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 Why Financial Realities Should Be Shared

The author uses the metaphor of the ‘three-legged Stool’ to bring staff on board with how expenses affect Resident care.

 

 
Nursing home administrators are often seen by their caregiver and clinical staff as only caring about the financial aspects of the facility.
 
They are often reluctant to share facility financial information out of fear that staff would think that’s all management cared about. They may also fear that staff would mishandle the information.
 
Subconsciously, owners and managers may fear that staff aren’t mature or sophisticated enough to appreciate the need for the facility to make money.

Lack Of Information Detrimental

So, instead of educating staff on the financial fundamentals and enlisting their help to eliminate waste and be efficient as co-owners of the facility and their departments, many administrators ration out just enough information to get staff members to carry out a prepared agenda.

Staff may be given a budget for hours or expenses for the month, based on the company’s projected census. They toil away under close scrutiny, trying to hit that budget without understanding the larger picture.

Not to say that this approach doesn’t get the job done, because in many cases it does. But, people who have been hired to care for and protect frail elders need to see the bigger picture, one that outlines how an efficiently run center protects those residents in the long run.

Sharing Realities Makes A Difference

When administrators choose to share the economic realities of the costs of caring for the center’s residents, staff will begin to trust management, and then something powerful happens: Caregivers come alive and take more ownership of their responsibilities.

Staff who have been briefed on the financial realities of running the center take pride in their new understanding, and they become more creative problem solvers, now that they see the whole scenario and not just their isolated part of it.

Inform Team Leaders

Several months ago, this author took on an interim administrator assignment for his company.The newly remodeled building was designed and contracted for 100 percent short-term rehabilitation patients only.
After a couple of weeks of assessing the care, talent, systems, and financial situation of the new venture, it was found that significant adjustments needed to be made in the facility’s cost structure.

Forming A Plan

The predecessor’s belief that “if you build it, they will come” hadn’t panned out, and the company couldn’t continue to take large losses while it worked and hoped for a positive census.

Fortunately, the leadership team was a strong one. It had a special combination of compassion and commitment to excellence.

As interim administrator, I decided to show them the entire income statement, including the bottom year-to-date losses, which were significant.

That meeting was stimulating, educational, and ironically motivating. Each member of the team took a more serious interest and ownership in the financial facets of their jobs. They came up with ideas of how they could run more efficiently, without sacrificing quality.
:##:

Expanding The Strategy Facilitywide

If presented properly, sharing the financial realities, both challenges and successes, is an empowering, trust-building lever administrators should pull in the management of their facilities.

The key phrase, of course, is “if presented properly.” An administrator can be burned by sharing facility financial information, too.

The best way to empower staff with this lever is to use the metaphor of the Three-Legged Stool. In the scenario presented above, I was so encouraged by the department head team’s response to the information, I decided to venture into the unpredictable waters of the all-staff meeting.

Here’s how the conversation went at my first all-staff meeting months ago:
Me: “What do you think I care most about?”

Them:
 [Thinking: I’m not stupid enough to answer that question ... suspicious smiles ... long pause.]

Me:
“Really. It’s okay. What do you think I care most about in running this facility?”

Them:
 [Still thinking: I don’t know him well enough to be honest. He’s just like all the rest, probably. Money. The answer is money.] “Patient care.”

Me:
“Yes. What else?”

Them:
 [Oh, there’s more than one answer. I’ll say it ...] “Profits.”

Me:
“Yes. What else?”

Them:
[What a dork. He can’t care MOST about more than one thing!] “Ummm … customer satisfaction?”

Me:
“Yes. But, how can I care MOST about more than one thing? Have any of you ever seen a three-legged stool?”

Them:
“Yes, of course.”

Me:
“Which leg is most important? Which leg do you care most about when you sit on it?”

Them:
“The one that’s going to break.”

Me:
“Put yourself in my shoes. If you were me, what would you say make up the three legs holding up our facility?

Them:
“Money, patient care … and … ?”

Me:
“And … customer and employee satisfaction. Which one do you think I think is most important?”

Them:
“Whichever is weakest?”

Me:
“That’s right. That’s exactly right. You’ve heard me talk a lot lately about some of our financial challenges.

“You’ve seen me tighten up our processes around approving overtime and tightening our belt in other ways, too. We’ve had to flex staffing to appropriate levels that match our lower census.

“Our patient care is great. Our customer satisfaction is high. Our turnover is low. But, financially, the facility has been losing money for a few months in a row because we haven’t adjusted our spending appropriately to our low census.

“Right now, the leg that’s weakest, the leg that’s breaking, is the financial one, and we have to strengthen it. Here’s what we’re doing (overview of efficiencies we’re trying to regain).

“What else do you suggest we try? What can you do to help?”

I then asked if any of them had ever been “cancelled” or sent home early from a shift. One hundred percent of their hands shot up. I asked if they understood the rationale for flexing hours and if they understood nursing hours per patient day and the state minimum requirements. They did not.

I explained how the hours PPD number is calculated, and we calculated it for our facility. They saw—and
understood—how highly we were staffed. I shared with them our bottom line losses for the year.

They began to ask insightful questions about staffing for acuity and skilled mix and how we derive our staffing goals, which the director of nursing determines based on acuity.

Staff Response

The feedback from the meeting was very positive. The staff members went to work the next day with a sounder understanding of what makes me tick and why we were managing the financial side of things so tightly.

I finished the meeting focusing on the other two legs of the stool. I reaffirmed to staff where my heart and passions lie—in creating an environment where they are free to thrive as caregivers, an environment that creates a surprising experience for our patients and their families.

It is time to stop rationing financial crumbs to the leaders in the facilities. Let them have a seat at the table.
Let’s be more transparent with facility income statements so staff can take ownership, and eventual pride, in the successful operation they’re actually responsible for shaping.

They deserve it. And, their hearts and minds will be unleashed as they see their role in the bigger picture.

Dave Sedgwick is vice president of operations at CareTrust REIT, a real estate investment trust specializing in sale-leaseback financing in seniors housing and health care. Sedgwick, who has served in key leadership roles at The Ensign Group, from administrator to chief human capital officer and ran five skilled nursing facilities in three states, is a frequent industry speaker and writes about health care leadership issues at LeadingLTC.com. 
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