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Table of Contents

I. Process Overview

II. Executive Summary

III. Financial Opportunities & AnalysisStaffing AnalysisBenefit Cost AnalysisRaw Food Cost AnalysisWage AnalysisTotal Cost AnalysisRate StructureCompetitor AnalysisChange in Service Offerings

IV. Sales & MarketingRecommendationsCompetitive Analysis

V. OperationsLife Enrichment/ActivitiesDining Services/DietaryClinical ServicesTeam Member TurnoverCulture

VI. AppendixCompetitive AnalysisSample Activity Calendars

Process Overview

South Metro Housing Options (the “Organization”) recognizes the need to assess scenarios for the future success of Libby Bortz Assisted Living Center (the “Community”). The organization seeks to maintain its long term commitment to its mission of providing quality services to residents and families, treating residents and co-workers in a kind and friendly manner and being a positive influence in the Community, while ensuring the highest level of financial stewardship. The organization engaged Cappella Living Solutions (“Cappella”) to evaluate the current operations and make recommendations for future considerations.

Engagement ProcessThe engagement process consisted of three phases of work. The first phase entailed data collection and a desk review of financial and other operational data, assessment of the Community’s marketing and digital presence, and review of organizational materials. During the second phase, Cappella’s Chief Operating Officer, Regional Director of Sales and Marketing and Regional Director of Clinical Services spent two days on site (May 8 & 9) interviewing department directors, team members and residents. The team also experienced dining services by having lunch with residents, visited several referral sources, attended a staff meeting and a resident program. Finally, the third phase consisted of comparing various financial and operating metrics of the Community to national benchmarks and completing a competitive shop of five competitors and competitive snapshots of an additional five assisted living communities in the area.

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Executive Summary

Financial Opportunities & AnalysisCappella Living Solutions evaluated staffing levels, wages, overall expenses, and revenue opportunities for the Community and developed the following recommendations.

Short term financial recommendations: Right-size dining wages and food cost Build private pay occupancy and reduce Innovage utilization or

renegotiate rates Raise services fees by $200 per month for new residents Add full range of assistance with activities of daily living (ADLs) and

associated fees to first floor (private pay only)

Long term recommendations (upon expiration of Land Use Restriction agreement):

Position community as private pay, affordable assisted living community with full range of assisted living support for activities of daily living (ADLs)

Create technology-supported memory support neighborhood in one neighborhood on the first floor* *Cappella recommends partnering with an organization to provide master planning services for this long term plan

Sales & MarketingThe sales and marketing department has a strong sales culture and is led by a competent and experienced sales and marketing director who is very engaged with the outside community and referral sources. In order to continue to build private pay occupancy, the sales and marketing area would benefit from technology and systems to improve efficiency and effectiveness and re-allocating dollars from advertising to search engine optimization.

OperationsThe Community has a cohesive leadership team which appears to be strongly committed to the organization. Based on observation and discussions with residents, housekeeping, maintenance and laundry are functioning in a high level manner. Common areas are extremely well-maintained and residents comment on how pleased they are with laundry

services. The biggest area of opportunity is dining services. We also recommend some enhancements to life

Executive Summary cont.

enrichment/activities. In addition, team member turnover is extremely high—this should be a focus for the Community.

Clinical OperationsThe Community provides a more limited level of services and care than is offered in other assisted living communities. The Organization may want to consider enhancing these services by offering assistance with grooming, dressing, continence care and mobility escorts. These are standard offerings in assisted living communities. In addition, there are opportunities for creating more person-directed care plans and service offerings.

Organizational CultureThe Community enjoys a rich heritage in providing high quality, affordable housing and services for area older adults. There is great pride on the part of residents and team members about the services that the Community provides. While the level of service quality appears to be good in most areas, the Community could benefit from the infusion of principles of person-directed care and services and hospitality, such as flexible dining times and more opportunities for resident- driven programming. This approach will serve the Community now as well as preparing it for the future when the Land Use Restriction agreement expires.

Financial Opportunities & Analysis

OVERVIEWCappella reviewed financial statements for the periods ending September 30, 2015, September 30, 2016 and February 28, 2017. The Community reported net losses for each of those periods in the amounts of $148, $468, $136, $116 and $26,219 respectively. After accounting for depreciation, principal payments on debt and other cash flow items that do not reflect on the income statement, the Community had negative cash flow for each period reviewed. In addition, Cappella reviewed the budget for the period ending September 30, 2017 that also reflects negative cash flow of $30,650.

In order to further understand the reason for these losses, Cappella analyzed revenues and expenses of Libby Bortz to evaluate opportunities to improve cash flow through either expense reductions or revenue enhancements. Cappella financial analysis of the Community included the following:

- Review of financial statements, current budget, and current financial forecast

- Review of census and payer mix- Review of current rate structure- Review of wage rates- Comparison of Community staffing levels and expenses against

industry benchmarks- Analysis of financial impact from adding a higher acuity assisted living

product

EXPENSE ANALYSISIn order to evaluate expenses, Cappella focused on five areas. First, Cappella reviewed staffing by department and compared those to industry benchmarks to determine if staffing levels were reasonable. Cappella’s Director of Clinical Services also reviewed staffing in the nursing area. Second, Cappella compared benefit cost at the Community to industry benchmarks. Third, Cappella compared raw food costs to industry benchmarks. Fourth, we reviewed current wage rates for various positions at the Community and compared to benchmark data for similar positions in the market. Fifth, we compared total cost per unit to industry benchmarks.

Benchmark data used in our analysis comes from the 2016 State of Seniors Housing (SOSH) survey. This is an annual survey compiled via joint efforts from the American Seniors Housing Association,Financial Opportunities & Analysis cont .

Argentum, LeadingAge, National Center for Assisted Living and National Center for Assisted Living and National Investment Center for Seniors Housing & Care. The survey includes 1,555 senior living properties comprising almost 200,000 units. Data is broken out by property type. Cappella compared the Community to median data for assisted living properties, which represented 469 of the 1,555 properties surveyed.

Staffing AnalysisCappella analyzed the current staffing schedule provided by Libby Bortz and then compared this staffing to benchmark data. We benchmarked staffing in each department and in total. Below are the results of this analysis and our observations by department. Areas highlighted in green are areas where Libby Bortz is favorable against the benchmark. Any areas in red are unfavorable against the benchmark.

Administration

Table 1.0 (Administration staffing analysis)

Libby Bortz SOSH 2016/2017 Benchmark Variance

FTE's 4.54 5.300 0.760

FTE's per resident 0.043 0.050 0.007

Observation / Recommendation: Libby Bortz is lower than the benchmark and appears very reasonably staffed in this area. Cappella is not recommending any changes in staffing.

Marketing

Table 1.1 (Marketing staffing analysis)


FTE's 1.00 2.120 1.120


Financial Opportunities & Analysis cont .

Observation / Recommendation: Libby Bortz is lower than the benchmark, but current marketing staff is adequate considering current demand, pricing and product offering. Cappella is not recommending any changes in staffing.

Nursing

Table 1.2 (Nursing staffing analysis)


FTE's 15.20 25.440 10.240


Observation / Recommendation: The Community is significantly lower than the benchmark. This is due primarily to the lower acuity resident that the Community serves. Cappella’s Director of Clinical Services reviewed staffing at the Community and believes it is appropriate for current residents. Staffing should be consistently evaluated to ensure it is adequate to meet the care needs of residents. Cappella is not recommending any changes in staffing.

Dining Services

Table 1.3 (Dining Services staffing analysis)


FTE's 11.50 9.540 (1.960)

FTE's per resident 0.108 0.090 (0.018)

Observation / Recommendation: The Community is higher than the benchmark. Considering the recommendations Cappella is making to improve the dining services program, we are not suggesting any changes in staffing.

Cappella did note that dining services wages / temporary labor have increased from $307,156 for the year ending September 30, 2015 to $379,577 budgeted for the current fiscal year. That is an increase of over 24% and appears to be the reason that the Community

is higher than the benchmark.


Maintenance

Table 1.4 (Maintenance staffing analysis)


FTE's 2.00 2.120 0.120


Observation/Recommendation: The Community staffing is consistent with the benchmark. We are not recommending any changes in staffing.

Housekeeping/Laundry

Table 1.5 (Housekeeping / Laundry staffing analysis)


FTE's 3.00 3.180 0.180


Observation / Recommendation: The Community staffing is consistent with the benchmark. Cappella is not recommending any changes in staffing.

Activities

Table 1.6 (Activities staffing analysis)


FTE's 1.00 2.120 1.120


Observation / Recommendation: The Community staffing is below the benchmark but Cappella believes it is adequate to provide the level of activities currently offered at the Community. Cappella is not recommending any changes in staffing.


Table 1.7 (Total staffing analysis)


FTE's 38.24 47.700 9.460


Observation: The Community is well below the benchmark. Other than potential opportunity in the dietary area, Cappella believes that overall staffing at the Community is appropriate and necessary based on current programming and needs of residents. Benefit Cost Analysis

Cappella took the actual benefit cost for the years ending September 30, 2015, September 30, 2016 and the proposed benefit cost in the budget for the current fiscal year ending September 30, 2017. Cappella then compared that to benchmark data from the SOSH survey.

Table 1.8 (Benefit cost analysis)Budget Actual Actual

2016/2017 9/30/2016 9/30/2015Total Salaries 1,378,527$ 1,247,404$ 1,160,553$

Total Benefits 133,798$ 105,967$ 179,969$

Benefit % 9.71% 8.50% 15.51%

SOSH Average 9.91% 9.91% 9.91%

Observation / Recommendation: Current year budget is consistent with the benchmark. Benefit cost for the year ending September 30, 2015 were high and it appears the Community was proactive in changing benefits to reduce costs.

Raw Food Cost Analysis

Cappella took the actual raw food cost for the years ending September 30, 2015, September 30, 2016 and the proposed cost in the budget for the current fiscal year ending September 30, 2017. Cappella then compared that to benchmark data from the SOSH survey.


Table 1.9 (Raw Food cost analysis)Budget Actual Actual

2016/2017 9/30/2016 9/30/2015Raw Food Cost 286,653$ 288,535$ 268,689$

Per day raw food cost 7.41$ 7.46$ 6.94$

SOSH benchmark 7.13$ 6.92$ 6.72$

Observation / Recommendation: The Community is slightly above benchmark data for raw food costs. In addition, raw food costs increased by 7.4% from 2015 to 2016. Cappella recommends that Libby Bortz evaluate food costs further to explore possible cost savings.

Wage Analysis

Cappella evaluated average hourly pay rates provided by the Community and compared those to survey data compiled from various sources.

Table 1.10 (Hourly wage analysis)Libby Bortz Comp 1 Comp 2 Comp 2

Dishwashers/servers 10.90$ 9.74$ 11.83$

Housekeepers 12.13$ 10.46$ 12.33$ 11.83$

Resident Assistants 13.13$ 13.02$ $12-$14 13.50$

Cooks 14.64$ 13.33$

Receptionists 11.25$ 12.13$ 14.46$

Observation / Recommendation: The Community hourly rate of pay appears to be in the range for dishwashers, housekeepers and resident assistants and Cappella does not believe any changes need to be considered for those positions. The Community hourly rate of pay for cooks is high compared to average rate of pay based on our survey data. The Community could consider lowering the wage grid for cooks for any future new hired but should be careful considering the current strong employment market and potential impact on recruiting. The Community hourly rate of pay for a receptionist is low, so the Community could consider raising that to around $12 an hour as that it appears to be more consistent with the market.


Lastly, Cappella calculated the total cost per resident for the Community for the year ending September 30, 2015, September 30, 2016 and budgeted for the year ending September 30, 2017 and compared to benchmark data.

Table 1.11 (Total cost analysis)Budget Actual Actual

2016/2017 9/30/2016 9/30/2015Libby Bortz expense per resident 24,244$ 22,655$ 21,558$

SOSH expense per resident (median) 30,541$ 29,651$ 28,787$

SOSH expense per resident (low) 26,647$ 25,871$ 25,118$

Observation / recommendation: The Community is below both the low and median SOSH benchmark data. Cappella believes this is due to both the lower acuity residents being served and also the focus on keeping costs low in order to provide an affordable assisted living product in the market.

Summary

The Community is consistently below benchmark data in all expense areas reviewed except for dining services staffing. We believe this is consistent with both the acuity of residents served and the mission of the Community to provide affordable services to the market. Cappella does not see much opportunity for the Community to reduce expenses. Opportunities to improve overall financial performance will need to focus on revenue enhancements.

REVENUE ANALYSISIn order to evaluate revenues, Cappella focused on three areas. First, Cappella reviewed the current rate structure for both Innovage and private pay residents. Second, Cappella compared the Community current rates to competitors. Third, Cappella reviewed the current level of assisted living being provided and analyzed the financial impact of a higher acuity assisted living product offering.


The Community is currently under a Land Use Restriction Agreement that requires occupancy to remain at 60% of Area Median Income. This agreement is in effect through 2024. Currently, 60% of area median income for a single person in Arapahoe County is $35,280. The current maximum rent that can be charged is $882 per month. The monthly services fee is not capped, however, the Community needs to be sensitive to monthly fees as residents must be below the income threshold of $35,280.

Current census data provided by the Community has current average census this year at 106.4 of which 50.3 are on Innovage. Private pay rent is currently $841 per month with an additional $1,225 for services. In addition, for any private pay resident needing medication assistance, the Community charges an additional $288 per month. Total private pay rate for a resident on medication assistance is $2,354, plus private pay residents also pay for room trays and baths. Innovage payment is $2,234.62 per month. Innovage does not pay anything additional for medication assistance, room trays, baths or any other additional care needed for the resident.

Table 1.12 (Summary of rents/fees)Private Pay Innovage

Monthly Rent 841$ 2,235$

Services 1,225$ -$

Medication Assistance 288$ -$

Bathing, room trays (approximate) 41$ -$

Total 2,395$ 2,235$

Based on an analysis provided, the Community receives approximately $8,000 less per month in revenue due to lower reimbursement from Innovage. This is approximately $160 per month per resident based on average Innovage census this year of 50.3 residents.

Observation / Recommendation:

- The Community should continue their focus on marketing and building census in the private pay market. Cappella has made recommendations in the marketing section of this report that we believe will help build the private pay census. A reduction in Innovage census of 15 would generate approximately $29,000 in additional revenue per year.


- The Community should consider approaching Innovage to see if they would consider tier level payments in addition to the $2,234.62 base rate. Cappella’s sister company, Christian Living Communities, has negotiated additional tier levels with Innovage of $200 and $400 monthly based on the needs of the residents. It is of note that approximately 79% of Innovage residents are receiving medication assistance while only 35% of private pay residents are receiving medication assistance. This would indicate a higher acuity with Innovage residents that could argue for additional tier level reimbursement from Innovage. In addition, the Community has a significant number of Innovage residents that might provide some negotiating leverage.

Competitor Analysis

Cappella reviewed competitors in the market to determine how the Community monthly rent plus services of $2,066 compares to competitors. Cappella understands the restrictions under the land use agreement and the mission to provide affordable services to the market. As noted earlier, the restriction in place applies specifically to the rent. The Community can increase the service component of the monthly fee, but needs to be sensitive to the maximum allowable income of $35,280.

The detailed competitive market analyses by competitor is provided in the appendix to this report. The average monthly low rate for competitors in the market was $2,695 with the average rate being $3,845. In addition, competitors are charging additional leveling fees with the average minimum starting at approximately $400 per month.

Observation / Recommendation: The monthly fee at the Community of $2,066 is $629 lower than the lowest competitor and $1,779 below the average of competitors reviewed. While we understand that the acuity of residents at the Community is lower than most competitors, residents who need assisted living services would likely go to one of these competitors to get the services and care they need and would pay these higher rates.

Cappella recommends that the Community consider raising the services component of the monthly fee. This could be done for all residents with the next increase in the services fee or could be implemented for new residents to mitigate the impact to current residents. We would propose this increase not be assessed to current residents but rather the market rate be changed and only new residents moving forward would pay the higher rate. If the Community raised the


services fee from $1,225 to $1,425, the total monthly fee would be $2,266, or $27,192 per year, which is still $429 below the lowest competitor and 23% below 60% of area median income of $35,280. As turnover of residents occurs, this would generate over $134,000 in additional revenue per year once all residents are paying this new rate.

CHANGE IN SERVICE OFFERINGSLevel of Services

The Community is currently providing services to a lower acuity assisted living resident. In the first quarter of 2017, there were 11 resident move-outs due to memory support or increased care needs and the Community has had to turn away prospective residents who need higher levels of care than is offered at the Community. In order to enable residents to age in place as their care needs increase, most assisted living communities have expanded services and enhanced the clinical abilities of their operations. It is common practice for an assisted living community to offer assistance with dressing, grooming, showers, escorts, transfers, continence care and weight and vital sign monitoring. In order to broaden its market and maximize revenue, the Community should consider adding services to provide the care needed to serve higher acuity residents.

Cappella analyzed the additional revenue and expenses that could result in changing the first floor to assisted living where higher acuity residents could be served. Cappella assumed that of the current 37 apartments on the first floor, two would be converted to additional office space and 35 would be available for residents. All 35 apartments on the first floor would be private pay residents. No capital improvements would be required to make this change.

Revenue analysis of proposed change

We assumed a monthly base fee of $3,000 per month and average leveling fees of $500 per apartment. The $3,000 base fee is still well below the average monthly base fee in the market ($3,845 discussed above). The $500 average leveling fee is in the lower range of monthly fees in the market. Revenue impact is summarized below:


Table 1.13 (Additional revenue from first floor AL conversion)Lost revenue from 37 current apartments (928,916)$

Added revenue from 35 apartments 1,367,100$

Added revenue 438,184$

Expense analysis of proposed change

In order to market the apartments and provide the additional services for these residents, we would propose adding .40 FTE in marketing, 1.0 FTE in activities and 4.2 FTE’s in resident assistants. Expense impact is summarized below:

Table 1.14 (Additional expenses from first floor AL conversion)Hourly pay rate Annual cost

Marketing 20.00$ 20,800$

Activities 14.00$ 36,400$

Resident Assistants 13.13$ 143,380$

Added expenses 200,580$

Overall impact of proposed change

The proposed conversion would generate $206,404 in additional operating margin summarized as follows:

Table 1.15 (Incremental operating margin from first floor AL conversion)Added revenue 438,184$

Added expenses 231,780$

Incremental operating margin 206,404$

Cappella believes that this change would give the Community a stronger position in the market as they could expand an affordable offering to more residents who are not currently being served. Depending on market demand, the Community could expand this product to the second and third floors as well to further improve financial results. For example, a second floor conversion would generate an additional $200,000 in operating margin, assuming a private pay census.

Long term, Cappella believes that converting the Community to a higher acuity assisted living product offering would better serve the market and could also provide a stronger operating margin, depending on the number of

Innovage residents. Cappella believes a phased approach is


best, thus the recommendation to start with the first floor. This will give time for the market to absorb the change and assist with the change in payer mix. In addition, the income restriction on residents under the Land Use Restriction is limiting in regards to how many residents the Community can attract at these higher rates.

If the Community decides to pursue a conversion of all apartments, a master plan should be prepared which would include a market study and a full financial feasibility study which would consider exact payer mix, timing of staffing changes and transition of residents.

Memory Support Services

We would also suggest a re-evaluation of converting one neighborhood of one floor to memory support. We understand that the Community investigated this possibility but decided against that due to construction issues and the monthly fees necessary to make this a more financially viable option. We believe a memory care product offering would be attractive in the market and would further improve operating margin. During the first quarter of 2017, there were 12 move-outs. Eleven of these residents moved to a nursing home or small board and care home due to needing memory support or additional hands-on support with activities of daily living.

Cappella worked with Jami Mohlenkamp from OZ Architecture to evaluate the construction requirements of creating a neighborhood for those living with dementia. While firm answers would require additional discussions with the Fire Department, we believe that it is possible to offer memory support services and provide safety through the use of technology, such as a wander management system, that would not require a different licensure type or expensive construction modifications. Under this scenario, the neighborhood would not be considered a “locked unit”. Instead, the wander management system uses technology to secure the doors when an individual who is at risk for wandering (wearing a special bracelet) approaches the exit. Creating a memory support neighborhood on the south wing of the first floor would require renovating the equivalent of two apartments to create a dining and living space and creating a secured courtyard outside the building.


SUMMARY OF REVENUE AND EXPENSE ANALYSIS

Cappella believes that the Community needs to pursue the revenue enhancements identified. Below is a summary of the potential additional revenue from our recommendations.

Table 1.16 (Summary of potential revenue enhancment)

Improve private pay census by 15 29,000$

Increase services fee by $200 monthly 134,000$

Conversion of 1st floor to higher acuity assisted living 206,404$

Sales & Marketing

The Community is warm and friendly and serves older adults on a moderate fixed income. The Community also boasts multiple gathering spaces for residents to socialize, enjoy a book, watch a movie or enjoy a cup of coffee. While the décor is somewhat dated, it is very clean and in excellent repair. The pride that team members have for the Community is evidenced by the attention to detail of the physical plant and the rapport with residents.

A Director of Sales & Marketing oversees the sales, marketing and outreach efforts for 111 studio apartments. The current director, Jan Stephan, is strong in prospect sales and interactions with referral sources. This was evidenced by the study of the conversion ratios from inquiry to move-in and by the documented referrals from top referral sources such as the Aging Well Center and Innovage. She continually seeks out ways to partner with the greater Littleton community to bring additional amenities and services to residents. For example, she has developed a strong relationship with the Buck Center to provide recreational outlets for residents and the city of Littleton to provide transportation.

As a stand-alone assisted living center with no access to a larger company, the sales & marketing department would benefit from the implementation of cost-conscious systems that will support the efforts of the department director. The following are recommendations to improve current systems and enable the Community to begin to generate more private pay leads. Currently, Innovage is the primary referral source for the Community. By increasing leads from other sources, the usage of Innovage can be decreased while private pay sources are increased.

Sales & Marketing Recommendations:

Customer Relationship Management (CRM) System – the Community manually tracks leads and does not have an electronic data base. Our recommendation is for the implementation of a CRM that can track leads, conversion ratios and other prospect/referral information. Cost for the software begins at about $1,000 one-time and monthly support is in the $100 - $150 range.

Back Up Team – the sales director is currently the only person who is trained in sales. With a schedule of Monday – Thursday, the Community can only accommodate scheduled tours and does not take walk-ins. We recommend training

a back-up team who can answer initial phone calls and handle walk-in tours for prospects.

Sales & Marketing cont. Website – the current website is not mobile friendly and would benefit

from a complete overhaul that includes SEO (search engine optimization) and reputation management (on-line testimonials and positive feedback). Cost to build a new site starts at approximately $1500 one-time and monthly hosting and SEO management starts at about $400 to $500 per month.

Advertising – the Community currently utilizes most of the marketing dollars for print advertising. With a limited budget to work with they are only scheduled for six publications in 2017. Three of these ads are local senior guides and three are sponsorship type ads for community based publications. Recommend diverting the high dollars of print ads to a digital campaign. Some cost effective digital ad venues are Facebook, geo-targeting, and PPC (pay per click). The ad budget can be customized based on the needs of the Community and amount of dollars available.

Collateral – the current collateral package is underwhelming and would benefit from a complete overhaul. There is only one handout that is professionally printed to use with prospects and referral sources. The pocket folder is office supply standard and the inserts are inconsistent. The recommendation would be to engage a creative agency for a redesign of the collateral package. Suggested items to be designed and branded for the Community would be: a pocket folder, inserts (assisted living, price sheet, floor plan, etc.), a small fold over type of brochure that explains the USP (unique selling points) of the Community and a sample menu and event schedule. Pricing varies depending on agency and printing costs. We suggest sending out an RFP (request for proposal) to various local agencies.

Senior Living Resources – as a stand-alone community lacking a deeper bench of resources to pull from, the Community is unable to access many programs and services for sales & marketing. Resources and tools for move-in programs, event planning, sales initiatives and many other tactical programs can be accessed through the online agency, Senior Living Smart. The cost is $149 per year. This site can be accessed at www.seniorlivingsmart.com.

Outreach - the sales & marketing director has cultivated multiple community relationships and referral sources such as the Aging Well Center through the Bemis

http://www.seniorlivingsmart.com/

Library and the Buck Recreation Center. With limited time and resources, referral connections are inconsistent and less effective. Approximately 75% of the initial leads that come into the Community are for Medicaid. With education and sustained outreach to potential referral sources the quality of leads should improve. It is recommended that

Sales & Marketing cont. quarterly events be held at the Community for professional referral sources. It is also recommended that all referral activity be tracked in a CRM system to develop the data needed to track the success of outreach efforts.

Prospect Events –the Community desires to increase the percentage of private pay residents as currently approximately 50% are utilizing Innovage. The implementation of a CRM will assist in better tracking and communication with prospects. In addition, it is recommended that the Community do monthly events that are geared toward prospect engagement. Some topics can include educational speaker series, cooking demonstrations, cultural opportunities and “lunch & learns”. With consistent marketing events on the calendar, private pay leads can be cultivated and the length of the sales cycle can be decreased. Cost for events can be kept at a minimum through the posting of the events on local community calendars, partnering with the Aging Well Center and email blasts to the data base (after a data base is established).

Discovery Room – the current sales office is in a good location next to the concierge and just off the front lobby. The room is small and not set up to meet with prospects. Other areas of the Community are welcoming but not private to meet with potential new residents and their families. It is recommended that the current sales and marketing office be converted to a “discovery room”. This would consist of a comfortable seating area – preferably a loveseat and two chairs and several side tables. The room should have a living room feel where prospects feel comfortable sharing their current situation. The sales “office” can be relocated to another area of the building that is private allowing the sales director to make calls and prepare for follow up with prospects and referral sources. One area identified that would serve well is the current underutilized computer room on the 2nd floor.

Competitive Analysis

Libby Bortz continues to maintain stabilized occupancy. A competitive analysis was completed to give a comprehensive overview of the market. Primary competitors include: Caley Ridge, Clermont Park, Gardens at Columbine, Granville and Someren Glen. Secondary competitors that were identified are: Morningstar Littleton, Manor on Marston Lake, Cherry Hills Assisted Living, Golden Orchard and Lighthouse AL.

Sales & Marketing cont. Within the primary market, Libby Bortz is in a desirable location and ties with Clermont Park, Caley Ridge and Someren Glen with a score of 19 out of 25 for attributes such as drive by traffic, access and surrounding housing. The Community evaluation was on the lower side with a score of 42 out of 90 for first impressions, building ambiance, overall apartment conditions and services such as dining and life enrichment. Clermont Park ranked the highest in the study with an overall score of 59.

In apartment comparison, Libby Bortz only offers studio apartments and was the lowest priced by a considerable amount when comparing price per square foot. Libby Bortz has a low of $8.75 per square foot compared to the costliest in the analysis of Clermont Park at $24.59. It is important to note that Libby Bortz has the smallest size apartments of all evaluated with square footage ranging from 255 – 280.

Within the secondary market – the main competitor in regards to price would be Golden Orchard. However, this is a small home concept and does not have the amenities that are offered by Libby Bortz such as Life Enrichment activities, common spaces and a dining program.

Operations As indicated in the sales and marketing section, the Community offers a warm, friendly and welcoming environment. There is a strong core of team members who have been in the Community for a long time. We were extremely impressed with the maintenance and environmental services departments. It is evident that much attention is paid to common area cleaning, touch-up painting and other details. Residents also emphasized that they are very happy with the laundry service – this is something that we rarely hear when we visit communities! There were a couple of residents who indicated cleaning of their apartment homes was not as thorough as it could be.The leadership team appears to work very well together and to focus on residents and the success of the Community versus their own silos. There appears to be a focus on integrating sales and marketing success within the entire leadership team.

Life Enrichment (Activities)Cappella team members participated in a knitting program in which residents knit hats for newborns. This is a well-attended and highly meaningful program that appears to bring a great deal of purpose and engagement to the residents. We recommend finding more opportunities for purposeful engagement of residents in the outside community. The Sales & Marketing Director’s involvement with outside organizations would likely be a great source of such opportunities and would create further opportunities for public relations. For example, while the Cappella team was on-site, we encouraged resident involvement with outreach visits to the local fire department. While there is resident involvement with activity programming, we recommend ramping up this approach and focusing on further opportunities for residents to be involved with determining the programming that will take place and actually running programs (with staff support only as needed). Examples include resident-led book clubs, garden clubs, news discussion

groups, walking clubs, volunteer groups, etc. The actual groups and clubs are dependent on the interests and passions of residents and team members at each community.A key focus for many assisted living communities is a whole-person approach to well-being. Such approaches are intentional about driving social, intellectual, physical and spiritual engagement. Multiple research studies confirm that engagement in these components help people to live longer, healthier lives. We recommend implementing a whole person wellness approach to thrive in the increasingly competitive private pay assisted living market.

Operations cont. The Community utilizes overhead paging to announce activities. Overhead paging has been eliminated in nearly all assisted living communities due to the institutional feel. We recommend discontinuing this practice and identifying other means of communication. Please note that current residents may reject this change as it is what they are used to, but through education and time, it will eventually be accepted. We recommend involving residents in discussions to identify other means of communication. For example, in some communities, residents assist in reminding others that a program is going to be starting. This provides opportunities for purpose, and builds community, while satisfying the need for communication.Recommendations:

Build more opportunities for resident-driven programming and community involvement

Build more opportunities for purpose-focused programming like the group that knits hats for newborns

Eliminate overhead paging by engaging resident problem-solving Create whole person wellness programming

Dining Services (Dietary)All Cappella team members dined with residents for lunch during the site visit. The majority of residents we spoke with indicated that they are unhappy and frustrated with food choices and quality. Satisfaction surveys provided by the Community also reflect this dissatisfaction. Residents who dined with the Cappella team indicated that breakfast is cooked to order and is very good but lunch and dinner options and quality were not satisfactory.

Our interviews with the dining services director indicate that very little food is cooked from scratch. The kitchen uses pre-cooked meats. The dining director explained that this is because pre-cooked meats are more tender and residents complain about the toughness of meats cooked at the Community. The kitchen uses packaged soups and about 50% frozen or prepared starches and vegetables. Most desserts are made in-house.The service model in the dining room is very institutional, as compared to other assisted living communities. Dessert, when we were present, was served from carts rolled through the dining rooms with boxed ice cream and plates of pie on it. Entrees were also served from a cart. We recommend implementing a hospitality-based approach to service in which servers take orders for each course and use serving trays instead of carts. Expanding dining hours (as discussed

Operations cont. below) would reduce the number of residents being served at one time and would allow for a more service-focused approach to dining. Adding to the institutional feel in the dining room, servers wear hairnets and gloves. In assisted living, long hair must be tied back but neither gloves nor hair nets are required for servers in the dining room as long as they are not touching food. We recommend changing this practice and eliminating hairnets and gloves for servers unless they are touching food.Service was very slow – one team member experienced a 25 minute wait between food order and delivery. In general, a standard for time elapsed between food order and delivery is 7 minutes.The dietary director states that it is extremely difficult to keep team members. She doesn’t believe the wages are out of line with the market but indicates that due to the demographics of the area, it is difficult to find staff to work at the Community. She also indicated that the culture in the dining room is very negative and that residents can be “brutal and vicious” to the staff. Meal times are very limited and regimented – each meal period is listed as ½ hour in length. This requires that all residents come to the meal at the same time. Residents line up along the hallway before the dining room opens. We recommend a different approach which entails expanding dining times to at least 2 hours in length to provide more choice, flexibility and freedom for residents. It was pointed out that the dining room is also used for programming which makes it difficult to consider a more open dining

schedule. Regardless, flexible dining has become a standard offering and is expected in the marketplace. We believe there are creative approaches that would enable the Community to expand dining hours such as shifting the times of programs and evaluating which programs require the use of a large space. The dining room has assigned seating which means the residents sit with the same people every day. We recommend eliminating the institutional approach of assigned seating and providing opportunities for residents to decide where they want to sit each day. This type of shift creates more of a community focus, can help to eliminate cliques and encourage additional friendships to flourish. Such a change takes time and requires intentional discussions with residents about creating a sense of community. Residents must be involved with problem solving and developing new norms such as inviting others to sit with them rather than sitting with the same people each day.

Operations cont. Recommendations:

Evaluate options for outsourcing dining management. It is Cappella’s experience that such services can be implemented for little to no additional cost (due to savings on food purchasing).

Transform from an institutional dietary approach to a hospitality model of dining services.

Provide more scratch-cooked meals. Create extended dining times or all-day dining options. This would

have to be balanced with the times that the room is used for other programs.

Eliminate assigned seating for residents through resident involvement and intentional focus on building community.

Culture building exercises with residents to curtail negative treatment of team members.

Clinical ServicesThe Community underwent a regulatory survey on November 3, 2016 related to a complaint. Following the survey, the complaint was substantiated and one deficiency was cited. There were an additional four deficiencies cited

unrelated to the complaint. The Community implemented a plan of correction to address each deficiency. Upon visiting the Community, four of the deficiencies were found to be corrected and in compliance. There continues to be deficient practice related to Assisted Living dietary regulations – specifically related to hand washing and proper use of gloves for sanitation. To avoid being cited for a repeat deficiency (which can result in intermediate conditions and civil fines from being imposed by CDPHE), immediate correction of the deficient practice is recommended. The assessments and care plans at the Community are completed by hand and consist of checking boxes on forms. There is no personalization on the care plans, which is becoming a standard in the field. CDPHE is currently revising regulations which will require care plans to be more robust and include personalization and preferences. For example, rather than indicating someone needs minimal assistance with showering, the care plan should describe exactly what assistance is needed. The degree of detail on a care plan should enable the team to identify the resident it applies to without looking at the name.

Operations cont. The Community does not currently offer weight and vital sign monitoring which is common practice in assisted living communities.Recommendations:

Coordinate a training for all staff working in the dining room and kitchen and all leadership team members to review dietary requirements

Ensure a leadership team member is present in the dining room during each meal to provide on-the-spot coaching and support when deficient practice is observed

Engage direct care staff to add resident preferences to care plans. Oftentimes, direct care team members learn resident likes and dislikes and are able to verbalize great detail about residents.

Coordinate a monthly wellness clinic to measure weights and vital signs by partnering with a home health agency.

Team Member TurnoverThe Community self-reported the following turnover numbers for 2016:

Administrative 71%Resident assistants 118%Housekeeping 125%Medication coordinator 200%Dietary 111%Marketing 100%

Cappella was able to conduct phone interviews with seven former and newly hired employees of the Community to learn more about why people stay and leave the Community. Some of the issues brought up during these interviews with dining team members were the prevalence of call-ins from other team members, inadequate training and perceived inadequate staffing levels. Another team member indicates that there is frustration with being unable to get into the stock room on weekends, to help people inquiring about moving to the Community in the evenings and on the weekends. We recommend, as indicated in the Sales & Marketing section, implementing a sales & marketing backup plan so inquiries can be responded to at any time. Most of the respondents indicated that they enjoyed working with residents.

Operations cont. Turnover is extremely costly and often leads to interruptions in service levels and lower resident and team member satisfaction. We recommend that the Community put a strong focus on improving team member retention. Some suggestions include:

Develop a mentor program to help new team members adapt and become successful in the Community.

Start a resident committee focused on understanding and improving team member retention.

Conduct learning circles (focused small group discussions where each person has the opportunity to speak uninterrupted) with team members to learn more about possible frustrations and gather ideas for implementing change.

Connect with each new team member at the 30, 60 and 90 day mark (and annually thereafter) after hire to identify possible dissatisfiers.

CultureIn order to compete in even the moderately priced assisted living marketplace, providers must move away from the institutional model of care

and services. When consumers are shopping for assisted living, they are experiencing hospitality-based approaches to services and care, flexibility in dining times and meal options, and control over the flow of their own day. In addition, innovative providers, understanding the value of continuing to challenge ourselves throughout the lifespan, are focusing on creating cultures of continued growth and innovation. It is our assessment that the Community, while providing excellent care and services, could benefit from implementing the philosophies and principles of the culture change movement. Such philosophies are rooted in a focus on pushing decision making closer to the residents (and team members who work with them) to create an empowered culture. The Eden Alternative® and The Pioneer Network™ are two national organizations that provide education and guidance with such a shift. We recommend visiting assisted living communities in the Denver-area, such as Chateau des Mons, that have implemented culture change principles.

Appendix

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