As senior living residents decline in acuity and need more services and care, it’s more important than ever for providers to be aware of the full-package value of their amenities and services so they are not leaving revenue on the table, according to one sales and marketing expert.
Operators too often focus on room rates, consistently missing the opportunity to charge for the value of the full package they offer, according to Bild & Co. CEO Jennifer Saxman. Consumers, she said, are more aware of pricing, and companies in the industry do a good job of communicating their pricing, but they don’t focus enough on costs related to their ancillary costs or the entire value of what they offer.
“Everyone is trying to fight on the basis of room rates,” Saxman said, but as residents with higher needs move into assisted living communities — and even into independent living communities — what’s missing is the all-inclusive rate for a higher level of care and services. “That’s where we’re missing the boat on the true value proposition versus our competitors,” she said.
In a recent white paper about services and amenities, Bild & Co. shared the results of a survey of more than 250 senior living locations across the country regarding care services, amenities and service pricing. What she found was a wide range of pricing structures that don’t necessarily allow providers to make an apples-to-apples comparisons with their competition.
The skinny on pricing
Overall, the survey found that assisted living providers charged an average of $1,367 monthly for care services — or $45 per day — whereas memory care averaged $1,976 per month for care costs, or $65 per day.
Just more than half (51%) of memory care locations were all-inclusive in their pricing, whereas 25% said they included some care in base rent pricing but had additional charges once a resident exceeded a certain amount of care. Twenty-four percent of participating locations did not include care costs in their base rent prices.
Average memory care monthly rent was $7,171. When not included in care costs, residents paid an average extra $60 daily for incontinence care ($6 to $12 per day), medication management ($20 to $40 per day) and other ancillary services.
For independent living, 58.4% of responding providers reported that they did not include any care services in their pricing, but they did offer health services for an additional cost or through a third-party company.
Among the most common services and amenities associated with an extra charge were trash services (an average of $60 to $80 per month), laundry ($20 per week), telephone ($20 per month), garage or storage space ($35 to $70 per month), pet fees (a $500 to $700 one-time deposit and then $25 monthly) and additional meals ($5 to $8 per meal).
Move toward value-based pricing
Those pricing structures, however, don’t always align with consumer expectations, Saxman said. Although providers are maintaining a “keeping up with the Joneses” mentality, in terms of pricing, consumers are asking questions about actual amenities, including food quality, menus and types of activities included in pricing models.
“This is really prepping us heavily for those boomers that are going to be coming in,” Saxman said. “We’ve been serving the Great Depression era for so long. If we aren’t thinking strategically about how we compete not on the basis of price, but on the basis of the lifestyle and environment, we are going to miss out.”
Providers need to define their competitors and do an apples-to-apples comparison of pricing and structure. In some cases, providers may find that they are misaligned with who they see as their competition. Having a vastly different pricing structure from competitors means that consumers won’t group providers together for comparison, leaving some out of consideration.
Over the last two years, Saxman said she has noticed that many providers are getting away from a points system that assigns charges based on levels of care and services and moving toward the value-based pricing of rooms based on inventory and room placement, similar to hotel pricing structures.
She added that it’s important for providers to reassess residents returning from a hospital stay to determine whether a higher level of care is warranted for them.
“Just those missed opportunities — we leave so much revenue on the table because we want everything to be black and white, easy-peasy,” Saxman said. “This is a business. You have to have business acumen.”
Providers that do the best in the area of pricing, she said, prepare consumers for potential increases in prices tied to care and amenities. Along with educating themselves on how their competition is pricing offerings, providers need to educate consumers on what to expect so they are not surprised.
“We try to avoid it like the plague. We don’t like to tell people they have to pay more,” she said. “It’s like ripping off the Band-Aid.”
