Executive summary
- Budgeting in the senior and assisted living sector is crucial for understanding a facility's financial health and determining how to allocate resources for both resident and facility success.
- Your assisted living budget should include your projected revenue, operating expenses, long-term capital expenditures, and a contingency fund.
- Budgeting will allow you to set long-term financial goals while best serving your resident needs and business growth.
- Get the Qwick Senior + Assisted Living Facility Budget template to organize your revenue and expenses for easier financial management.
Importance of budgeting in assisted living
A strategic, detailed budget will help you determine how to meet resident needs now and into the future while maintaining long-term financial stability for your facility. An effective, comprehensive budget considers current revenue streams, operating expenses, and plans for future investments so that your facility can best serve residents.
Creating a budget that outlines the full scope of your income and expenditures will allow you to create financial goals, set spending priorities, and assess the financial health of your facility. By using this budget, you can then make ongoing adjustments to ensure your spending is used for the most necessary expenses.
Get our Senior + Assisted Living Facility Budget Template below and read more about how to use it so you can stay ahead of your finances and maximize the success of your facility.
DOWNLOAD OUR SENIOR LIVING BUDGET TEMPLATE
Understanding the components of the budget template
A comprehensive budget should account for your current revenue and expenses as well as your future plans. Our budget template includes the following components to give you a holistic view of your finances.
Revenue sources
Your revenue sources should account for any area where you are bringing in funding for your facility. This section should factor in resident fees, government funding and grants, and private pay, like donations and grants. Revenue sources will vary depending on your facility and the income streams you utilize.
The most common sources of revenue for senior living facilities include:
- Resident fees – Resident fees account for the largest chunk of revenue a facility receives. The average cost of assisted living for an individual resident in the United States is about $54,000 annually.
- Government funding – This revenue includes funding from government grants, including those from state governments and federal agencies like the US Department of Housing and Development (HUD).
- Private pay – Private pay for assisted living includes personal savings, pension payments, retirement accounts, and all other ways residents pay for services without the support of a third party.
- Insurance – Revenue from insurance can include payments from private insurance companies, Medicaid, and Medicare depending on resident plans.
- Service offerings – Tracking your income from specific service offerings will give you a more detailed view of your funding sources. This income can come from residents who need specially required healthcare services, extra support for daily living, specific dietary needs, or other costs residents pay not related to their resident fees.
Operating expenses
After compiling your revenue sources, you should list all the expenses associated with keeping your facility up and running daily. Be sure to include all the operating expenses required for sustaining your systems, from daily supplies to occasional maintenance costs.
Important operating expenses to consider in your budget include:
- Utilities – Utility costs include electricity, water, and other expenses required for the functioning of the facility.
- Staff payroll – Payroll expenses are some of the highest costs for facilities, as they should factor in wages, salaries, and benefits for all staff members, including caregivers, nurses, foodservice workers, administrators, and cleaning staff. Expenses should account for both full-time and part-time staff.
- Dining services – Resident foodservice is an important part of facility operations and a significant part of the monthly budget. These expenses include those necessary for stocking food inventory and serving meals.
- Maintenance and repairs – These costs detail any expenses related to the upkeep of your facility, like equipment repairs or scheduled maintenance of healthcare or foodservice machines.
- Healthcare services – These services include anything required for providing healthcare to residents, including medical supplies, medication, and other special care services.
- Administrative costs – These costs relate to the functioning of your business and can include marketing costs, outreach efforts, and materials for interested residents.
Capital expenditures
In addition to operating expenses, you may need to make an occasional bigger purchase to expand your facility’s capabilities to serve clients. Capital expenditures involve current investments for long-term gain, typically to improve the resident experience.
Examples of capital expenditures may include:
- Equipment purchases
- Facility upgrades
- Technology investments
- New software systems
- Energy-efficiency improvements
Long-term investments in infrastructure improvements, technological advancements, and other expenditures require higher costs up-front, but they can offer tangible benefits that make them worth the additional expenses going forward. Having the right equipment and making strategic upgrades can empower you to increase your resident occupancy limits, improve your services, and bring in more revenue.
Step-by-step guide to using the budget template
Our budget template provides you with a clear view of your revenue and expenditures. Using this template with the following steps in mind will empower you to make the most of it and boost your facility’s financial health.
Set clear financial goals
Setting goals will allow you to determine your budgeting priorities and decide where to distribute funds based on areas of need. Financial goals might include increasing spending toward marketing or saving for future equipment upgrades or facility renovations.
As you set your financial goals, ask the following questions:
- What are the long-term goals for your facility? Resident growth? Expanded service offerings? Increased staffing levels?
- What areas of spending are the highest priority?
- What ideas do you have for future projects that you will need funding for?
- Which areas can you allocate funding away from to cover more immediate needs?
Once you set your financial goals, be sure to monitor your progress toward them by reviewing your budget and your success in following it on a monthly and annual basis.
Gathering necessary data
To make the most of your budget template, you’ll need all the financial information you have available to maintain accurate reporting. Consider all the past, present, and future financial information you have at your disposal. Utilize historical financial data, upcoming revenue projections, and expense estimates to provide the most complete picture.
To gather this data, start by looking at the following sources:
- Past budgets created
- Current income from resident fees
- Invoices for expenses on food and medical supplies
- Staff payroll
- Monthly utility bills
- Schedule for upcoming maintenance needs
- Historical maintenance costs
Inputting revenue projections
Using your historical data and any information you have regarding the upcoming year, you can create revenue projections to visualize what funds you expect to bring in and use to support your operations.
Project your revenue streams by considering the following sources.
- Historical data – If your revenue has been relatively consistent year-over-year, you can use data from previous years to project your revenue for the upcoming years.
- Occupancy rates – Calculate your resident revenue source by multiplying your current occupancy rates by the income you gain from each resident through resident fees.
- Potential changes in funding sources – If you expect any changes in your income, like from government funding, private grants, or changes in resident occupancy in the upcoming year, you should include this in your projected revenue.
Using this projected revenue, begin to allocate the funds you expect to receive toward the expenses you’ll need to cover.
Allocating funds for operating expenses
Understanding your projected revenue will allow you to allocate expenses based on where and when these funds are needed most. To allocate funds properly, consider your spending priorities and monitor your operating expenses consistently.
Take a look at how much you are spending on daily operating costs and use that information to adapt your budget accordingly. Keep a detailed accounting of your staff payroll, utility usage, and other operating expenses to understand how much of your budget you should allocate going forward.
Planning for capital expenditures
Capital expenditures contribute to your facility's long-term well-being. Examples of capital expenditures may include purchasing new management software, buying new equipment, or renovating a part of your facility. Use the budget template to set money aside for these purchases.
Plan for these expenses by estimating the costs needed for each project and setting spending priorities. Then, reserve some consistent revenue for your capital expenditures, just as you would budget for contributing to savings in your personal expenses.
When considering how to use these savings, prioritize the expenses that will make the most sense for your facility's long-term health. For example, if your facility is spending significant amounts of money on medical equipment maintenance and could benefit from newer equipment, consider investing in these upgrades before investing in something like new HR software if the current systems get the job done.
Reviewing and adjusting the budget as needed
Your budget must remain a living document—it will change as your revenue sources or operating expenses adjust. As your facility needs change, you should adapt your budget to accommodate so you can maintain an accurate picture of your revenue and expenditures.
Any new adjustments should be considered part of the process and included in your budget. Making these changes will ensure that the document remains useful and doesn’t become outdated. Actively updating the document will also motivate your facility to engage with it, make dynamic financial decisions, and ensure that your budget remains more than just a procedural task.
Best practices for budgeting in senior living facilities
To be successful in your budgeting efforts, it’s important that you remain mindful of the benefits and objectives of creating a budget. Anyone can create a budget for the sake of checking off an office to-do list—the key is using your budget consistently as a living document to inform your spending efforts and long-term goals.
Keep some of the following practices in mind so you can maintain success while using your budget.
- Forecasting future expenses and revenue – It’s important to stay on your toes so you can adapt your budget as far in advance of uncertainties as possible, so maintain a forward-thinking mindset as you monitor your upcoming facility needs.
- Contingency planning for unexpected costs – In addition to your day-to-day expected expenses, you should also set aside money for contingency costs, like unexpected maintenance, equipment replacements, or a significant revenue loss.
- Prioritizing spending to align with organizational goals – Use your budget to make progress toward long-term spending goals. This may mean leaving room in your budget to save for a large expense for facility upgrades or redirecting more funds to marketing efforts or client retention.
- Involving key stakeholders in the budgeting process – Building your budget should be a collaborative effort so you can gain the most from the process and ensure everyone has input for sustained success.
- Regular monitoring and reporting on budget performance – Once you set your budget, you should assess regularly whether you are meeting your budget goals by tracking your performance, identifying any variances, and making informed decisions about how to coordinate your real-world spending with your goals.
Empowering senior living facilities with effective budgeting strategies
Having a detailed budget is crucial for understanding your expenses and sustaining the long-term health of your assisted living facility. To get the most use out of it, your budget should be comprehensive and account for several factors, including your day-to-day operating expenses, yearly revenue, long-term investments, and any contingencies. Be sure to use this budget to set long-term goals, assess your progress, and make adjustments as necessary.
Our assisted living facility budget template provides an easy-to-use format for tracking revenue and expenses to keep your operations running strong while meeting your organizational goals. Access our budget template here to get started.
To make budgeting even easier, you can utilize Qwick to maintain control over your staffing expenses for roles like banquet cooks, dishwashers, restaurant servers, event set-up, and even general cleaning. Qwick is the leading staffing platform dedicated to the hospitality industry. You can use Qwick to fill shifts as needed, helping you conserve some of your payroll expenses and budget only for the staff you need.
Create a free account and start posting shifts today.
