Our client is a non-profit, multi-site continuing care retirement community (CCRC) organization based in the mid-Atlantic region.
The organization had various contract offerings for each of its campuses, including different refund structures, entrance fee contracts, and service inclusions. Additionally, the competitive market was very different depending on the campus location, ranging from high-end CCRCs to rental competitors. The challenges made consistency between campuses difficult, and leadership recognized the need to address market-specific observations and make appropriate changes as part of future strategy.
Baker Tilly conducted market assessments and in-depth pricing analyses for all campuses, including site visits of competitors in each market. Baker Tilly’s pricing analysis process goes beyond a range of fees by unit and, instead, takes a deep dive into rate structure, breaking down entrance fees and monthly fees on a per square foot basis, adjusting for inclusions (e.g., meals, housekeeping, etc.), to compare rates on an “apples to apples” basis.
When reviewing the pricing on this detailed basis, we were able to identify specific units that had pricing out of line with the market. Additionally, we found that the client had amortization schedules for the declining balance entrance fee plans that were much longer than the market competitors, prolonging the amount of time the fees would be realized by the organization.
Baker Tilly continued to assist the organization with conducting contract reviews of all campus contracts to identify points of inconsistencies between campuses and among similarly structured CCRCs. Additionally, as a new independent living expansion project on one of the campuses entered the final planning stages, Baker Tilly updated the pricing analysis for that campus to prepare for pricing the new units.
Guided by the pricing analysis results, the client restructured certain fees for units that were underpriced compared to the market, shortened the amortization schedules for the non-refundable entrance fee plans, and restructured contracts to be more consistent with the market and between the campuses.
“The pricing analyses provided by Baker Tilly have been a valuable tool to inform our business decisions.” - Vice President of Sales and Marketing
