Penetrating Your Home and Community-Based Service Market

Members | May 15, 2013

Expanding into home and community-based services (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. 

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.