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It's Good to be
a CCRC; Not so Good to be a Nursing Home
Fitch Ratings in their "2005 Industry Outlook
for CCRC's and Nursing Homes" state that "the (CCRC) industry
continues to exhibit improvement in 2005 and believes that
strong demand for independent living units and an improving
economy will lead to continued strong cash flows, solid
debt service coverage, and improved liquidity." However,
the outlook for free-standing nonprofit nursing homes is
a different story, Fitch notes, "is negative due to significant
challenges facing the industry, which will continue to pressure
already weak financial performance. The challenges include
inadequate Medicaid reimbursement, rising insurance, labor
and benefits expense, and increased capital needs." Here
are some key statistics released by Fitch for CCRC's:
- Occupancy for ILU's rose to 95.4% in 2003,
up from 94.8% in 2001.
- 2004 CCRC median report showed debt service
coverage for all investment-grade credits rose to 2.0
times (x) in fiscal 2003, from 1.8 x in fiscal 2002.
- Median days cash on hand for all
investment grade credits improved to 374 days in fiscal
2003 from 346 days in fiscal 2002. For a copy of the complete
report, go to www.fitchratings.com
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What Great Managers
Do and Don't Do
Marcus Buckingham has written a new
book entitled "The One thing You Need to Know" based upon
his work with the Gallup Organization and his years of experience
in working with managers. "Great managers discover what
is unique about each person and then capitalize on it".
Buckingham uses the analogy of chess to make his point.
Average managers play checkers where all the pieces move
in the same direction whereby great managers play chess,
where each piece moves in a different way, and you can't
win unless you consider how all the pieces can move in a
coordinated manner. Many of us try to treat each person
in a fair and equitable manner to achieve consistency and
negate any criticism of favoritism. However, in this book,
the author encourages us to consider how people learn, work
and the tools they need to achieve their goals. He indicates
that each of us has different "triggers" of good performance;
strengths that can be turned on by proper coaching. The
most powerful trigger of all in his view is recognition.
As has been pointed out in his other books, "Great managers
don't try to change a person's style". Each of us differs
in how we think process information, relate to others, and
organize ourselves to achieve our goals. If we are to be
good managers, we must find ways to "release not transform"
the strengths and talents of those around us. For a copy
of this article, go to click HERE.
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The Reflective
Curiosity of a Board
In the fundraising world, the acronym B.H.A.G
stands for Big Hairy Audacious Goal and usually means setting
one's sights high. When it comes to the role of trustees
at board meetings, the phrase might be Big Hairy Audacious
Questions, because asking such questions is integral to
creating an open and informative dialogue between the board
members and the executive.
Since success and survival is everyone's goal, asking tough
questions need not be negative or confrontational. It can
be done with the style of "reflective curiosity."
In their new book, "Governance as Leadership," authors Richard
Chait, William Ryan and Barbara Taylor suggest tackling
these big questions: "If leadership matters board members
need to come prepared, rise to the occasion, work diligently
as a group, and expect to be intellectually taxed by complex
and consequential questions." The authors point out that
the work of every board of trustees centers around three
unique but interdependent responsibilities: fiduciary, strategic
and generative.
The fiduciary duty of the board is to make sure that the
assets of the corporation are used effectively and wisely
to achieve the mission. Trustees are acting on behalf of
the best interests of the residents they serve. They want
to prevent theft, minimize waste and certainly avoid any
misuse of precious resources.
When reflective curiosity is employed in the fiduciary role,
inquiry replaces oversight:
- Replace "How much does it cost and where
did you buy it?" with "If we expend this money, how does
this achieve our outcomes?"
- Replace "Did we get a clean audit?" with
"What does this and past audits tell us about our long
term survival?
- Replace "Does the budget balance?" with
"Does the budget reflect our mission and one year priorities?
Next month, we will talk about the questions
needed in the strategic thinking role of a board member.
Take a look at other articles about boards by visiting www.agingri.org.
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Salaries of
Chief Executive Officers of Multi-Facility Organizations
In a study sponsored by AAHSA and the
Chief Executives of Multi-Facility Organizations in 2004
the Median Base Salary was $194,000 annually. 40% of the
CEO's surveyed receive an incentive payment of an average
of 16% of the base salary. Top Operations officers had a
median of $147,000 with a 15% incentive of base salary.
97 organizations participate in the survey with 41% having
a break even or positive operating margin and 59% had a
negative operating margin. The most frequent performance
measures in formal incentive plans are operating margin,
quality and mission. For a copy of the report contact
www.aahsa.org.
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