For the past 20 years, HDG has been advising clients to stay focused on the future and not get completely bogged down by the present. Whether it is the COVID-19 pandemic challenges, reimbursement shortfalls, regulation changes, or simply changes in consumer demands, there are always ground-level challenges that will cause us to lose sight of the end goal. It’s paramount that senior care and living leaders keep their eyes on long-term planning during times of industry turmoil and upheaval.
Many organizations do not take the time or spend the resources regularly to conduct market research. Does your marketing department occasionally call your perceived competitors for pricing and occupancy and consider that good enough? Do you rely on this limited data to make strategic decisions? HDG would argue that you should do deeper dives into your market annually and not just when you need a bank loan for a project or have the five-year strategic planning process completed.
So, how should resources be deployed for long-term planning when we know the future is so uncertain? Evaluating your market is paramount to making strategic decisions and to guide your organization on where to invest capital and financial resources—not to mention your time and energy. Therefore, let’s explore the ways market research and data is effectively used to support your strategic initiatives.
Do you know how many seniors 85+ in your market are income qualified for market-rate housing and assisted living alternatives? Do you know what percentage of your market is Medicare and Medicaid qualified? Are these populations growing? Is the projected population growth keeping pace with capacity growth or outpacing it? What about the 75 to 84 age group? Do you know what growth rate will occur over the next five years and how this translates to demand for assisted living services?
Understanding the growth of senior population by age, income, and acuity levels are critical to driving strategies for your organization. These benchmarks will help you define what market exists in your area and what services will likely have the greatest opportunity for growth. By understanding the demographics, you can capture market share, increase revenues, and develop services that will be in demand for the foreseeable future.
Did you know that the senior population is growing faster than the workforce population? Every market is different but analyzing the workforce population is just as important as analyzing the senior population. Without a strong marketing plan to attract and retain staff, will you be able to care for your clientele in the future, let alone expand your services? An analysis of how the workforce is changing by age cohort—for both entry- and senior-level positions—will determine where the staffing shortfalls may occur. Staffing issues will impact current operations and strategic decisions about program growth and capacity growth and/or expansion, not to mention the cost of labor over time.
Did you know that your competitors have secret shopped your facilities, have probably been in your building, and toured and collected your marketing packets? It is highly likely. Alternatively, have you toured your competitors? Are you even aware of your competition? Too many clients are not aware of what their competitors offer; what their plans are for expansion, renovation, and upgrades; and what market they are targeting.
What is your reputation and how does it compare to your competitors? What is it that differentiates you from them? You must know who you are competing with or what they offer to make effective decisions, which can include:
Understanding your competitors’ approach to targeting the market will help you differentiate your own approach, and in turn, you might learn something you did not already know.
Do you know how much your competitor charges for the same services you offer? Do you know whether their pricing is comparable? Are you offering apples-to-apples services for a similar price? Are you charging one price or à la carte pricing; what about your competitors? Too many times, we have worked with clients that are underpriced in the market. That’s right—underpriced.
HDG has found that until you have investigated the competition thoroughly, you are simply making assumptions on your pricing based on your internal data. As a result, the following questions should be asked:
The issue could be that you are overpriced in the market, which is causing occupancy issues. You might very well be losing market share because of fees and not even know it. On the other hand, many clients can increase fees on larger units and one- and two-bedroom units in their independent living and assisted living options and still be within the competitive market pricing, thereby increasing revenues without increasing costs or debt.
Is there a market niche that is currently underserved? Or, conversely, is a service in your market overbuilt in any specific area? For example, it is important to understand how many memory care beds will be demanded in the next five years compared to how many exist today. If there are open beds every day in your area, should your nursing home be downsized so the space can be used for something other than skilled nursing care? The demand assessment completed in the market study will guide you in deciding whether to keep your current capacity, increase your capacity, or change your capacity to some alternative you might not offer now. The assessment will also guide you in choosing which services to avoid due to overcapacity in the area already. Finally, the demand assessment will give you a sense of timing for when you should seriously begin the expansion or contraction process. This information is critical to drive the development of your strategies.
All market studies have three basic components: demographic assessment, competitive market evaluation, and demand projections. Each analyst studies demographics; these data are the backbone of all studies. There are many different demand models, and as many ways of concluding what is in demand in a market. Some market analysts fall short with their competitive market evaluations. To truly understand your market position, your analyst should dive deep into your competition. You might find significant pieces of intelligence to drive your strategies by conducting a high-quality, deep-dive market study from an analyst that knows the senior living profession.
Authored by: Mike Edwin,
VP, Consulting Services
Director, Analytics and Research