A big part of the decision to move to a continuing care retirement community (CCRC or life plan community) has to do with security. Residents are making a large investment, and in exchange, they are given access to a continuum of care services should they need them in the future. As a result, CCRC prospects want to know that their money will be safe and that the promises made by the community (explicit or implied) will be fulfilled. This includes the delivery of any long-term care services they may need down the road, as well as timely entry fee refunds, among other things.

This past Wednesday, I had the pleasure of participating on a panel for a bi-annual conference for CCRCs, hosted by actuarial firm A.V. Powell and Associates. (It was held virtually this year.) The theme for the panel was how to effectively communicate CCRC actuarial results and projections to residents.

For my part, A.V. asked me to speak about why a CCRC’s financial solvency is important to sales and marketing. I’ve posted about this in the past, but with the conference fresh on my mind, I wanted to revisit the topic. The information presented in this post is a summary of what I covered on the panel.

The importance of sound finances

In my view, financial solvency and sales/marketing go hand in hand. A representative of a CCRC should be able to look a prospective resident in the eyes and say with complete confidence that financial stability is a top priority of the organization. Not only should they be able to say it, they should also be equipped with the proper materials to clearly and concisely convey it to those considering a move to the community.

Today’s prospective residents are more self-directed in their research process than ever before. Understandably, most will do thorough research, comparisons, and overall due diligence. Why not be a valued resource by making the process easier for them? Rather than simply making available audited financial statements, for example (which are difficult for the average person to interpret), why not have a one- or two-pager with the key details presented in a clear and concise fashion? It could be included on the community’s website too.

I believe such solvency data should include qualitative and quantitative aspects. The qualitative part would include things such as the diversity of the board of directors (professional, racial, ethnic), the experience of the management team, executive staff tenure, and more. This type of information does not necessarily reveal CCRC financial solvency or a lack thereof, but it could be argued that a CCRC lacking in these areas is less likely to experience long-term financial success.

On the quantitative side there could be any number of things included, but it would be helpful to show just five or six key data points that can be interpreted on balance. Examples might include debt service coverage ratio, net operating margins, net assets, and, of course, results from any recent actuarial studies.

The last one is important because while financial ratios paint a good picture of current financial standing, they do not reflect an organization’s ability to meet long-term financial liabilities, including obligations to residents. Of course, each of these data points should be accompanied by a brief explanation or definition, and possibly industry benchmarks for comparisons, so they can be interpreted by a lay person who doesn’t have an accounting background.

>> Related: Evaluate the Financial Viability of a CCRC With Our Free Guide

A unified sales and finance team

I recognize that many who work for the sales or marketing team at a CCRC may not be comfortable talking about finances. This is completely understandable. But this is another reason why the finance and sales teams must work together.

The finance team should be able to educate the sales and marketing staff enough for them to have at least a high-level discussion with prospective residents, along with providing supporting materials to hand out. But the finance team should also be available to meet with prospective residents if they have questions beyond the scope of what the sales team can adequately answer.

>> Related: How Financial Confidence Impacts Your CCRC Decision Process

Always prioritizing residents

Another point I discussed on the panel is that I think a CCRC’s financial loyalty should always be to the residents first, and not to bondholders or investors. This isn’t a slight to the financiers in any way because they obviously play a very important role. But if financial decisions are not good for residents, then ultimately, they won’t be good for the organization or its financial partners. I would hope the financiers of the organization agree with this mentality.

With every financial decision pondered by management, the question should be asked, “Will this be good for our residents?” Residents should be a CCRC’s best referral source. If financial decisions made by management and the board are not in the best interest of residents, then this certainly will not motivate residents to recommend that other people move there.

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