MANAGING LABOR, FOOD, AND ENERGY COSTS IN SENIOR LIVING COMMUNITIES
“Five years ago, people assumed energy efficiency meant you had to have a glaring blue light in the hallway. Three years ago, LED solved that,” said Kevin Siebrecht, president of Greenleaf Energy Solutions.
Experts say it makes sense to move an
entire community to LED lighting rather than changing out bulbs one at a time. By taking a property-wide inventory and doing a wholesale changeover, it’s possible to get the bulbs at a lower price and also take ad- vantage of incentives and rebates from state and federal sources. “It’s relatively low risk, which means that
there is financing readily available through third parties, so that the end user often will not be out of pocket a nickel. Or you can lease it,” said Mike Payne, executive vice president and corporate counsel at energy consultancy APPI. “There are lots of ways to structure the cost and it’s worth exploring.” In deregulated states, it makes sense to
comparison-shop among vendors. “Every Argentum member who can, should do this. If they have one or more locations, either they should internally explore whether they can save money in the competitive market space, or else engage a consultant,” he said. In states where power is regulated, it can
pay to review the distribution tariff or trans- mission tariff. These tariffs are not negotiable but you’re supposed to pay according to a fixed set of rules. Most communities are prop- erly classified, but if yours isn’t, you could reap big benefits through a reclassification. Payne sees lighting as an obvious first step,
but he stresses that there are other important measures that operators need to look into in the push to drive down energy costs. There are some incremental wins to be
had beyond lighting. Heating, ventilation, and air conditioning (HVAC), for instance, is where a big percentage of energy dollars are spent. But this gets tricky. An HVAC upgrade can be very expensive and can dis- rupt resident life during the transition, and the returns on such projects aren’t always very high.
42 SENIOR LIVING EXECUTIVE / ISSUE 5 2017
Still, it makes sense to look at heating and cooling as a possible place to cut costs. Brightview, for instance, is transitioning
from Packaged Terminal Air Conditioner (PTAC) technology to more modern Variable Refrigerant Flow (VRF) in its new buildings. The systems are expensive—$6,000 to $9,000 more per unit compared to PTAC—but re- quire less hardware, are more aesthetically pleasing, and cost far less to operate. Less expensive, and intriguing to some,
are intelligent control systems, the rising variety of sensor systems that help to auto- matically regulate the interior environment. “There is a higher level of sensor technol-
ogy, and there is better metering technolo- gy to track the performance of the unit,” Payne said. Then, immediate real-time data is sent back wirelessly to a cloud-based tracking portal. “The monitoring helps with your maintenance costs, knowing how long a piece of equipment has to wear and when it should be serviced. That can make a big difference,” according to Payne. While maintenance teams have always kept a watchful eye on equipment, monitor-
ing technologies are closing the time lag be- tween a problem and the solution. “It used to take days for someone to notice an issue,” Payne said. “Now I am getting a read all the time, and I am getting benchmarks, so as soon as I am outside of those benchmark parameters, I hear about it. That allows me to be much more proactive.” While sensor systems have improved in
recent years, Spannhake is still treading with caution. “Some are easier to use than others. The platform may be more straight- forward for the maintenance director to manage. Some are far more convoluted and require more training,” he said. “Some also lack the ability for us to control at the actu- al local level. Say the residents are playing Mahjong in a different room tonight. At the room level, at 8 p.m., is the system smart enough to let me take control back?” Still, he’s looking to automation to yield
big returns over time. “In the past, you might have had lights full on, 24/7. Now you can leave on those lights, but you can dim them. Or a light that someone used to forget in the library and it stayed on all night, now it goes off automatically,” he said. “That has to be an improvement.” Across energy, food, and labor, it’s clear
that controlling operational expenses is no small task, nor it is easily achieved. But it’s also clear that with the right technologies, with thoughtful management and diligent oversight, it is possible to make incremen- tal improvements that ultimately bolster the bottom line.
MORE RESEARCH AVAILABLE IN ARGENTUM QUARTERLY ISSUE 3 2017
Argentum Quarterly Issue 3 2017, “Key Economic Indicators: 2018 Trends and Forecasts for Labor, Food, Utilities,” analyzes the trends and forecasts of key U.S. economic indicators with a focus on senior living’s biggest cost drivers—labor, food, and utilities.
The analysis highlights national, regional, and state data related to assisted living and continuing care retirement communities based primarily on sources from U.S. federal government agencies including the Bureau of Labor Statistics, Department of Agriculture, Department of Energy, Federal Reserve, and Census Bureau.
Argentum members can download the full report at
argentum.org/store.
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