How Our Financial Controllers Help Operators Navigate the Challenges of Long-Term Care
In this second part of our Q&A with LTC Ally’s EVP of Finance, Steve Zicherman, and VP of Finance, Sam Pirutinsky, we address how outsourcing financial controllership is an incredibly effective means to address current and future issues within the long-term care industry.
LTC Ally’s Finance department has helped operators navigate significant challenges over the past ten years. Collectively, the people who make up LTC Ally’s Finance department have seen a vast range of scenarios and have the experience required to assist operators of all sizes to work effectively within the complex financial regulations in skilled nursing.
Q. What are the main pain points operators face when handling financials in-house? What kind of improvements does LTC Ally bring them?
There are two primary areas where our expertise and services help operators with their pain points. It’s technology and automation on one side, and staffing and structure on the other side.
For an operator that’s focused on their strengths—which is managing nursing homes as best as possible—or an operator who’s growing, it’s almost impossible to have the in-house expertise required to stay up to date with the latest technology and automation. That’s our focus and is one of the ways we are able to help growing operators scale. When operators partner with us, they benefit from all the technology and automation we are continually developing to make sure reporting and tracking are clear and accurate, and our processes are as efficient and effective as possible. While we focus on having the best technology, they can focus on growing their operations and delivering quality resident care.
When an operator is growing from three to seven, or 15 to 20 facilities, staffing and structuring their operation properly is incredibly challenging. When operators partner with us, we help them get the staff necessary to handle their financial operations—accounts payable, cash management—and increased workloads thanks to the offices we have across the country and our expansive talent pool. Expanding our footprint has been another one of our primary focuses and allows our clients to effortlessly scale up with 30, 50 people from our teams when they take on new facilities.
After working with operators for more than ten years at this point, we have noticed that experience goes a long way. When an operator—whether they’re brand new or not—comes across a scenario they’ve never encountered before, they can depend on us and the full knowledge of our team to navigate it safely and effectively. As a whole, we have an incredibly experienced team and have seen so many different scenarios, including moments of hardship, and helped our clients navigate through them. Most operators, regardless of their size, would be hard-pressed to have this level of experience in their own corporate office.
Q. What are you currently helping partners navigate in light of current industry reforms?
Every year brings its own set of challenges. Let’s rewind to four or five years ago. Many homes were struggling. Their main challenge was cash management, even bankruptcy in some cases. Over time, they stabilized and started doing well, then we got hit with COVID. This became a huge issue everyone had to react to. First, every office had to go remote, then there was a slew of government programs that had to be applied for, supported, and required specific reporting. We did a tremendous amount of research during that time to support our clients. PPP loans came about in a real rush, then there were the HHS stimulus funds that had to be applied for and reported on, then the Employee Retention Credits. All these programs came flying into these homes and anyone that didn’t have a strong back office had a hard time navigating all of it.
We, being focused on the back office, were able to transition to being remote in a way that maintained our stability during an extremely unstable time. We are grateful we had the resources, expertise, and focus to research and execute on all these various programs for our clients. It was essential they had this extra support from the government. For many of the facilities that were struggling during this time, it was because they didn’t have a strong back office to support all the extra work.
Now, after COVID, there’s a new set of challenges for the facilities and anyone who doesn’t have a strong back office. Staffing costs and the cost of running a facility have sky-rocketed, and Medicaid reimbursements continue to be insufficient for most operators. It seems the government has lost its appetite to continue funding and making sure that skilled nursing is stable. Now, operators are facing a cash crunch. They have to watch their expenses very closely and stay on top of every dollar, and that’s exactly what we’re helping them do.
Q. How important is technology to your clients’ success?
Our focus on developing our technology has a tremendous impact on the success of our clients. It’s part of the reason we are so focused on continually advancing our capabilities. There are real benefits for our clients when we develop and implement new solutions. For example, we’ve developed technology that helps us track critical vendors, gather information more efficiently for financial statements, and proprietary task managers so we can see where everyone is with their projects. We’re very focused on making our processes as efficient as possible and ensuring that all the innovations we work on are done in the name of transparency, accuracy, and efficiency.
When we implement these technologies, it helps us standardize processes so every task is being done consistently and accurately. For example, we’ve mastered Intacct. We can create custom reports based on the client’s needs. In the name of advancing our abilities, we have specialists working on our Business Intelligence dashboard, which will deliver even more actionable data to our clients, controllers, and accountants. By collating all the data we have in one place, we can create benchmarks for facilities and compare performance against historical data, specific to an individual region or zip code.
Ultimately, technology is one part of the business we’re never satisfied with. We’re always asking ourselves how we can improve and deliver our clients better results.
Q. In light of inflation, increasing interest rates, and the slowing economy, how are you working with clients to help the industry?
There’s a lot happening right now on a macro level and a micro level.
On a micro level, we are seeing operators focusing on their internal processes around purchasing and controlling agency spend. We’re actively helping our clients maximize their purchasing power by providing very close oversight of their accounts payable.
We’re also helping our clients manage their agency spend and track this at the facility level so they’re not being overcharged. They’re trying to hire nurses and nurse aids and they’re competing with every other industry. The only way for a lot of operators to get new staff is by paying a premium. In reaction to this massive increase in agency use, we’ve signed on subject matter experts to help specifically with agency spend.
When a directive from the corporate level comes down to a facility, the only way to keep a facility accountable is by having transparency into a given process and tracking it properly. That’s exactly what our staffing agency experts are helping us do with operators to make sure they’re not being overcharged. At the end of the day, we can look at the data and see which facilities are outliers and use more agency staffing. Then we can identify why this is happening and make suggestions on how to correct things.
When the needs of our clients change, we evolve as well. This is exactly why we decided to bring in more experts in ancillary spend to help our clients handle all their expenses as effectively as possible.
On a macro level, we’re seeing operators being more vocal with their state and local governments, the federal government, and industry associations. They’re working to make sure the facilities’ primary sources of funding understand their role and the pressure operators are under.
For instance, many companies in the industry, including us, are being more vocal with home-side associations. We are collectively urging them to get in front of the government and help our representatives realize the value skilled nursing facilities provide. We are continuing to drive home the message that operators have to have their needs met in order to continue to take care of their residents. These are truly financial needs and the only way to address them is through additional funding.
This is part II of a two-part Q&A with LTC Ally’s EVP of Finance, Steve Zicherman, and VP of Finance, Sam Pirutinsky. To read part I, click here.