short- and long-term financial flexibility. Here are four potential ways to do so.

#1 – “What are we going to do for SNF?

Asking the question, “Must we build skilled nursing beds?” is really a key driver to any senior living master planning process. Skilled nursing spaces hold the highest cost per square foot, operate at the lowest margin, require the highest staff intensity (at a time when we can’t get staff), and are the most regulated.

In many cases, organizational leadership consider this and opt to either significantly limit new SNF offerings or avoid building new SNF beds altogether. We’ve seen two recent start-ups, one of which is nearly full, specifically choose not to build any SNF because it allows more financial flexibility at the outset and into the future.

Limiting or avoiding SNF may be a way for your start-up, expansion or repositioning project to achieve greater flexibility both upfront and in the years after opening, from financial and operational perspectives. And before diving too deep into master planning, your team should know how your organization will approach SNF.

#2 – Instead of building anew, become a partner

At the master planning level, some of the biggest costs are senior living amenities and resources that need to be built. When seeking to add financial flexibility to a plan, it’s also important to ask which amenities or spaces must be incorporated on campus versus those in which you can possibly partner with existing local organizations to incorporate into the community.

For example, if the potential project site is a block or two away from a local community center, YMCA, resort or similar organization, you may not need to add a full fitness center and pool to your community’s plans. If the organization is willing to grant membership to members of your community and you can guarantee convenient access, it will cost significantly less than spending millions on a brand-new aquatic complex or state-of-the-art fitness center.

#3 – Creating “twofer” or “threefer” spaces

Getting the most function from the spaces that will be included in the new campus or neighborhood is critical to maximizing the cost efficiency of the new project. If a space is configured or built in a way that limits its usage to one purpose, such as a dining venue designed to only function as a formal dining space, you would have to create or adjust other spaces to accommodate the casual dining crowd. Plus, the size and equipment of dining venues typically require a lot of a plan’s square footage—and budget dollars.

We’ve seen recently that leading-edge communities are adopting systems that allow community areas like dining venues to become “twofers” or even “threefers,” as opposed to dedicated spaces. In practice, a community could design a space using reconfigurable furnishings and technology that adjusts lighting, wall art and signage to make a dining venue feel like three different restaurants in one day. It could start the day as a Starbucks-like coffeehouse, transition to a Panera-style café for lunchtime, and end the day as an Olive Garden-style casual dinner spot.

These arrangements yield more flexibility and agility to respond to the changing preferences of today’s and tomorrow’s seniors, while maximizing your organization’s resources and space usage.

#4 – Consider a reconfiguration

When trying to bring flexibility into a senior living master plan, it can help to think about what an existing or planned space could become in the future.

For example, as healthcare residence designs have shifted from the old, institutional “H” model into neighborhood designs, the original space could be reconfigured to take on a new purpose as part of the new project, such as a rehab wing or office space. Older, smaller IL residence spaces could also be reconfigured into memory care suites.

When it comes to flexibility, don’t forget what you already have.

Even with all these tips in mind, it’s important to remember the basics at the end of the day. Properly designing project costs vis-à-vis the proposed revenue envelope and establishing development timelines that require speed to market have much more of an effect than anything that can be value-engineered out of a plan later. That’s why the previous blogs in this series highlight the importance of handling market research and design considerations—before diving into a master plan.

So, if your organization is currently considering embarking on a senior living master plan, tune into our July discussion with Rob Love (Love & Company), Melissa Pritchard (SFCS Architects) and myself for expanded insights on the team-based approach, why it works, and how it synchronizes the crucial “dollars, design and demand” elements of any project. We hope you’ll join us then!

Feel free to reach out to Tim Bracken, Vice President at Love & Company, at 410-207-0013 or tbracken@loveandcompany.com to explore how to craft a master plan that will set up your organization for sustained success.

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