This isn’t a topic that I enjoy. But it’s a topic that is important for some owners of assisted living homes or facilities, like one of my past clients who I visited with this week.
It’s the topic of closing up and winding down your operations.
Closing an assisted living facility isn’t like closing other businesses. With residents who need housing and care and staff who need jobs, the owner needs to be smart in their planning and compassionate in their work to wind down the operations.
Managing this wind-down is tricky. Here are some things to keep in mind.
Assisted living regulations usually cover the topics of closing facilities and discharging residents. You need to review the regulations and make sure that the schedule you plan meets the regulation’s requirements for notice to residents, notice to state licensing staff, and other things.
In my home state of Wisconsin, one of the types of assisted living facility licenses is the Community Based Residential Facility (CBRF). The requirements for closing a CBRF are listed in DHS 83.11. For one thing, this regulation states that a licensee must notify the Department of Health Services at least 30 days before closing. And there is more in that regulation and other rules found in Wisconsin statutes.
Assisted living regulation varies from state to state. So make sure that you study the regulations about closing your facility before you start down that path.
Revealing The Plan
One of the questions I’ve heard many times is when an owner should reveal their plan to sell or close their facility. There are several ways to look at this.
On one hand, an owner should be cautious about revealing anything until they are certain, or as certain as possible, that the plan to sell or close is a sure thing. News about this type of change will cause understandable stress for residents and staff so don’t bring that type of disruption to your facility and their lives unless it’s necessary. Never reveal the plan until the owner has completed a full plan about how the changes will affect residents and staff.
On another hand, it’s important to comply with regulations about notice periods and to be a responsible owner helping ensure residents and staff have time to make their own changes.
Keep another thing in mind – there will be no secrets once a staff member or a resident knows about the plan. Do your best to announce your plan completely at one time to avoid the rumor mill making things tougher than they need to be.
You will probably need to seek out potential new living options for your residents early in the process. This might include finding similar nearby facilities that have openings and eventually making referrals to other facilities. You might prepare information to distribute to residents and their families about nearby relocation options, and you might introduce them to placement services like A Place For Mom. It’s not just the right thing to do but it’s also something that regulations will probably require – that is, require that you make sure any resident you’re discharging has a place to go.
When you’ve revealed your plan to close your facility, staff will know that they’ll be out of a job soon. They’ll immediately start looking for a new job, and finding one is very easy in this economy. To ensure you have staffing for your residents until the last discharge, you may need to offer some incentives.
Incentives might be needed for all staff or a selected handful of key staff persons that are more likely to stay on board through the end. The incentive might be a cash bonus paid after the last resident is discharged. It can also be other incentives such as a higher pay rate that is effective immediately, a severance package that provides for continued paychecks for some time after you close, or other ways that staff can be incentivized to stick with you. Obviously, this all depends on your ability to pay incentives so this is another balancing act for you during the wind-down process.
During the final month or so of operations, it may be time to begin providing notice as needed for vendor contracts to reduce costs to a minimum as soon as possible after the last resident is discharged. Purchasing patterns will be adjusted to use up inventory and not have deliveries arriving days before you close. Other advisors, such as payroll services, CPAs, lawyers, and bankers may need to be brought into the process (if they’re not already in the loop) to find any other things to wrap up, including final payroll and income tax filings.
This list is far from comprehensive. There are always surprises when closing a facility, and each facility is unique with its staff and residents. It may be impossible to game plan all of this in advance.
But if you’ve made the decision to close down your assisted living facility, plan ahead to make the winding down the operations as easy as possible for everyone involved.