Are you about starting an assisted living facility business? If YES, here are 5 major operating expenses for an assisted living facility. Getting into the health or personal care business is beyond the reach of most because of the cost, regulatory environment, and technical expertise required. But, the one arena that is more accessible to the new comer is Senior Housing. In this sector, regulations are far less complex, not to mention licensing requirements, and lower cost of construction.
Note that Assisted Living facilities make money by charging residents a fee for staying in the facility. This cost is applied on a per – month or per – year basis. Generally, assisted living facilities can charge between $2,000 and $4,000 per resident per month. Howbeit, the exact cost depends on the location and the quality of the facility.
Also note that profit level of assisted living facilities depend on the size of the facility as well as its amenities. If you have a large facility with top – notch amenities and maintain full capacity, profits could easily reach the six figure mark or higher. Also, if you build a true brand and open additional assisted living facilities at new locations, it is not uncommon to make millions of dollars in profit.
However, the facility must first be constructed. Though some facilities can be rented, the majority are either purchased or built by the entrepreneur. Additional costs include employee wages, utilities, internet, nurse call buttons, security cameras, computer hardware, food and drink for patients, bedding, and medical equipment.
You might also decide it is prudent to purchase software designed to minimize the challenges of assisted living facility businesses. The operating expenses of assisted living facilities can vary depending on the type and size of the facility. Nonetheless, here is simple breakdown of the ongoing expenses of an assisted living facility in the United States.
What are the Operating Expenses of an Assisted Living Facility?
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1. Specialist & Staff Salaries
Normally, assisted living facilities hire healthcare practitioners with expertise in treating particular types of illnesses. For instance, staff members may specialize in cardiology – related illnesses or neurological disorders, among other areas of medicine.
Doctors, nurses and other healthcare staff all have varying salary requirements, making salaries and wages a major budgeting concern. A state licensed assisted living facility manager will more or less command a salary of between $35,000 and $75,000 or more. If you do not want to handle advertising efforts, a marketing director will be required.
Also expect to pay such a professional between $40,000 and $70,000 per year. Nursing staff will likely demand a salary in the range of $30,000 to $50,000. Administrative staff will cost between $10 and $15 per hour. Kitchen/food prep staff will cost between $10 and $12 per hour.
2. Equipment & Utilities
In your Assisted Living Facility, some residents with respiratory problems may need breathing machines and equipment to help them circulate air through their lungs. Note that these machines can be quite huge and expensive to acquire and maintain. Those having issues with walking or moving around freely without the help of others also need equipment to aid their limited mobility.
The cost of utilities depends on the size of the facility. In general, utilities cost a couple hundred dollars per month. Medical supplies and bedding must be replaced as time progresses. Plan to spend at least $500 – $1,000 per month for these supplies and adjust your budget accordingly as you get a better gauge of your clientele’s needs and demands.
Just as with licenses and permits, an Assisted Living Facility is expected to maintain insurance in order to operate safely and lawfully. Business Insurance protects the financial wellbeing of the facility in the event of a covered loss. Note there are several types of insurance policies created for different types of businesses with different risks.
Expect to allot about 9 percent of sales to liability insurance, property taxes and other legal bills. (Operators of multiple facilities have an edge here as they can spread their insurance costs over a larger pool of residents.)
4. Medications & Treatments
Have it in mind that medications are among the most costly items to provide patients in an assisted living facility. Some conditions require expensive treatments that must be administered on a regular basis. Other treatments, such as regular therapy and wound care, also require consideration when preparing a budget. Insurance carriers cover some of these expenses, but not everything patients need for specialty care is covered under federal or personal health plans.
5. Meals and Entertainment
Patients in assisted living facilities require nutritious meals and varying forms of entertainment to maintain a positive quality of life. Note that for many specialty care patients, restricted diets and nutritional supplements are imperative to preserve their current state of health. Meals are an expense that must be budgeted for carefully, and headcount is one of the variables used to approximate recurring expenses.
Entertainment in the form of games, movies and special events also is factored into budgets. The cost of food and beverages hinges on quality. Expect to spend several thousand dollars per month on sustenance for your residents, at least 15 percent of your facility income (Excessive turnover drives those percentages higher.)
It can indeed be hard to state the exact operating expense of an Assisted Living Facility as this cost can vary greatly based on the factors mentioned above. However, it is possible to charge residents additional fees for optional niceties like cable TV packages, nuanced dining options, on – site entertainment events, specialized care, and so on.
If your facility reaches full capacity, it can also be possible to receive financial kick – backs for referring prospective residents to other facilities with available space.