Benchmarking: Operating by the Numbers in Senior Living Organizations

Senior living organizations are continuously bombarded with more and more challenges in the face of increasing regulation, complexities in reimbursement and contracts, a competitive environment and the desires and demands of residents.  How can an organization meet these challenges and remain focused on the ultimate goals of providing high quality care while still maintaining operational efficiency?  One proven method of keeping “your eye on the ball” is to implement and monitor a system of benchmarking within your organization.

The concept of benchmarking is fairly simple.  Benchmarks are calculated and compared with the same measures from other sources.  The organization identifies areas with potential for improvement, calculates relevant measures, compares them with other data, identifies factors impacting the area and makes adjustments, and then monitors the benchmark on an ongoing basis.  The key is to develop benchmarks related to areas where improvements can be made.  For the best chance at success, limit the monitoring process to a few critical measures until management is comfortable with the method.

The first step in establishing the system is to identify the benchmarks to be monitored.  Once the problem or opportunity areas are identified, determine what operational or financial factors can contribute to improvement. Will a change in the nursing hours per resident day or staff hours per occupied unit lead to improvements?  Are housekeeping costs per occupied unit higher than industry averages?  Are costs per meal too high or possibly even too low?

It is critical in setting goals to fully understand the benchmarks used and their relationship to comparative data.  The primary goals of high quality care and operational efficiency can often seem to be competing goals.   A good example involves the benchmark of cost per meal served.   A very low cost per meal may negatively impact meal quality and lead to resident dissatisfaction.  On the other hand, a cost per meal well above best practice data probably indicates an opportunity for cost reduction.   Keep in mind that high quality care that is perceived in the market is an important driver of occupancy or census and leads to improved revenue.

Once the decision of which benchmarks to monitor has been made, a baseline is established by calculating the current measures for those benchmarks. Going forward, it is imperative to monitor the results and compare the benchmarks to internal data and any available external data.  Internal measures involve historical data for the same calculation, which is the primary indication of whether improvements are being made.  For multi-site organizations, comparison with similar sites can also be a valuable resource.  External benchmarks may include industry publications of best practices and comparison with external facilities with similar resident types, geography, market, etc.

A benchmarking system is a great way to get all of the staff involved in the goals of improving the quality of life for the residents and improving the operational efficiency of the facility.   By continually striving toward these goals, the staff and management help to ensure the continued financial health of the organization.


James R. Jobe, CPA
Jobe, Hastings & Assoc

Jimmy Jobe is the managing partner of Jobe, Hastings & Associates, a CPA firm located in Murfreesboro, TN and established in 1984.  Jimmy has over 30 years’ experience consulting in the health care, long-term care and senior housing industries.  He currently serves as a director on the board of National Health Investors, Inc. (NHI), a publically-traded real estate investment trust invested primarily in senior housing and long-term care facilities.