If You’re Considering Creating Households, Let Go of Preconceptions

People often have more doubt than hope when they call Action Pact Development.  They presuppose what kind of project they can afford based on misinformation and myth.  Thus they assume either they can’t afford households or will need to do a lot of fundraising before starting.

False Assumptions Limit Possibilities
I hear recurring themes:

  • “We can’t get these households designed for X-number of residents to work financially,” or
  • “We can’t build new households because project costs amount to $Y,” or
  • “We CAN afford to build households, but staffing costs of $Z can’t be sustained.”

The problem is not that they can’t afford households.  Often it’s because they’ve prematurely determined the value (size, number or ratio) of one or more of the many variables in the Household Model before considering all others.

Perhaps you believe that X-number of residents per household is optimal.  You ask the architect to design households for X. From that point on, all other variables are planned on the basis of X. Number of houses, residents per household and residents per staff member; square footage per house; revenue rates, payer mix and more – any of these variables improperly fixed at the onset can skew your entire project to make it seem unworkable.

Project development isn’t about determining the solution upfront.  Rather, it is about integrating all the developmental partners and variables to interactively create a balanced project.  For example, you may decide the best cultural solution is for each household to consist of no more than 12 residents.  But if you make that decision while ignoring the financial, architectural and operational disciplines and market factors, your project will be unbalanced in these other critical areas.  Thus you conclude the project “won’t work” … not because households are not possible for your organization, but because of the unbalanced nature of your project.

Include All Important Stakeholders and Variables in Planning
So, rather than engaging an architect to design X- resident households only to later learn it will be too costly, we recommend bringing everyone to the table simultaneously.  Variables can then be evaluated from all angles rather than pre-determined from one perspective.

The trick is to establish bandwidths for each variable that help guide you through the development process.  Base these bandwidths on fact and experience, not myth.

From a cultural standpoint, you might conclude 12 residents per house are ideal, but based on the experience of organizations that operate households of various sizes, you might accept a range between 12 and 20.
From an operational/financial standpoint, you might determine that self-led teams of versatile workers make sense from an hours-per-resident-day basis only if the houses have 15 residents or more.
From an architectural standpoint, you might decide that a minimum of four and a maximum of 25 residents is the range in which a residentially-scaled house can be designed.
From a financing standpoint, you might establish that, based on acceptable levels of leverage (i.e. cash to debt), the largest project you could finance is $25 million.
From a market research perspective, you might not want to build more than 80 units.

By engaging the various development disciplines at the outset, no single variable is predetermined within the isolation of departmental decision-making silos.  Together, you can line up the various bandwidths to produce a balanced project.

In our example above, you might conclude that 3-4 houses of 15 – 20 residents, each with a project budget of less than $20 million, is the best combination.  It balances market demand with culture, architecture, operations and finance. Below is an example of a chart based on these variables that visually reinforces where the best overlap of all variables occurs.

green: preferred, yellow: acceptable, red: avoid if possible

An Integrated Process Will Ensure Success
The point isn’t that household of 15-20 residents are best. It’s that you must evaluate all your specific variables in an integrated process to determine what is best for your organization based on its unique circumstances. Action Pact Development accomplishes this through our Integrated Prefeasibility Analysis (IPA) process. By going through the IPA process with the necessary stakeholders at the table, organizations are able to envision the true potential of their projects.

Operationally, the Household Model is about destroying decision-making silos and creating self-led teams from all disciplines to create a home environment that serves everyone. It’s important that we now take that approach into construction design and development to plan a balanced project.

Martin Dickmann is a Principal of Action Pact Development, where he is dedicated to the goal of creating home for elders. Martin is a senior living consultant and an expert in the Household Model financial modeling.  His primary role is to facilitate the planning and development of senior living projects through an interactive process that integrates architecture, construction, finance, operations, and culture. This allows the development team to create a balanced and optimized project scope that transforms the lives of residents and staff while ensuring continuity of mission and financial viability.

 

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