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Paying for senior living: The nontraditional way

October 21, 2010
by Elias Papasavvas
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Smart providers put emphasis on financing options and electronic payments

In a demanding economic environment, many providers want the payment process to their communities as easy to make as possible. When adult children had job security and mom’s home was selling quickly, families didn’t think twice about bringing out the checkbook for the monthly seniors housing rent—something that may be a consternating affair these days.

Enter a senior living line of credit, credit cards, and electronic payments. Each of these options can give community relations directors a number of financial solutions for families seeking out appropriate long-term care.

Payment in a form other than a check is relatively new to the seniors housing industry and it is taking some time for staff to understand how nontraditional options can help families. Training is certainly integral to the effective execution of these conversion tools. Ensuring these options are discussed is also no longer a “nice to do” but rather a “must do” as cash-strapped families need to be made aware of everything at their disposal.

For long-term needs where a family believes it will take many months to sell a house or for benefits to arrive, a senior living line of credit may be part of the financial assistance package. Typically available in amounts of up to $50,000 with same-day decision and funding in 72 hours, families take advantage of the line of credit to fund the ongoing monthly rent until a liquidity event takes place, such as that of the home selling or benefits arriving. Monthly payments tend to be small and suited to fit within a family’s budget.

Families often use a senior living line of credit to fund a loved one’s gap between the cost of monthly rent and what mom or dad can afford to pay out of pocket. It gives families breathing room and time to fix and stage the house in the best possible light to get the best possible price for it in a tough market. Getting sales teams on the frontlines, however, requires support and training to smoothly discuss this option with families. It’s a touchy subject and many opt to let the family figure it out on their own. Confidently holding a family’s hand can help keep them focused on getting through.

For short-term immediate payment needs, many providers are now accepting credit cards. Whether it is for a past-due bill, or the amount due at move-in, giving a family the option to swipe a credit card, which enables the provider to get paid instantly, can be the deciding factor between a moving commitment today or a postponement of the sought commitment. Despite a 3% credit card fee, it’s still much better compared to having a salesperson wait even one additional day for the check—a check that may take another week of work to obtain.

On a $10,000 amount due at move-in, a credit card fee could total $300. That fee may not be worthwhile if the prospect is eager to commit today. But what if the prospect didn’t bring their checkbook and says they’ll come back next week? If they delay by more than 2 days the provider has lost $300 and counting.

Electronic payments are also gaining traction. In the past, a family would cut a check, the business office manager would put it in the drawer and, after a few days, take it to the bank along with all the other collected checks. This is convenient for the business office manager, and quite inconvenient to an executive director’s or CFO’s cash flow. While some larger providers have checks sent to a centralized lockbox, many smaller providers still have checks sent to the specific community—or families call and say they will “bring the check by” when visiting dad. These days, the faster the provider can collect, the better it will be for operations. Remote check deposit terminals enable a community to process a check without leaving the building. Once scanned, the terminal can automatically set up a recurring monthly payment via ACH processing, avoiding the need for future paper checks all together and decreasing the time between the statement printing date and the days until payment was collected (in some cases decreasing the wait by 20 days).

In evaluating the backroom, many providers are moving away from printing, processing, and mailing paper invoices, opting instead for electronic invoicing. If families still desire to pay by check and receive a paper statement, that is OK—but some providers are charging a “convenience fee” of $5-$10 for paper invoices. And with seniors’ penchant for penny-pinching, when they learn of the fee, they opt for an electronic invoice and a direct debit out of their checking account cutting backroom FTEs, postage, processing, and float times significantly.

Providers sell the most perishable of goods: that of time. A suite of payment solutions expedites a family’s commitment, locks in occupancy sooner, and keeps lost revenue days from walking away.

Elias Papasavvas is CEO of Elderlife Financial Services, a company that offers financing for seniors moving into rental and CCRC communities as well as credit card processing and electronic payment solutions for the senior housing industry.

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