By Stephen Winbaum

Mark Anderson, Senior Vice President of Eldermark, a senior housing software firm (and Senior Living Foresight partner), thinks an all-inclusive rate is a bad idea. In a Senior Living Foresight webinar, How to Increase Your Senior Living Margins, he gives good reasons why to avoid this rating system. 

    1. The all-inclusive rate interferes with the senior care service model. Anderson said senior housing operators need to safeguard their financial goals, their customer service goals, and their care management goals. These factors lead to a true evaluation of the costs of care. All-inclusive prices are unscientific compared with hourly rates. Providers can lose additional margin and mark-up. “Some operators price themselves out of the market with high rent, then have no room for services on top of the rent,” Anderson said.


    2. Wash, rinse, repeat — success. Anderson – a recent selection as a 2019 Senior Examiner for the AHCA/NCAL National Quality Award Program – said the all-inclusive rate goes against best pricing practices based on real numbers. There needs to be a thoughtful business model, including operational expenses and margin goals, to bring about optimum pricing. When senior care professionals do their homework, the successful model can be duplicated in other settings. Their unique selling proposals and pricing schemes don’t fare well with the all-inclusive rate. 


    3. The all-inclusive rate rejects service documentation. This documentation reveals successful levels for senior housing operators through electronic health records (EHRs). Senior housing revenue is enhanced by capturing care services through technology platforms, like Eldermark’s. Anderson warned in the webinar, “Money is left on the table by not charging for those services.” Also, the needs of customers are misunderstood.


    4. Capturing the bottom line. EHR documentation improves the financial goals of senior communities, through the revenue enhancement of capturing unscheduled services overlooked by an all-inclusive rate.


    5. Things ain’t what they used to be. The all-inclusive rate is not as common as it used to be, said Anderson. It presents problems, especially in assisted living care, where lower care residents pay more per hour and end up subsidizing higher care residents. To end monthly speculation about monthly individual costs, there’s a move toward more levels of care and away from all-inclusive rates. Proper assessments and more care levels are necessary to justify costs per residents and to level the playing field, said Anderson.


    6. A zillion variables to a hamburger. There are too many variables to effectively utilize an all-inclusive rate. Operators must account for an intricate labor analysis based on each hour of care, including wages, staff benefits, and taxes for caregivers, and overhead.


    7. Finding the real cost. Senior care providers must add up all the costs, said Eldermark’s Senior Vice President, then add in margin and mark-up to see what is needed to accomplish their financial goals. Assessment scoring needs to be linked to the service model of communities, rather than an all-inclusive rate.

For more information about Eldermark, visit their website.