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Effective Cost Management Strategies in Senior Living for Challenging Times

As budget cuts and regulatory pressures mount in the senior living sector, managing costs effectively becomes critical. With food purchases representing approximately 40% of total spending, it's vital to adopt a "SMART" purchasing strategy that maintains quality. Owners and administrators must take an active role in purchasing decisions, collaborate with food vendors to optimize spending, and implement cost management tools. Emphasizing product selection and leveraging rebates can lead to significant savings and improve operational efficiency, ensuring a sustainable future for senior living facilities.

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Effective Cost Management Strategies in Senior Living for Challenging Times

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  1. Healthcare

  2. How will you manage costs during these trying times??? • Budget Cuts: (legislation changes, local budget reductions, is census low?) • “I can’t increase my rates!” • How can I purchase “SMART” without sacrificing quality AND MEET REGULATORY STANDARDS???

  3. FOOD PURCHASES APPROXIMATELY 40% OF TOTAL SPEND IN SENIOR LIVING !! • Add chemicals (foodservice, housekeeping, laundry) and paper goods and this number continues to increase.

  4. CPI FOOD AND BEVERAGE • 2008 overall 5.4% increase • (4.8% 1st 6 months, 5.9% 2nd 6 months) • 2009 overall 1.9% increase • (3.7% 1st 6 months, 0.1% 2nd 6 months) 2010 projection……. 2.4% increase 1st 6 months

  5. But I’m “in budget” so I don’t have to worry about anything • REMEMBER….THERE IS ALWAYS OPPORTUNITY

  6. Owners / Administrators MUST stay involved in purchasing decisions. • If food service manager is making all purchasing decisions then ask the following: • Does he/she understand your current purchasing program? • Does he/she work with your food vendor to maximize these opportunities?

  7. Do you have an AGGRESSIVE & CONSISTENT margin schedule? • Are you receiving additional incentives based on your delivery size and cash flow efficiency? • Do you have price protection against inflation due to extreme market conditions? • Are you utilizing Cost Management Tools and Services available from your foodservice supplier and GPO? • Financial reviews that focus on key drivers in your operation, product selection, and much more

  8. Very important service is PRODUCT SELECTION • Work with your supplier to be sure you are using the right products for the right applications • ARE YOU GETTING THE BEST “BANG FOR YOUR BUCK”

  9. Savings Buckets Manufacturer’s Deviated $ On Invoice Cost Management Solutions Manufacturer Rebates AR Rebate Delivery Size Rebate

  10. Win-Win-Win GPO & Supplier: WIN • Market Share • Growth Facility: WIN • Savings • Effectiveness • Manager: WIN • Leadership Role • Savings

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