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MDS
Financial Sensitivity Templates
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Operations, Finance and Direct
Care
Sales and Marketing,
Affordability, Consumer Financial Planning
Finance, Capital Investment
Operations, Finance and Direct
Care
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The Impact of Reducing
Operating Expenses PRD |
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What it is:
Shows total and PRD revenue and expenses for a community. PRD figures
are based on variables including total capacity, occupied units, occupied
resident days per year. How to use it:
User can set variables including total capacity, occupied units, revenue and
expense figures to represent the community's current situation. Two
large dials are used to set expected reduction in expenses PRD
Expected Outcomes: User can
simultaneously run two different expense PRD reductions and see the outcome
in dollar amount increase in NOI, percent increase in NOI and percent
expense reduction PRD. |
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What Does Your CNA
REALLY Cost |
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What it is:
Real per hour cost of a CNA and then total loaded cost be=yond the base
hourly rate. Lets the user adjust variables such as the base hourly
rate, fringe benefits, downtime, overhead allocation and profit margins.
How to use it: Set base hourly rate
to reflect individual circumstances or average hourly rates of all CNAs in a
community. Select community specific cost for fringe benefits, average
amount of downtime, overhead allocation cost and desired profit margins
Expected Outcomes: Indicates what
an operator would need to charge residents for car provided in order to
achieve desired financial results. |
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Direct Care FTE
Sensitivity Analysis |
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What it is:
Shows bottom line loaded labor rates for direct care workers including RNs,
LVNs and CNAs. Uses yearly base salary and adds fringe benefits,
indirect cost and overhead allocations as percent of yearly base salary for
direct care workers
How to use it: User can adjust base
salaries and the percent of fringe benefits, indirect cost and overhead
allocation for direct care workers.
Expected Outcomes: User can see the
effect of direct care loaded labor rates on the bottom line. This will also
allow management to run what-0if situations with lower variable rates and
/or and increase/decrease in FTE for each category |
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Direct Care Staff Cost
Sensitivity Analysis |
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What it is:
Shows the loaded wage rate of a direct care worker or an average of
all direct care workers and minutes of direct care provided to
residents. Variables include direct care workers base salary, fringe
benefits, indirect cost and overhead allotment as a percent of base wage
rate, staff efficiency, number of residents receiving care and actual number
of direct care staff.
How to use it: Set all
variables mentioned above to reflect the current or anticipated situation of
their community.
Expected Outcomes: Two options are
available on this template; 1) change in FTEs and 2) change in
minutes of care provided to residents. The first option, change in
FTEs, will show the user how an increase/decrease in FTEs will affect the
minutes of care provided to residents. The second option, change in number
of minutes of direct care provided, will show the user how an
increase/decrease in number of direct care minutes provided will impact the
total number of FTEs needed and both will show the bottom line impact to the
community. |
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How to Recover cost Creep Through Tiered
Pricing |
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What it is: Shows loaded
labor rate for direct care worker or average for all direct care workers.
User can see the additional revenue needed to cover direct care cost creep
through tiered pricing. Variables include base hourly rate for direct
care worker, fringe benefit, overhead allocation and desired profit margin
as a percent of base pay and staff efficiency. The weighted average
month service fee for the community is also variable
How to use it: Set
salary variables to reflect the community situation. The dial located
middle right can be set to reflect expected additional minutes of direct
care to be delivered to residents.
Expected outcomes: User
will be able to accurately determine pricing tiers for additional care
provided to residents based on community wage rates and additional minutes
of direct care to be provided to residents. |
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Dietary Analysis |
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What it is: Operators can
view current dietary trends in total dollars and per resident-day (PRD)
format as compared to industry benchmarks. Also allows user to run and
see results from what-if scenarios involving increasing/decreasing the three
major categories in dietary; labor, raw food and other dietary expenses.
How to use it: Set
variables to reflect their specific current operating situation. The
variables include average number of independent living, assisted living and
nursing residents, number of meals served per day to each living
arrangement, number of moths in the current fiscal year, base line
escalation of benchmark data and expected escalation factor, Kosher premium
(if needed), current dietary expenses as related to labor, raw food
and other expenses
Expected Outcomes: Allows
user to view the current dietary situation by total dietary expense and
broken down into three major categories; labor, raw food and other expenses.
Each category is expressed in PRD values. User can then compare
community's current PRD dietary expense to benchmark data. The
template also allow user to run what-if scenario based on increasing or
decreasing expenses in each category. The related expense increase or
decrease can be seen with a bottom line total impact to the dietary
department. |
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Blended Operating Margins Based on Current
Occupancy |
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WHAT IT IS:
Shows blended operating margins based on occupancy ratios and profit margins
from different living arrangements
How to use it: User
can adjust total units, actual occupancy and profit margins for each
different living arrangement
EXPECTED OUTCOMES: User can
see the resulting blended operating profit margin form their current
situation. Template also allows user to run what-if scenarios based on
changes to teach of the variables listed, total units, actual occupied units
and increase/decrease in margin for each different living arrangement. |
Sales and Marketing,
Affordability, Consumer Financial Planning
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Recovering the
Opportunity Cost of Potentially Vacant Units |
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What it is:
Determines the dollar impact of vacant units
How to use it: User can adjust the
number of occupied units, average monthly unit rental dollars, and
incremental cost of additional residents
Expected Outcomes: User can see the
dollar amount impact to the community's bottom line of vacant units per
month and per year |
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The Opportunity Cost of
Pent-Up Home Equity |
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What it is:
Will show current resident or prospect how to put home equity to work for
them to make up shortfall on income.
How to use it: Find out approximate
value of resident or prospects home and estimate the selling cost (default
10%). Template gives the user three options for current rates of
savings and a marginal tax rate selection.
Expected Outcomes: Lets user set
variables to senior's estimated current situation concerning home equity
and/or investments. Template return the estimated per month and per
year after tax return on invested home equity to be used for monthly service
fees or other expenses. |
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Home Equity Analysis -
The Hold or Sell Comparison |
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What it is:
Compares hypothetical return from selling a home and earning interest on the
proceeds versus holding the current residence for the same specific period
of time.
How to use it: Find out approximate
value of current resident or prospect's home and estimate the selling cost
(default 10%). Template gives the user options for holding period,
percent value of home appreciation and percent return on investments.
Expected Outcomes: Lets user set
variables to senior's expected value of their home and selling cost.
User is able to compare the difference in future value of a senior selling
their home and investing the proceeds versus the future value of holding the
property. |
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Senior Consumer
Affordability Analysis |
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What it is: Shows
potential clients different sources of income compared to cost of senior
living arrangements. The variables include Social Security Income,
Pension, saving/investment portfolio, home equity, average returns on
investment, tax rate, discretionary allowance and cost of living.
How to use it: User will obtain
information from potential client and set all variables to reflect current
situation of prospect.
Expected Outcomes: This will show
the prospect if they can afford the community with current income.
This will also allow marketing representative to begin dialog of other
sources of income some seniors do not think of such as investments, home
equity and/or getting family members financially involved. The
community representative will now know if they must discuss the possibility
of spending down prospects investments or home equity and estimate how long
the funds will last. |
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The Medical Tax
Deduction for Asssisted Living, Alzheimer's/Dementia and Nursing |
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What it is:
Allows operator to show a prospective resident a side-by-side comparison of
using or not using the medical tax deduction while living in assisted living
and any savings that may result. It is advisable that the prospective
resident seek independent financial and tax counsel on this specific issue.
How to use it: Select the appropriate
monthly service fee for the community and then select the most appropriate
response for the resident's gross income level using the arrows next to the
individual boxes
Expected Outcomes: The results are
a side-by-side comparison of potential savings presented as total dollars
and a percent of savings based on the community's monthly service fee. |
Finance, Capital Investment
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Cost Recovery for
Capital Investments to Individual Units |
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What it is:
Lets community operators evaluate revenue increases - expressed as increase
to monthly service fees - needed to recapture capital dollars expended to
upgrade individual units.
How to use it: Community operator can
set property specific variables such as average occupancy rates, loan
amortization in number of years, lender/company acceptable debt coverage
ratio and expected prevailing market interest rates. There are three
interest rate scenarios available for comparison. Once the community
specific and estimate market variables are set, the operator can then select
and compare different levels of potential capital investment.
Expected Outcomes: The community
operator can now evaluate potential capital investment decisions required to
upgrade individual units based on the sensitivity of raising current monthly
service fees when considering community specific and current market
variables. |
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Cost Recovery for Capital Investments
to Common Areas/Physical Plant |
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What it is:
Lets community operators evaluate revenue increases - expressed as an
increase to monthly service fees - needed to recapture capital dollars
expended to upgrade common areas and /or physical plant equipment.
How to use it: Community operator
can set property specific variables such as total number of units, average
occupancy rates, loan amortization in number of years, lender/company
acceptable debt coverage ratio and expected prevailing market interest
rates. There are three interest rate scenarios available for
comparison. Once the community specific and estimated market variables
are set, the operator can then select and compare different levels of
potential capital investment.
Expected Outcomes: The community
operator can now evaluate potential capital investment decisions required to
upgrade common areas and /or physical plant equipment based on the
sensitivity of raising current monthly service fees when considering
community specific and current market variable. |
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Cost Recovery for Capital Investments For
Both Common Area/Physical Plant and Individual Living Units |
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WHAT IT IS:
Evaluate revenue increases - expressed as an
increase to monthly service fees - needed to recapture capital dollars
expended to upgrade common areas and /or physical plant equipment and
individual living units.
How to use it:
Set property specific variables such as total number of units, average
occupancy rates, cost of funds, loan amortization in number of years
and lender/company
acceptable debt coverage ratio. Once the community specific and
estimated market variables are set, the operator can then select and compare
a range of different levels of capital investment for upgrading common
areas/physical plant equipment in combination with three levels of potential
capital investment in upgrading individual units.
EXPECTED OUTCOMES: Evaluate potential capital investment decisions
required to upgrade common areas and/or physical plan equipment in
combination with upgrading individual units based on the
sensitivity of raising current monthly service fees when considering
community specific and current market variables. |
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Annualized NOI
Sensitivity Based on Occupancy |
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What it is:
Compares target/budgeted NOI and margin to YTD data annualized for the
remainder of 12 months. Will allow user to test bottom line results by
adjusting occupancy, average monthly service fees and cost factor for the
remainder of the year.
How to use it: Initial base data is
annualized YTD data based on figures and target/budgeted figures provided by
community/providers. The user can manipulate occupancy, average monthly
service fees and cost factors for additional residents.
Expected Outcomes: Allows users to
see how increased occupancy, increase/decrease in monthly service fees and
increase/decrease in cost factors for additional residents, either as
individual changes or a combination of change to all three variables, will
affect the bottom line of the community. |
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Build vs. Buy - The IRR
Sensitivity |
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What it is:
Lets the potential investor compare possible internal rates of return (IRR)
for three common scenarios at various capitalization rates (cap rate). The
three different scenarios are: 1) buying existing facility with a five year
hold, 2) building a new facility with a five year hold and 3) building a new
facility with a seven year hold.
How to use it: User can set template
variables with data unique to their specific market situation. The
variables include cost per unit when buying an existing facility and the
cost per unit to build a new facility. User can also set a range of
six expected terminal capitalization rates.
Expected Outcomes: .Allows the user
to evaluate potential IRRs when deciding whether to invest capital for
buying an existing facility or building a new facility. Potential
returns are shown in both tabular and graphic format. |
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Land Values - Range of
Reasonable Land Cost |
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What it is:
Investors and/or operators can evaluate a range of raw land cost per unit
when considering building a senior living community. this can be
accomplished using an all at once or a two phase development program
How to use it: User selects specific
variables such as total acres and expected cost of raw land per unit.
User can also select number of units to be build all at once or in a two
phase development program. User can select three values for raw land
cost per unit for evaluation purposes.
Expected Outcomes: Investor/operator
can compare and evaluate the total land cost, cost per acre, and cost per
square foot based on specific project assumptions. |
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