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Penetrating Your Home and Community-Based Service Market

by Published On: May 16, 2013

Prepared by Amy Castleberry, CFA, Senior Vice President, Ziegler

Sarah Lentz Spellman, Director, CliftonLarsonAllen, presented a dynamic and strategy-centered session on Penetrating Your Home and Community-Based Service (HCBS) Market at the Ziegler LeadingAge National Senior Living CFO Workshop.

According to Spellman, senior living providers expand into HCBS for a variety of reasons. 

It may be a part of their growth or diversification strategy, often requiring relatively minimal up-front capital. Expanding into HCBS may allow organizations to more closely manage the quality of services delivered on their campus, leverage current management expertise and expense or increase brand awareness in the community. 

Or, expanding into HCBS may allow providers to react to consumer care trends and prepare for health care reform.

Whatever the initial spark, Spellman cautioned providers that expanding into HCBS needs to be done knowing and understanding as much as possible.

She outlined key ‘readiness decision’ tools that enable organizations to address the critical thinking components such as: 

  • Market and Financial Feasibility.
  • Target Market.
  • Financial Investment and Return.
  • Level of Difficulty.
  • Critical Success Factors.
  • Assessing Organizational Readiness.

One tool Spellman created aligns who an organization wishes to serve with the HCBS line that serves that client. For example, an organization wishing to increase its service to low income individuals would be steered toward home heath or adult day, rather than private-duty services.

Spellman walked the audience through key steps to assessing the market and financial feasibility, such as defining the service area and target market, analyzing the demographics and competition, determining price, and estimating needed capital as well as operating expenses, among other criteria. 

In addition, Spellman discussed organizational readiness and strategic questions for managers and boards such as:

  • Will the new entity be non-profit or for-profit?
  • Do we have the management resources to focus on a new venture?
  • Do we have the expertise in the new service or do we need to recruit?
  • What impact will assisting residents to age in place have on the organization?
  • Will this program help position us for Health Care Reform?

Finally, Spellman wrapped up the session with what she’s learned to be critical success factors for each HCBS line and importantly, a discussion of the advantages and disadvantages for each market entry option: acquisition, franchise, joint venture.


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