By Jack Cumming
A recent LeadingAge panel led me to realize how difficult it is now to budget for the coming fiscal year. The panelists were Mario McKenzie of CliftonLarsonAllen, Dan Hermann of Ziegler, Stuart Jackson of Greystone, and Chet Chandler of LeadingAge’s Value First. The takeaway is that the triple threat of inflation, labor shortages, and supply chain lags makes this a tough year for budgeting.
When it comes to budgeting, those immediately involved in the process are most affected. Still, budgeting affects everyone. That’s particularly true now, as we face the economic uncertainties of 2023. Will we have a recession like we did in 2008? Nobody knows. We hope not.
Budgeting can be a lot like calling plays in football. A budget is a short-term plan. Calling a play is short-term. Everyone knows that a play rarely plays out as simply as hoped. If the other team acts differently from the plan’s expectation, the play is broken, and the players then scramble to make the most of the situation on the field. For 2023, the unpredictable other team is the economy.
My reflection on these challenges quickly grew beyond the limits for an article, so I shifted to a paper. Here are some highlights from the paper, a link to which is at the end of this article.
- It will be challenging to consider the timing and amount of rate increases in a time of rising prices and falling stock values. Many residents depend on investments.
- Now is a good time to take a close look at skilled nursing facilities in CCRCs to see if they are still the best solution for residents’ geriatric needs and if there are better solutions both financially and humanely.
- The disruptions of COVID and economic uncertainty make this a good time to consider whether age restrictions are still warranted.
- It may be possible to grow revenues by opening services to select outsiders using the membership options of social clubs to ensure that residents remain protected.
- Creative minds can find many ways to grow revenues and contain costs while improving services to residents.
- Hard times call for managements to face hard realities squarely. Doing so will call for courage and imagination.
- Lastly, after lean years come years of greater promise. We look at how a stronger commitment to technology and adaptability may then be needed.
Click here to access the longer discussion of these challenges. The LeadingAge discussion is restricted.