Fairview Retirement - Another Great Idea - Drilling Down On The Financial Benchmarking Results

Brett Arthur
CEO - Fairview Retirement

Fairview Retirement Village situated in Moree has been using QPS Financial Benchmarking since 2008 and has always found it to be a useful financial tool to compare our performance against other facilities. This year there appeared a number of account totals in our Quarterly Reports that showed a large discrepancy in the facility averages for both High and Low Care. After checking to ensure our calculations were correct we discussed with QPS how we could further explore in detail where our results varied as we recognised by doing so we could identify specific areas that may require further review.

In our discussion with QPS we came up with the concept of using the same principals used for other QPS Benchmarking charting tools and the new 'Financial Charting Tool for Aged Care' was developed and trialled to break down the costs in an attempt to ascertain the individual areas of concern. This tool enables the facility to then look at each expense or income in further detail and on a more specific line item. The use of the graphs provided within the tool will immediately highlight variations of expense or income within each account group. These tools and especially the graphs when delivered at board level provide an easy explanation on the facilities performance in regard to annual income and expenditure.

The assessment of each expense or income involved firstly ensuring that details provided in our data was similar to that of the other facilities. By using the graphs we were very quickly able to identify specific line items where our results were clearly above the benchmark and establish the reasons for this variation. An example of this would be high costs of Utilities and then being able to drill down to identify the cost of electricity compared to other facilities. Energy prices have been rising with projections that they will continue to rise in the future. This has a direct impact on operational costs of facilities, and reviewing the systems in place to becoming more energy efficient can result in reducing operating and maintenance costs as well as reducing energy consumption and carbon emissions. While many individuals have embarked on energy saving initiatives in their own house including replacing inefficient light fittings, installing solar panels and building insulations, undertaking this project in a residential aged care facility will require a strategic approach beginning with a systems review of all aspects of building including heating and cooling systems, hot water, lighting and housekeeping areas.

Another example of reasons for higher costs in specific areas could be the sharing of roles and functions by specific staff members. Fairview Retirement Village is concerned about providing night time security for the safety of their residents and staff, particularly after a number of incidences occurred within the facility. A night time cleaner who acts as a security guard for a large portion of his shift is employed and this cost is shared between High and Low care but is placed under cleaning expenses. Identifying the reason for higher or lower costs in any area is essential in understanding and managing the performance of your organisation.

Other influences that would require consideration when reviewing your financial benchmarking results are the age of the facility, location (especially in regards the proximity to large cities) the layout of the building, efficiencies due to size, purchasing availability and practices, staff mix, previous workers compensation history etc.

The use of this benchmarking tool has provided Fairview with additional information highlighting the need to address expenditure on catering, cleaning, laundry and even depreciation. There are items which need further investigation including the cost of provisions, staff rosters and in the case of depreciation a review of the accounting practice in consultation with the board and auditors. Although some of our over expenditure may be unavoidable it is important that we regularly review our income and expense items to ensure we manage our facility correctly, extracting as much income as is possible and reducing expenditure to provide an efficient service to our residents.