profitability
FLORIDA CONTINUING CARE RETIREMENT COMMUNITY SUMMARY OF FINANCIAL BENCHMARKS 2006 - 2009
Florida Continuing Care Retirement Community Summary of Financial Benchmarks 2006 - 2009
TABLE OF CONTENTS INTRODUCTORY SECTION Table of Contents ............................................................................................................................................... i Introduction ...................................................................................................................................................... iii Executive Summary ......................................................................................................................................... iv
FINANCIAL SECTION Chapter 1. CHARACTERISTICS OF FLORIDA COMMUNITIES Community Type and Unit Mix .................................................................................................1 Geographic Distribution of Units...............................................................................................3 Property Size ..............................................................................................................................4 Chapter 2. MEDICARE AND MEDICAID UTILIZATION Medicare Utilization ..................................................................................................................5 Medicaid Utilization ..................................................................................................................6 Chapter 3. MARGIN (PROFITABILITY) RATIOS Operating Ratio ..........................................................................................................................7 Operating Margin Ratio .............................................................................................................8 Chapter 4. LIQUIDITY RATIOS Days in Accounts Receivable. ...................................................................................................9 Days’ Cash on Hand ................................................................................................................10 Chapter 5. CAPITAL STRUCTURE RATIOS Debt Service Coverage Ratio (Revenue Basis) .......................................................................11 Debt Service Coverage Ratio ...................................................................................................12 Cash and Investments to Long-term Debt Ratio ......................................................................13 Average Age of Provider Ratio................................................................................................14 Capital Investment Ratio..........................................................................................................15 Long-term Debt to Total Assets Ratio .....................................................................................16
i
TABLE OF CONTENTS
FINANCIAL SECTION (Continued) Chapter 6. OPERATING RESULTS Occupancy................................................................................................................................17 Entrance Fees ...........................................................................................................................22 Fee Increases ............................................................................................................................26 Annual Financial Results per Occupied Unit...........................................................................27 Salary and Benefits as a Percent of Total Expenses ................................................................29 Management Fees as a Percent of Total Revenue ...................................................................31 Management Fees as a Percent of Total Revenue by Region ..................................................32 Property Insurance per Unit .....................................................................................................33 Property Insurance per Unit by Region ...................................................................................34 Property Taxes per Unit ...........................................................................................................35
ii
INTRODUCTION Moore Stephens Lovelace, P.A. (“MSL”) and the Florida Association of Homes and Services for the Aging (“FAHSA”) are pleased to present this Summary of Financial Benchmarks for 2009, based upon analyses of the Annual Reports filed with the Florida Office of Insurance Regulation (“FOIR”). The data contained in each report was submitted by continuing care retirement communities (“CCRCs”) in the state of Florida. This report also includes comparable data for the reporting periods 2006 through 2008. The findings reported from our analysis are presented in various measurements including counts, sums, means, medians, and percentiles. These terms are defined below: COUNT:
Number of responses
SUM:
Aggregate value of numerical responses
MEAN:
Arithmetic average of numerical responses
MEDIAN:
The mid-point in a sorted set of values (in ascending order) or value below which half of the responses fall
PERCENTILE:
Calculated by dividing the sample into equal parts; the median value is also the 50th percentile; 75th percentile defines those values that are above the boundary of the upper 25% of responses
We analyzed data by regions of Florida. We used the provider’s location as reported to the FOIR to define the region. Generally, for the purposes of this report, we considered Orlando to be the middle of the state. Providers located southeast of Orlando were classified as southeast, providers located southwest of Orlando were classified as southwest, and providers north of Orlando were classified as northeast or northwest, roughly using Interstate 75 as the dividing line. Providers located in Orlando were classified as northeast for the purposes of this report. Quartile Rankings For each financial ratio, the highest and lowest ratios are presented to provide an overall sense of the range for each ratio. Also, quartile divisions have been calculated. Each provider’s ratio was ranked in ascending order; then the list was divided into four equal groups. The best ratio in the lowest quartile defines the 25th percentile, the best ratio in the middle quartile defines the 50th percentile, and the best ratio in the highest quartile represents the 75th percentile. Financial ratios are valuable tools of analysis. They can be used to identify a provider’s strengths and weaknesses, identify trends, or provide comparisons. Ratios should be used in conjunction with other analytical tools; however, ratios for individual providers may vary based on differences in financial reporting treatments or other anomalies.
iii
EXECUTIVE SUMMARY To:
Florida CCRC Providers
This report has been developed to respond to the need expressed by many Florida continuing care retirement community (“CCRC”) providers for industry benchmarks based exclusively on data from Florida providers. To that purpose, we have collected data from the Annual Reports filed with the Florida Office of Insurance Regulation (“FOIR”) for the years 2006 through 2009. While the Annual Reports were accompanied by audited financial statements, we used the financial report groupings used in the preparation of the Annual Reports in order to provide the most consistent comparisons possible. Many of the ratios included in this report will be familiar to the reader. They are the same presented in national publications such as the Financial Ratios & Trend Analysis of CARF-CCAC accredited organizations. In addition, we have included some additional benchmarks that we think would be of interest to Florida CCRC providers. We are always looking for ways to improve on our presentation and this year we have included a break-down of our results between for profit and not for profit (“NFP”) providers as recommended by one of our report recipients last year. If you have any ideas that you feel would make this report useful for you and your organization’s leadership group, we would appreciate very much hearing your suggestions. This is our second year in compiling this information and we are beginning to accumulate enough data to identify trends within the Florida CCRC provider group. In general, we continued to see the impact of the economic downturn in the providers’ financial results. However, it is important to note that the ratios that depict operational management showed improvement. Ratios like Operating Ratio (Table 3.0), Operating Margin Ratio (Table 3.1), and Days in Accounts Receivable (Table 4.0) improved or, at least in part, partially rebounded from a poor 2008. Most impressively, Debt Service Coverage Ratios (Tables 5.0 and 5.1) increased in spite of a decrease in independent living occupancy levels (Table 6.0) which is usually an indication of a reduced amount of entrance fee proceeds. Days’ Cash on Hand (Table 4.1) and Capital Investment Ratio (Table 5.4) showed decreases for NFP providers further indicating a decrease in entrance fee proceeds. It is our sincere hope that you find this report useful and a tool you can use to compare your community with your colleagues and to chart your progress over the years. These results should be compared with your community’s individual results and shared and discussed with your organization boards and finance committees. If we can help with the comparison or presentation to your governing bodies, we would be happy to do so. We plan to continue to issue this report annually and will always be interested in your critique and ideas in how we can improve the report in the future. Thank you.
iv
CHAPTER 1. CHARACTERISTICS OF FLORIDA COMMUNITIES Community Type and Unit Mix TABLE 1.0
Total Units by Level of Care - 2009
17% 6%
10% 67%
IL
Type of Unit
AL
Rental
SNF
2008/2009 Change
%
18,667
502
2.8%
1,766
1,649
-117
-6.6%
2,372
2,539
2,705
166
6.5%
4,484
4,462
4,752
4,832
80
1.7%
27,214
26,787
27,222
27,853
631
2.3%
2006
2007
2008
2009
17,861
17,650
18,165
Rental Units
2,408
2,303
Assisted Living (AL) Units
2,461
Skilled Nursing (SNF) Units
CCRC Contract Units
Total Units
1
Table 1.01
List of CCRCs Included in the Analysis - 2009 Facility Name
Abbey Delray
Profit/Non-Profit Non-Profit
Proximity SE Lakehouse West
Facility Name
Profit/Non-Profit Profit
Proximity SW
Abbey Delray South
Non-Profit
SE
Lakeview Terrace Retirement Services, LLP
Non-Profit
NE
Azalea Trace, Inc.
Non-Profit
NW
Masonic Home of Florida
Non-Profit
SW
Bay Village of Sarasota, Inc.
Non-Profit
SW
Mease Manor, Inc.
Non-Profit
SW
BLC - Cypress Village, LLC
Profit
NE
Moorings Park
Non-Profit
SW
Buena Vida Estates, Inc.
Non-Profit
SE
Oak Hammock at the University of Florida
Non-Profit
NE
Canterbury Tower, Inc.
Non-Profit
SW
Orlando Lutheran Towers
Non-Profit
NE
Carpenter's Home Estates, Inc.
Non-Profit
SW
Park of the Palms
Non-Profit
NE
Classic Bentley Village, Inc.
Profit
SW
Pelican Bay Cooperative Housing Corporation
Non-Profit
SW
Classic Residence by Hyatt at Lakeside Village
Profit
SE
Penney Retirement Community, Inc.
Non-Profit
NE
Classic Residence by Hyatt in Aventura
Profit
SE
Plymouth Harbor
Non-Profit
SW SW
Covenant Village of Florida
Non-Profit
SE
Regency Oaks
Profit
Cypress Cove at Healthpark Florida, Inc.
Non-Profit
SW
Sandhill Cove
Profit
SE
Devonshire at PGA National
Profit
SE
Shell Point Retirement Community
Non-Profit
SW
East Ridge Retirement Village
Non-Profit
SE
South Port Square
Profit
SW
Edgewater Pointe Estates
Non-Profit
SE
St. Andrews Estates North & South
Non-Profit
SE
Fleet Landing
Non-Profit
NE
St. Mark Village, Inc.
Non-Profit
SW
Florida Lutheran Retirement Center
Non-Profit
NE
The Alliance Community for Retirement Living
Non-Profit
NE
Florida Presbyterian Homes, Inc.
Non-Profit
SW
The Mayflower Retirement Community
Non-Profit
NE
Freedom Pointe at The Villages
Profit
NE
The Waterford
Non-Profit
SE
Freedom Square
Profit
SW
University Village
Profit
SW
Freedom Village of Bradenton, LLC
Profit
SW
Vicar's Landing
Non-Profit
NE
Freedom Village of Sun City Center
Profit
SW
Village on the Green
Non-Profit
NE
Glenmoor
Non-Profit
NE
Village on the Isle
Non-Profit
SW
Glenridge on Palmer Ranch, Inc.
Non-Profit
sw
Westminster Communities of Bradenton
Non-Profit
SW
Gulf Care, Inc.
Non-Profit
SW
Westminster Oaks
Non-Profit
NW
Harbour's Edge
Non-Profit
SE
Westminster Palms
Non-Profit
SW
Indian River Estates East & West
Non-Profit
SE
Westminster Shores
Non-Profit
SW
Profit
SW
Westminster Suncoast
Non-Profit
SW
John Knox Village of Central Florida, Inc.
Non-Profit
NE
Westminster Towers
Non-Profit
NE
John Knox Village of Florida, Inc.
Non-Profit
SE
Westminster Woods on Julington Creek
Non-Profit
NE
John Knox Village of Tampa Bay Lake Port Square
Non-Profit Profit
SW NW
Winter Park Towers
Non-Profit
NE
Integrated Living Communities of Sarasota, LLC
Number of Providers
% of Total
For Profit Providers
16
25%
Not for Profit Providers
49
75%
65
100%
Total
2
GEOGRAPHIC DISTRIBUTION OF UNITS Reports were submitted by CCRCS from all areas of the state of Florida, with the majority of both properties and number of units being located in the Southwestern quadrant of the state. TABLE 1.1
Regional Distribution of CCRCs - 2009
28% 45% 5%
23%
Southwest Northeast Southeast
29 18 15
Northwest
3
Total Northeast
TABLE 1.2
Northwest
Southeast
65
Southwest
Regional Distribution of Units - 2009
23%
47%
5%
Southwest Northeast Southeast Northwest
25%
Total Northeast
Northwest
Southeast
13,130 6,496 6,834 1,393 27,853
Southwest
3
PROPERTY SIZE TABLE 1.3
Number of Independent Living (IL) Units per Community - 2009
The following table depicts the number of IL continuing care units for those providers reporting IL continuing care units. This table does not include rental units.
22%
37%
8%
34%
160 Units or Less
TABLE 1.4
161-200
201-300
160 Units or Less 161 - 200 Units
14 5
201 - 300 Units 301+ Units
22 24
Total
301+
65
Planned Expansion of Communities - 2009
The following table represents the number of providers indicating that they had either undergone an expansion or renovation of some type during the current period or were in the planning phase for future expansion and/or construction.
45%
44%
38%
40% 31%
31%
35%
25%
30% 25%
20%
20%
19%
20% 15% 10% 5% 0%
Expansion during Year 2006
Construction Plans 2007
2008
2009
4
CHAPTER 2. MEDICARE AND MEDICAID UTILIZATION MEDICARE UTILIZATION Medicare receipts increased between 2008 and 2009 in all regions.
Medicare Receipts
TABLE 2.0
2008
2009
2008/2009 Change
$129 million
$142 million
10%
Florida CCRC Participation in the Medicare Program - 2009
The following table shows the percent of Florida CCRC providers that participate in the Medicare program. 22%
Percentage of Providers that Accept Medicare Payments 78%
Medicare
TABLE 2.1
2006
2007
2008
2009
Change
Medicare
72 %
73%
80%
78%
-2%
No Medicare
28%
27%
20%
22%
2%
Non-Medicare
Average Annual Medicare Revenues per SNF Bed - 2009
$90,000 $80,000
$83,647
$70,000 $60,000
$41,666
$50,000
$32,861
$40,000
$22,010
$25,499
$30,000 $20,000
$5,449
$10,000 $0 Lowest
25th
50th
75th
Highest
Average
5
MEDICAID UTILIZATION Medicaid receipts increased between 2008 and 2009 in all regions.
Medicaid Receipts
TABLE 2.2
2008
2009
2008/2009 Change
$59.5 million
$60 million
0.76%
Florida CCRC Participation in the Medicaid Program - 2009
The following table shows the percentage of Florida CCRC providers that participate in the Medicaid program.
49%
51%
Medicaid
TABLE 2.3
Percentage of Providers that Accept Medicaid Payments 2006
2007
2008
2009
Change
Medicaid
46%
49%
52%
51%
-1%
No Medicaid
54%
51%
48%
49%
1%
Non-Medicaid
Average Medicaid Revenues per SNF Bed - 2009
$70,000 $65,128 $60,000 $50,000 $40,000 $22,855 $30,000
$17,863
$18,450
$13,330 $20,000 $2,289 $10,000 $0 Lowest
25th
50th
75th
Highest
Average
6
CHAPTER 3. MARGIN (PROFITABILITY) RATIOS Margin (Profitability) Ratios measure a provider’s revenues over expenses and its ability to provide for resident care, as well as additional capital and program needs, without relying on external donations or extraordinary events. TABLE 3.0
Operating Ratio - 2009
The Operating Ratio measures whether current year cash operating expenses can be covered by current year cash operating revenues. An Operating Ratio of less than 100% is desired; however, many CCRCs depend on cash from entrance fees collected to offset operating expenses and this can push the ratio above 100%. Also, newer CCRCs may have higher ratios while they rely on entrance fees to subsidize early losses while in the fillup phase. Factors to consider when reviewing the Operating Ratio include contract type, price structure, and refund provisions.
200%
195% 180% 160% 140% 120%
109%
100%
101%
99%
93% 80%
66%
60% 40% 20% 0% Worst
25th
50th
75th
Best
Average
2006
2007
2008
2009
2008/2009 Change
Median - All
100%
99%
103%
101%
2%
Median - For Profit
108%
105%
98%
107%
-9%
97%
99%
104%
100%
4%
Operating Ratio
Median - Not For Profit
7
TABLE 3.1
Operating Margin Ratio - 2009
This ratio focuses on operational performance. This ratio is calculated based on Resident Revenue - Resident Expense divided by Resident Revenue. This ratio looks at the core business of the CCRC, which includes healthcare fees and monthly fees from residents. Investment performance, depreciation and amortization, and net proceeds from entrance fees are not included. The purpose of this ratio is to provide a benchmark for the margin generated by cash operating revenues after payment of cash operating expenses. A higher margin indicates a better-performing entity. Providers with the most extensive contract types are generally also the ones with the lowest Operating Margin Ratio. These providers may be relying on reserves that have been funded by entrance fees to cover operating shortfalls.
60%
53% 40%
10%
20%
26%
19%
16%
0% -20% -40%
-80%
-60% -80% -100% Worst
25th Percentile
Operating Margin Ratio
Median
75th Percentile
Best
Average
2006
2007
2008
2009
Change
Median - All Providers
20%
19%
13%
19%
6%
Median - For Profit Providers
12%
14%
15%
16%
1%
Median - Not For Profit Providers
21%
21%
12%
20%
8%
8
CHAPTER 4. LIQUIDITY RATIOS Liquidity Ratios measure a Provider’s ability to pay off its short-term financial obligations, including goods and services, payroll, and debt service. TABLE 4.0
Days in Accounts Receivable - 2009
Days in Accounts Receivable measures the average number of days of accounts receivable that remain outstanding. The ratio compares the total amount uncollected, net of allowance, to average daily operating revenues received from residents. A key component of understanding accounts receivable management is to understand how the different payor types operate. In general, amounts billed to third-party payors, such as insurance companies and Medicare, will take longer to collect than amounts billed to individual residents. Because of this, the payor mix greatly affects the outcome of the ratio. A ratio of 30 or lower is generally positive; however, providers with little or no Medicare and/or Medicaid could be dramatically less.
100
95
90 80 70 60 50
33
40
21
30
25
14
20
1
10 0 Worst
25th
Days in Accounts Receivable
50th
75th
Best
Average
2006
2007
2008
2009
Change
Median
23
25
24
21
-3
Median - For Profit Providers
20
17
21
21
-
Median - Not For Profit Providers
22
26
25
23
-2
9
TABLE 4.1
Days’ Cash on Hand - 2009
Days’ Cash on Hand measures the number of days’ operating expenses a provider could cover with cash and equivalents and unrestricted investment assets (exclusive of the State of Florida mandated Minimum Liquid Reserve). This benchmark measures a provider’s ability to weather difficult operational and/or economic times. Investors will often set a minimum Days’ Cash on Hand amount as a lending requirement. While this requirement is case-specific, a 120 Days’ Cash on Hand requirement is not unusual.
1,800
1,672 1,600 1,400 1,200 1,000 800 600 400
147
69
301
13
198
200 Worst
25th
Days Cash on Hand Median Median - For Profit Providers Median - Not For Profit Providers
50th
75th
Best
Average
2006
2007
2008
2009
Change
159
140
146
147
1
57
44
59
85
26
307
283
264
223
-41
10
CHAPTER 5. CAPITAL STRUCTURE RATIOS Capital Structure Ratios generally indicate the strength (or weakness) of a provider’s balance sheet and compares the amount of debt a provider has undertaken compared to its assets and equity. Usually, a provider more heavily financed by debt poses greater risk. TABLE 5.0
Debt Service Coverage Ratio (Revenue Basis) - 2009
The Debt Service Coverage Ratio (Revenue Basis) measures a provider’s ability to meet its debt obligations through revenues alone. By excluding cash from entrance fees from the equation, this ratio shows the CCRC’s ability to cover debt service costs exclusively from operating revenues and non-operating sources. A ratio of 1.00 indicates a provider is able to meet its debt service obligations through operating revenues alone. A ratio of less than 1.00 could indicate that a provider relies on entrance fees to meet ongoing annual operating expenses. In recent years, this ratio has become a more important ratio to investment bankers and other analysts. Some experts believe that funding operations through entrance fee receipts may leave a provider unable to deal with slow resident turnover.
Debt Service Coverage Ratio (Revenue Basis) Median Median - For Profit Providers Median - Not For Profit Providers
2006
2007
2008
2009
Change
0.79
0.45
0.25
0.74
0.46
(0.09)
0.17
0.44
0.10
(0.34)
0.82
0.79
0.26
0.80
0.54
11
TABLE 5.1
Debt Service Coverage Ratio - 2009
Debt Service Coverage Ratio is a key ratio for lenders. This ratio reflects a provider’s ability to fund annual debt service with receipts from net cash revenues and entrance fees. A debt service coverage ratio of at least 1.30 is a typical requirement for lenders.
Debt Service Coverage Ratio
2006
2007
2008
2009
Change
Median
2.84
2.67
2.13
2.06
(0.07)
Median - For Profit Providers
6.45
1.42
2.25
0.23
(2.02)
Median - Not For Profit Providers
2.91
2.78
2.13
2.38
0.25
12
TABLE 5.2
Cash and Investments to Long-term Debt Ratio - 2009
The Cash and Investments to Long-term Debt Ratio is a measure of a provider’s ability to withstand annual fluctuations in cash. Analysts use this ratio to help determine a provider’s debt capacity. A ratio above 30% is generally desired.
300%
295%
250% 200% 150% 81%
100%
54% 50%
28% 9%
1%
0% Worst
25th
50th
Unrestricted Cash and Investments to Debt Ratio Median Median - For Profit Providers Median - Not For Profit Providers
75th
2006
Best
2007
Average
2008
2009
Change
41%
35%
34%
28%
-6%
4%
3%
4%
4%
-%
45%
43%
49%
43%
-6%
13
TABLE 5.3
Average Age of Provider Ratio - 2009
This ratio computes accumulated depreciation over annual depreciation expense to estimate how many years of depreciation have been realized for the provider. A steadily increasing value in this calculation is an indication that provider funds are not being used to renovate and upgrade the provider’s physical plant and assets. Updating of physical plant is important for the continued marketability of the CCRC.
Average Age of Provider
2006
2007
2008
2009
Change
Median
9.90
9.90
9.89
9.91
0.02
Median - For Profit Providers
5.78
3.56
4.25
4.80
0.41
11.11
10.91
11.33
10.95
-0.38
Median - Not For Profit Providers
14
TABLE 5.4
Capital Investment Ratio - 2009
The Capital Investment Ratio shows the amount of cash used to purchase fixed assets in relation to annual depreciation expense. A ratio of 1.00 would imply that the provider is replacing its physical plant and assets as they are depreciated. The median for our population was .85. A provider may have a large ratio in the year of a large capital project, such as an expansion of the community.
12
11.65
10 8 6 4 2
0.35
0.003
1.37
1.18
0.85
0 Worst
25th
Capital Investment Ratio
50th
75th
Best
Average
2006
2007
2008
2009
Change
Median
1.05
1.12
0.97
0.85
(0.12)
Median - For Profit Providers
0.58
0.35
0.38
0.32
(0.06)
Median - Not For Profit Providers
0.98
1.56
1.34
0.93
(0.41)
15
TABLE 5.5
Long-term Debt to Total Assets Ratio - 2009
The Long-term Debt to Total Assets Ratio indicates an organization’s amount of long-term debt relative to its total assets. A higher percentage indicates a weaker capital structure than a provider with a lower percentage. Typically, start-up organizations or providers that have recently undergone an expansion or significant capital outlay would be expected to have a higher percentage than mature organizations.
140.00%
138%
120.00% 100.00%
59%
80.00% 60.00%
36%
31%
40.00%
6% 0%
20.00% 0.00% Worst
25th
Long-Term Debt to Total Assets
50th
75th
Best
Average
2006
2007
2008
2009
Change
Median
35%
39%
37%
31%
6%
Median - For Profit Providers
40%
39%
38%
29%
11%
Median - Not For Profit Providers
33%
36%
35%
31%
4%
16
CHAPTER 6. OPERATING RESULTS OCCUPANCY Median occupancy rates for independent living units at Florida CCRCs were approximately 87%. Skilled nursing units reported the highest median occupancy rate of 89% and assisted living units reported median occupancy of 84%. TABLE 6.0
Independent Living Occupancy - 2009
97%
91% 85%
100%
83%
79%
90%
80% 70% 60% 38%
50% 40% 30%
20% 10% 0% Worst
25th
Independent Living Occupancy
50th
75th
Best
Average
2006
2007
2008
2009
Change
Median
94%
92%
89%
85%
-4%
Median - For Profit Providers
94%
89%
85%
82%
-3%
Median - Not For Profit Providers
94%
93%
90%
85%
-5%
17
TABLE 6.1
Independent Living Occupancy by Region - 2009
89% 87% 90% 88%
83%
86%
81%
84% 82% 80% 78%
76% Northeast
TABLE 6.2
Northwest
Southeast
Southwest
Assisted Living Occupancy - 2009 100%
95% 90% 100%
83%
78%
90% 80%
70% 60% 50%
40%
20%
30% 20%
10% 0% Worst
25th
Assisted Living Occupancy Median Median - For Profit Providers Median - Not For Profit Providers
50th
75th
Best
Average
2006
2007
2008
2009
Change
87%
88%
89%
90%
1%
100%
98%
88%
92%
4%
86%
87%
89%
90%
1%
18
TABLE 6.3
Assisted Living Occupancy by Region - 2009
92%
95%
86%
90%
81% 79%
85%
80% 75% 70% Northeast
TABLE 6.4
Northwest
Southeast
Southwest
Skilled Nursing Occupancy - 2009
100%
94%
89%
100%
86%
79%
90% 80%
60%
70%
60% 50% 40%
30% 20% 10%
0% Worst
25th
Skilled Nursing Occupancy
50th
75th
Best
Average
2006
2007
2008
2009
Change
Median
89%
89%
88%
89%
1%
Median - For Profit Providers
80%
86%
84%
81%
-3%
Median - Not For Profit Providers
90%
89%
90%
90%
-
19
TABLE 6.5
Skilled Nursing Occupancy by Region - 2009
94%
88%
95%
83%
90%
81% 85% 80% 75% 70% Northeast
Northwest
Southeast
Southwest
20
TABLE 6.6
Average Occupancy Comparisons by Region Independent Living Occupancy Rates
Region
2008/2009
2006
2007
2008
2009
NE
93%
92%
87%
87%
-
NW
94%
94%
93%
89%
-4%
SE
93%
92%
88%
83%
-5%
SW
91%
88%
84%
81%
-3%
Change
Assisted Living Occupancy Rates Region
2008/2009
2006
2007
2008
2009
NE
82%
86%
84%
81%
-3%
NW
81%
80%
81%
92%
11%
SE
75%
85%
79%
86%
7%
SW
80%
82%
79%
79%
-
Change
Skilled Nursing Occupancy Rates Region
2008/2009
2006
2007
2008
2009
NE
88%
90%
88%
88%
-
NW
87%
89%
92%
94%
2%
SE
77%
83%
81%
81%
-
SW
83%
80%
81%
83%
2%
Change
21
ENTRANCE FEES Providers are asked to specify the range of entrance fees. The following table depicts the range of providers’ entrance fees as reported by the applicants. Providers are asked to report the lowest and highest entrance fees offered in the Annual Report submitted to the State. The following table represents the ranges of highest and lowest entrance fees reported. TABLE 6.7
High Entrance Fees Reported - 2009
$1,890,000 $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $556,320
$800,000 $231,625
$600,000
$435,643
$369,650
$75,000
$400,000 $200,000 $0
Worst
High Entrance Fees
25th
50th
2006
75th
2007
Best
Average
2008
2009
Change
Median
$346,200
$342,500
$359,880
$369,650
2.7%
Median - For Profit Providers
$512,200
$507,609
$560,189
$535,400
-4.4%
Median - Not For Profit Providers
$234,650
$270,500
$284,850
$257,250
-9.7%
22
TABLE 6.7a Low Entrance Fees Reported - 2009
$282,900 $300,000 $250,000 $200,000 $125,063 $150,000
$96,182
$79,445
$54,725
$100,000 $24,198 $50,000 $0
Worst
Low Entrance Fees
25th
50th
75th
Best
Average
2006
2007
2008
2009
Change
Median
$74,900
$79,900
$82,900
$79,445
-4.2%
Median - For Profit Providers
$97,450
$104,750
$92,213
$97,425
-4.4%
Median - Not For Profit Providers
$60,600
$68,531
$67,390
$67,240
-0.2%
23
The following two tables analyze the average high and low price points by region, as provided by the applicants. TABLE 6.8
Median Entrance Fees (High) By Region – 2009
$379,900
$400,000
$369,400
$359,880
$356,200
$350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000
$0 Northeast
TABLE 6.9
Northwest
Southeast
Southwest
Median Entrance Fees (Low) By Region - 2009
$92,900 $100,000 $75,327
$80,000
$70,445 $63,675
$60,000 $40,000 $20,000 $0 Northeast
Northwest
Southeast
Southwest
24
Average Entrance Fee (High) 2006
2007
2008
2009
2008/2009 Change $
2008/2009 Change %
Average
$395,576
$404,567
$454,003
$435,643
-$18,360
-4.04%
Median
$342,500
$341,900
$359,880
$369,650
$9,770
2.71%
Average Entrance Fee (Low) 2008/2009 Change $
2008/2009 Change %
2006
2007
2008
2009
Average
$93,442
$99,107
$95,338
$96,182
$844
0.8%
Median
$74,900
$79,900
$81,900
$79,445
-$2,455
-3.0%
25
FEE INCREASES
Fee increase information was derived from the FOIR report section discussing planned fee increases for those communities reporting a fee increase in the Annual Report. TABLE 6.10 Fee Increases by Community - 2009
7.00 7.00 4.93
6.00
3.95
5.00
3.56 2.69
4.00 3.00 2.00
0.00
1.00 0.00 Highest
25th Percentile
Fee Increase
Median
75th Percentile
Lowest
Average
2006
2007
2008
2009
Change
Median
2.85%
4.00%
4.00%
3.95%
-0.05%
Median - For Profit Providers
5.00%
4.58%
4.80%
5.00%
0.20%
Median - Not For Profit Providers
4.00%
4.00%
3.90%
2.50%
-1.40%
26
ANNUAL FINANCIAL RESULTS PER OCCUPIED UNIT Revenue per Occupied Unit is calculated as Total Revenues divided by the number of occupied units at the community. Total Revenues represent Total Revenue (as reported by the applicant) less Earned Entrance Fees. Occupied Units represent all independent living, assisted living, rental, and skilled nursing units reported as sold or rented in the annual report. Median Revenue per Occupied Unit was approximately $45,200 in 2009. This represents an approximate 13% increase over revenue per occupied unit in 2008 of approximately $39,900. TABLE 6.11 Total Revenue per Occupied Unit - 2009
$144,488 $160,000 $140,000 $120,000 $100,000 $80,000
$45,211
$49,351
$35,998
$60,000 $40,000
$56,239
$18,898
$20,000 $0 Lowest
25th Percentile
Median
75th Percentile
Highest
Average
27
TABLE 6.12 Total Healthcare Revenue per Occupied SNF Unit - 2009
Revenue per Unit
2008/2009 % Change
2006
2007
2008
2009
Average Revenue per Occupied Unit
$38,818
$40,981
$39,919
$45,211
18.07%
Median Revenue per Occupied Unit - Profit
$39,968
$39,645
$49,565
$47,688
-3.80%
Median Revenue per Occupied Unit - Not for Profit
$38,912
$41,519
$39,830
$44,639
12.07%
Median Healthcare Revenue per Occupied SNF Bed
$71,795
$75,431
$86,013
$92,900
8.00%
Median Healthcare Revenue per Occupied SNF Bed Profit
$87,827
$93,487
$118,146
$125,501
6.23%
Median Healthcare Revenue per Occupied SNF Bed Not for Profit
$71,795
$74,723
$81,648
$83,675
2.48%
28
SALARY AND BENEFITS AS A PERCENT OF TOTAL EXPENSES As a provider’s management looks to reduce cost and overhead, salaries and benefits are always scrutinized. The average provider incurs 51% of its total costs of employees as salaries and wages. TABLE 6.13 Salary and Benefits as a Percent of Total Expenses - 2009
80% 70%
73%
57%
52%
50%
60%
43%
50% 40%
21%
30% 20% 10% 0% Highest
25th
50th
75th
Lowest
Average
2006
2007
2008
2009
2008/2009 % Change
Median
50%
49%
50%
52%
2%
Median - Profit
38%
37%
40%
41%
1%
Median - Not for Profit
53%
54%
54%
55%
1%
Salary and Benefits over Total Expenses
29
TABLE 6.14 Provider Insurance Cost as a Percent of Provider Market Value (per $1,000 of value) 2009 This ratio shows the ratio of a provider’s 2009 property insurance cost over the most recent market value of the provider.
24.14 25.00
20.00
15.00 8.71
6.69
6.29
10.00 3.78 5.00
0.11
Worst
25th
Provider Insurance Cost Over Provider Market Value
50th
75th
Best
Average
2006
2007
2008
2009
2008/2009 % Change
Median
5.5
6.4
7.0
6.29
-0.71
Median - Profit
3.7
4.8
2.9
3.5
0.60
Median - Not for Profit
5.3
6.4
7.6
6.9
-0.70
30
MANAGEMENT FEES AS A PERCENT OF TOTAL REVENUE The following table represents management fees as a percent of total revenue during 2009 for those providers reporting management fees paid. During 2009, 43 providers reported paying management fees. TABLE 6.15 Management Fees as a Percent of Total Revenue - 2009
11.22% 12.00% 10.00% 8.00%
5.90%
4.61%
4.31% 6.00% 2.85% 4.00% 0.15% 2.00%
0.00% Lowest
25th
50th
75th
Highest
Average
Management Fees as a % of Total Revenues
2006
2007
2008
2009
2008/2009 % Change
Median
4.67%
4.54%
4.86%
4.31%
-0.55%
Median - Profit
5.31%
5.54%
5.04%
5.17%
0.13%
Median - Not for Profit
3.58%
3.51%
3.52%
3.17%
-0.35%
31
TABLE 6.16 Management Fees as a Percent of Total Revenue by Region - 2009 The following table represents management fees as a percent of total revenue during 2009 by region for those providers reporting management fees paid.
4.94%
4.94%
4.60% 5.00%
3.72%
4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Northeast
Northwest
Southeast
Southwest
32
PROPERTY INSURANCE PER UNIT The following table represents property insurance paid per unit at the community (including all IL, AL, rental, and SNF units). TABLE 6.17 Property Insurance per Unit - 2009
$4,000
$3,891
$3,500 $3,000 $2,500 $2,000
$1,185 $959
$1,500
$739 $460
$1,000
$45
$500 $0 Worst
25th
50th
75th
Best
Average
2006
2007
2008
2009
2008/2009 Change
Median
$687
$1,047
$967
$739
-$228
Median - Profit
$748
$1,490
$992
$704
-$288
Median - Not for Profit
$655
$979
$955
$871
-$84
Property Insurance per Unit
33
PROPERTY INSURANCE PER UNIT BY REGION The following table represents the average property insurance paid per unit at the community (including all IL, AL, rental, and SNF units) by region of Florida. TABLE 6.18 Property Insurance per Unit by Region - 2009
$1,178
$1,178
$1,200 $907 $1,000
$827
$800 $600 $400 $200 $0 Northeast
Northwest
Southeast
Southwest
34
PROPERTY TAXES PER UNIT The following table represents average property taxes paid per unit. TABLE 6.19 Property Taxes per Unit - 2009
$6,000
$5,416 $5,000 $4,000 $3,000
$1,354 $2,000
$1,027
$855
$357
$16
$1,000
$0 Highest
Property Taxes per Unit Median Median - Profit Median - Not for Profit
25th
50th
75th
Lowest
Average
2008/2009 Change
2006
2007
2008
2009
$821
$772
$829
$855
$26
$1,394
$1,535
$1,424
$1,620
$196
$436
$498
$449
$512
$63
35
Florida Continuing Care Retirement Community Summary of Financial Benchmarks 2006 - 2009
TABLE OF CONTENTS INTRODUCTORY SECTION Table of Contents ............................................................................................................................................... i Introduction ...................................................................................................................................................... iii Executive Summary ......................................................................................................................................... iv
FINANCIAL SECTION Chapter 1. CHARACTERISTICS OF FLORIDA COMMUNITIES Community Type and Unit Mix .................................................................................................1 Geographic Distribution of Units...............................................................................................3 Property Size ..............................................................................................................................4 Chapter 2. MEDICARE AND MEDICAID UTILIZATION Medicare Utilization ..................................................................................................................5 Medicaid Utilization ..................................................................................................................6 Chapter 3. MARGIN (PROFITABILITY) RATIOS Operating Ratio ..........................................................................................................................7 Operating Margin Ratio .............................................................................................................8 Chapter 4. LIQUIDITY RATIOS Days in Accounts Receivable. ...................................................................................................9 Days’ Cash on Hand ................................................................................................................10 Chapter 5. CAPITAL STRUCTURE RATIOS Debt Service Coverage Ratio (Revenue Basis) .......................................................................11 Debt Service Coverage Ratio ...................................................................................................12 Cash and Investments to Long-term Debt Ratio ......................................................................13 Average Age of Provider Ratio................................................................................................14 Capital Investment Ratio..........................................................................................................15 Long-term Debt to Total Assets Ratio .....................................................................................16
i
TABLE OF CONTENTS
FINANCIAL SECTION (Continued) Chapter 6. OPERATING RESULTS Occupancy................................................................................................................................17 Entrance Fees ...........................................................................................................................22 Fee Increases ............................................................................................................................26 Annual Financial Results per Occupied Unit...........................................................................27 Salary and Benefits as a Percent of Total Expenses ................................................................29 Management Fees as a Percent of Total Revenue ...................................................................31 Management Fees as a Percent of Total Revenue by Region ..................................................32 Property Insurance per Unit .....................................................................................................33 Property Insurance per Unit by Region ...................................................................................34 Property Taxes per Unit ...........................................................................................................35
ii
INTRODUCTION Moore Stephens Lovelace, P.A. (“MSL”) and the Florida Association of Homes and Services for the Aging (“FAHSA”) are pleased to present this Summary of Financial Benchmarks for 2009, based upon analyses of the Annual Reports filed with the Florida Office of Insurance Regulation (“FOIR”). The data contained in each report was submitted by continuing care retirement communities (“CCRCs”) in the state of Florida. This report also includes comparable data for the reporting periods 2006 through 2008. The findings reported from our analysis are presented in various measurements including counts, sums, means, medians, and percentiles. These terms are defined below: COUNT:
Number of responses
SUM:
Aggregate value of numerical responses
MEAN:
Arithmetic average of numerical responses
MEDIAN:
The mid-point in a sorted set of values (in ascending order) or value below which half of the responses fall
PERCENTILE:
Calculated by dividing the sample into equal parts; the median value is also the 50th percentile; 75th percentile defines those values that are above the boundary of the upper 25% of responses
We analyzed data by regions of Florida. We used the provider’s location as reported to the FOIR to define the region. Generally, for the purposes of this report, we considered Orlando to be the middle of the state. Providers located southeast of Orlando were classified as southeast, providers located southwest of Orlando were classified as southwest, and providers north of Orlando were classified as northeast or northwest, roughly using Interstate 75 as the dividing line. Providers located in Orlando were classified as northeast for the purposes of this report. Quartile Rankings For each financial ratio, the highest and lowest ratios are presented to provide an overall sense of the range for each ratio. Also, quartile divisions have been calculated. Each provider’s ratio was ranked in ascending order; then the list was divided into four equal groups. The best ratio in the lowest quartile defines the 25th percentile, the best ratio in the middle quartile defines the 50th percentile, and the best ratio in the highest quartile represents the 75th percentile. Financial ratios are valuable tools of analysis. They can be used to identify a provider’s strengths and weaknesses, identify trends, or provide comparisons. Ratios should be used in conjunction with other analytical tools; however, ratios for individual providers may vary based on differences in financial reporting treatments or other anomalies.
iii
EXECUTIVE SUMMARY To:
Florida CCRC Providers
This report has been developed to respond to the need expressed by many Florida continuing care retirement community (“CCRC”) providers for industry benchmarks based exclusively on data from Florida providers. To that purpose, we have collected data from the Annual Reports filed with the Florida Office of Insurance Regulation (“FOIR”) for the years 2006 through 2009. While the Annual Reports were accompanied by audited financial statements, we used the financial report groupings used in the preparation of the Annual Reports in order to provide the most consistent comparisons possible. Many of the ratios included in this report will be familiar to the reader. They are the same presented in national publications such as the Financial Ratios & Trend Analysis of CARF-CCAC accredited organizations. In addition, we have included some additional benchmarks that we think would be of interest to Florida CCRC providers. We are always looking for ways to improve on our presentation and this year we have included a break-down of our results between for profit and not for profit (“NFP”) providers as recommended by one of our report recipients last year. If you have any ideas that you feel would make this report useful for you and your organization’s leadership group, we would appreciate very much hearing your suggestions. This is our second year in compiling this information and we are beginning to accumulate enough data to identify trends within the Florida CCRC provider group. In general, we continued to see the impact of the economic downturn in the providers’ financial results. However, it is important to note that the ratios that depict operational management showed improvement. Ratios like Operating Ratio (Table 3.0), Operating Margin Ratio (Table 3.1), and Days in Accounts Receivable (Table 4.0) improved or, at least in part, partially rebounded from a poor 2008. Most impressively, Debt Service Coverage Ratios (Tables 5.0 and 5.1) increased in spite of a decrease in independent living occupancy levels (Table 6.0) which is usually an indication of a reduced amount of entrance fee proceeds. Days’ Cash on Hand (Table 4.1) and Capital Investment Ratio (Table 5.4) showed decreases for NFP providers further indicating a decrease in entrance fee proceeds. It is our sincere hope that you find this report useful and a tool you can use to compare your community with your colleagues and to chart your progress over the years. These results should be compared with your community’s individual results and shared and discussed with your organization boards and finance committees. If we can help with the comparison or presentation to your governing bodies, we would be happy to do so. We plan to continue to issue this report annually and will always be interested in your critique and ideas in how we can improve the report in the future. Thank you.
iv
CHAPTER 1. CHARACTERISTICS OF FLORIDA COMMUNITIES Community Type and Unit Mix TABLE 1.0
Total Units by Level of Care - 2009
17% 6%
10% 67%
IL
Type of Unit
AL
Rental
SNF
2008/2009 Change
%
18,667
502
2.8%
1,766
1,649
-117
-6.6%
2,372
2,539
2,705
166
6.5%
4,484
4,462
4,752
4,832
80
1.7%
27,214
26,787
27,222
27,853
631
2.3%
2006
2007
2008
2009
17,861
17,650
18,165
Rental Units
2,408
2,303
Assisted Living (AL) Units
2,461
Skilled Nursing (SNF) Units
CCRC Contract Units
Total Units
1
Table 1.01
List of CCRCs Included in the Analysis - 2009 Facility Name
Abbey Delray
Profit/Non-Profit Non-Profit
Proximity SE Lakehouse West
Facility Name
Profit/Non-Profit Profit
Proximity SW
Abbey Delray South
Non-Profit
SE
Lakeview Terrace Retirement Services, LLP
Non-Profit
NE
Azalea Trace, Inc.
Non-Profit
NW
Masonic Home of Florida
Non-Profit
SW
Bay Village of Sarasota, Inc.
Non-Profit
SW
Mease Manor, Inc.
Non-Profit
SW
BLC - Cypress Village, LLC
Profit
NE
Moorings Park
Non-Profit
SW
Buena Vida Estates, Inc.
Non-Profit
SE
Oak Hammock at the University of Florida
Non-Profit
NE
Canterbury Tower, Inc.
Non-Profit
SW
Orlando Lutheran Towers
Non-Profit
NE
Carpenter's Home Estates, Inc.
Non-Profit
SW
Park of the Palms
Non-Profit
NE
Classic Bentley Village, Inc.
Profit
SW
Pelican Bay Cooperative Housing Corporation
Non-Profit
SW
Classic Residence by Hyatt at Lakeside Village
Profit
SE
Penney Retirement Community, Inc.
Non-Profit
NE
Classic Residence by Hyatt in Aventura
Profit
SE
Plymouth Harbor
Non-Profit
SW SW
Covenant Village of Florida
Non-Profit
SE
Regency Oaks
Profit
Cypress Cove at Healthpark Florida, Inc.
Non-Profit
SW
Sandhill Cove
Profit
SE
Devonshire at PGA National
Profit
SE
Shell Point Retirement Community
Non-Profit
SW
East Ridge Retirement Village
Non-Profit
SE
South Port Square
Profit
SW
Edgewater Pointe Estates
Non-Profit
SE
St. Andrews Estates North & South
Non-Profit
SE
Fleet Landing
Non-Profit
NE
St. Mark Village, Inc.
Non-Profit
SW
Florida Lutheran Retirement Center
Non-Profit
NE
The Alliance Community for Retirement Living
Non-Profit
NE
Florida Presbyterian Homes, Inc.
Non-Profit
SW
The Mayflower Retirement Community
Non-Profit
NE
Freedom Pointe at The Villages
Profit
NE
The Waterford
Non-Profit
SE
Freedom Square
Profit
SW
University Village
Profit
SW
Freedom Village of Bradenton, LLC
Profit
SW
Vicar's Landing
Non-Profit
NE
Freedom Village of Sun City Center
Profit
SW
Village on the Green
Non-Profit
NE
Glenmoor
Non-Profit
NE
Village on the Isle
Non-Profit
SW
Glenridge on Palmer Ranch, Inc.
Non-Profit
sw
Westminster Communities of Bradenton
Non-Profit
SW
Gulf Care, Inc.
Non-Profit
SW
Westminster Oaks
Non-Profit
NW
Harbour's Edge
Non-Profit
SE
Westminster Palms
Non-Profit
SW
Indian River Estates East & West
Non-Profit
SE
Westminster Shores
Non-Profit
SW
Profit
SW
Westminster Suncoast
Non-Profit
SW
John Knox Village of Central Florida, Inc.
Non-Profit
NE
Westminster Towers
Non-Profit
NE
John Knox Village of Florida, Inc.
Non-Profit
SE
Westminster Woods on Julington Creek
Non-Profit
NE
John Knox Village of Tampa Bay Lake Port Square
Non-Profit Profit
SW NW
Winter Park Towers
Non-Profit
NE
Integrated Living Communities of Sarasota, LLC
Number of Providers
% of Total
For Profit Providers
16
25%
Not for Profit Providers
49
75%
65
100%
Total
2
GEOGRAPHIC DISTRIBUTION OF UNITS Reports were submitted by CCRCS from all areas of the state of Florida, with the majority of both properties and number of units being located in the Southwestern quadrant of the state. TABLE 1.1
Regional Distribution of CCRCs - 2009
28% 45% 5%
23%
Southwest Northeast Southeast
29 18 15
Northwest
3
Total Northeast
TABLE 1.2
Northwest
Southeast
65
Southwest
Regional Distribution of Units - 2009
23%
47%
5%
Southwest Northeast Southeast Northwest
25%
Total Northeast
Northwest
Southeast
13,130 6,496 6,834 1,393 27,853
Southwest
3
PROPERTY SIZE TABLE 1.3
Number of Independent Living (IL) Units per Community - 2009
The following table depicts the number of IL continuing care units for those providers reporting IL continuing care units. This table does not include rental units.
22%
37%
8%
34%
160 Units or Less
TABLE 1.4
161-200
201-300
160 Units or Less 161 - 200 Units
14 5
201 - 300 Units 301+ Units
22 24
Total
301+
65
Planned Expansion of Communities - 2009
The following table represents the number of providers indicating that they had either undergone an expansion or renovation of some type during the current period or were in the planning phase for future expansion and/or construction.
45%
44%
38%
40% 31%
31%
35%
25%
30% 25%
20%
20%
19%
20% 15% 10% 5% 0%
Expansion during Year 2006
Construction Plans 2007
2008
2009
4
CHAPTER 2. MEDICARE AND MEDICAID UTILIZATION MEDICARE UTILIZATION Medicare receipts increased between 2008 and 2009 in all regions.
Medicare Receipts
TABLE 2.0
2008
2009
2008/2009 Change
$129 million
$142 million
10%
Florida CCRC Participation in the Medicare Program - 2009
The following table shows the percent of Florida CCRC providers that participate in the Medicare program. 22%
Percentage of Providers that Accept Medicare Payments 78%
Medicare
TABLE 2.1
2006
2007
2008
2009
Change
Medicare
72 %
73%
80%
78%
-2%
No Medicare
28%
27%
20%
22%
2%
Non-Medicare
Average Annual Medicare Revenues per SNF Bed - 2009
$90,000 $80,000
$83,647
$70,000 $60,000
$41,666
$50,000
$32,861
$40,000
$22,010
$25,499
$30,000 $20,000
$5,449
$10,000 $0 Lowest
25th
50th
75th
Highest
Average
5
MEDICAID UTILIZATION Medicaid receipts increased between 2008 and 2009 in all regions.
Medicaid Receipts
TABLE 2.2
2008
2009
2008/2009 Change
$59.5 million
$60 million
0.76%
Florida CCRC Participation in the Medicaid Program - 2009
The following table shows the percentage of Florida CCRC providers that participate in the Medicaid program.
49%
51%
Medicaid
TABLE 2.3
Percentage of Providers that Accept Medicaid Payments 2006
2007
2008
2009
Change
Medicaid
46%
49%
52%
51%
-1%
No Medicaid
54%
51%
48%
49%
1%
Non-Medicaid
Average Medicaid Revenues per SNF Bed - 2009
$70,000 $65,128 $60,000 $50,000 $40,000 $22,855 $30,000
$17,863
$18,450
$13,330 $20,000 $2,289 $10,000 $0 Lowest
25th
50th
75th
Highest
Average
6
CHAPTER 3. MARGIN (PROFITABILITY) RATIOS Margin (Profitability) Ratios measure a provider’s revenues over expenses and its ability to provide for resident care, as well as additional capital and program needs, without relying on external donations or extraordinary events. TABLE 3.0
Operating Ratio - 2009
The Operating Ratio measures whether current year cash operating expenses can be covered by current year cash operating revenues. An Operating Ratio of less than 100% is desired; however, many CCRCs depend on cash from entrance fees collected to offset operating expenses and this can push the ratio above 100%. Also, newer CCRCs may have higher ratios while they rely on entrance fees to subsidize early losses while in the fillup phase. Factors to consider when reviewing the Operating Ratio include contract type, price structure, and refund provisions.
200%
195% 180% 160% 140% 120%
109%
100%
101%
99%
93% 80%
66%
60% 40% 20% 0% Worst
25th
50th
75th
Best
Average
2006
2007
2008
2009
2008/2009 Change
Median - All
100%
99%
103%
101%
2%
Median - For Profit
108%
105%
98%
107%
-9%
97%
99%
104%
100%
4%
Operating Ratio
Median - Not For Profit
7
TABLE 3.1
Operating Margin Ratio - 2009
This ratio focuses on operational performance. This ratio is calculated based on Resident Revenue - Resident Expense divided by Resident Revenue. This ratio looks at the core business of the CCRC, which includes healthcare fees and monthly fees from residents. Investment performance, depreciation and amortization, and net proceeds from entrance fees are not included. The purpose of this ratio is to provide a benchmark for the margin generated by cash operating revenues after payment of cash operating expenses. A higher margin indicates a better-performing entity. Providers with the most extensive contract types are generally also the ones with the lowest Operating Margin Ratio. These providers may be relying on reserves that have been funded by entrance fees to cover operating shortfalls.
60%
53% 40%
10%
20%
26%
19%
16%
0% -20% -40%
-80%
-60% -80% -100% Worst
25th Percentile
Operating Margin Ratio
Median
75th Percentile
Best
Average
2006
2007
2008
2009
Change
Median - All Providers
20%
19%
13%
19%
6%
Median - For Profit Providers
12%
14%
15%
16%
1%
Median - Not For Profit Providers
21%
21%
12%
20%
8%
8
CHAPTER 4. LIQUIDITY RATIOS Liquidity Ratios measure a Provider’s ability to pay off its short-term financial obligations, including goods and services, payroll, and debt service. TABLE 4.0
Days in Accounts Receivable - 2009
Days in Accounts Receivable measures the average number of days of accounts receivable that remain outstanding. The ratio compares the total amount uncollected, net of allowance, to average daily operating revenues received from residents. A key component of understanding accounts receivable management is to understand how the different payor types operate. In general, amounts billed to third-party payors, such as insurance companies and Medicare, will take longer to collect than amounts billed to individual residents. Because of this, the payor mix greatly affects the outcome of the ratio. A ratio of 30 or lower is generally positive; however, providers with little or no Medicare and/or Medicaid could be dramatically less.
100
95
90 80 70 60 50
33
40
21
30
25
14
20
1
10 0 Worst
25th
Days in Accounts Receivable
50th
75th
Best
Average
2006
2007
2008
2009
Change
Median
23
25
24
21
-3
Median - For Profit Providers
20
17
21
21
-
Median - Not For Profit Providers
22
26
25
23
-2
9
TABLE 4.1
Days’ Cash on Hand - 2009
Days’ Cash on Hand measures the number of days’ operating expenses a provider could cover with cash and equivalents and unrestricted investment assets (exclusive of the State of Florida mandated Minimum Liquid Reserve). This benchmark measures a provider’s ability to weather difficult operational and/or economic times. Investors will often set a minimum Days’ Cash on Hand amount as a lending requirement. While this requirement is case-specific, a 120 Days’ Cash on Hand requirement is not unusual.
1,800
1,672 1,600 1,400 1,200 1,000 800 600 400
147
69
301
13
198
200 Worst
25th
Days Cash on Hand Median Median - For Profit Providers Median - Not For Profit Providers
50th
75th
Best
Average
2006
2007
2008
2009
Change
159
140
146
147
1
57
44
59
85
26
307
283
264
223
-41
10
CHAPTER 5. CAPITAL STRUCTURE RATIOS Capital Structure Ratios generally indicate the strength (or weakness) of a provider’s balance sheet and compares the amount of debt a provider has undertaken compared to its assets and equity. Usually, a provider more heavily financed by debt poses greater risk. TABLE 5.0
Debt Service Coverage Ratio (Revenue Basis) - 2009
The Debt Service Coverage Ratio (Revenue Basis) measures a provider’s ability to meet its debt obligations through revenues alone. By excluding cash from entrance fees from the equation, this ratio shows the CCRC’s ability to cover debt service costs exclusively from operating revenues and non-operating sources. A ratio of 1.00 indicates a provider is able to meet its debt service obligations through operating revenues alone. A ratio of less than 1.00 could indicate that a provider relies on entrance fees to meet ongoing annual operating expenses. In recent years, this ratio has become a more important ratio to investment bankers and other analysts. Some experts believe that funding operations through entrance fee receipts may leave a provider unable to deal with slow resident turnover.
Debt Service Coverage Ratio (Revenue Basis) Median Median - For Profit Providers Median - Not For Profit Providers
2006
2007
2008
2009
Change
0.79
0.45
0.25
0.74
0.46
(0.09)
0.17
0.44
0.10
(0.34)
0.82
0.79
0.26
0.80
0.54
11
TABLE 5.1
Debt Service Coverage Ratio - 2009
Debt Service Coverage Ratio is a key ratio for lenders. This ratio reflects a provider’s ability to fund annual debt service with receipts from net cash revenues and entrance fees. A debt service coverage ratio of at least 1.30 is a typical requirement for lenders.
Debt Service Coverage Ratio
2006
2007
2008
2009
Change
Median
2.84
2.67
2.13
2.06
(0.07)
Median - For Profit Providers
6.45
1.42
2.25
0.23
(2.02)
Median - Not For Profit Providers
2.91
2.78
2.13
2.38
0.25
12
TABLE 5.2
Cash and Investments to Long-term Debt Ratio - 2009
The Cash and Investments to Long-term Debt Ratio is a measure of a provider’s ability to withstand annual fluctuations in cash. Analysts use this ratio to help determine a provider’s debt capacity. A ratio above 30% is generally desired.
300%
295%
250% 200% 150% 81%
100%
54% 50%
28% 9%
1%
0% Worst
25th
50th
Unrestricted Cash and Investments to Debt Ratio Median Median - For Profit Providers Median - Not For Profit Providers
75th
2006
Best
2007
Average
2008
2009
Change
41%
35%
34%
28%
-6%
4%
3%
4%
4%
-%
45%
43%
49%
43%
-6%
13
TABLE 5.3
Average Age of Provider Ratio - 2009
This ratio computes accumulated depreciation over annual depreciation expense to estimate how many years of depreciation have been realized for the provider. A steadily increasing value in this calculation is an indication that provider funds are not being used to renovate and upgrade the provider’s physical plant and assets. Updating of physical plant is important for the continued marketability of the CCRC.
Average Age of Provider
2006
2007
2008
2009
Change
Median
9.90
9.90
9.89
9.91
0.02
Median - For Profit Providers
5.78
3.56
4.25
4.80
0.41
11.11
10.91
11.33
10.95
-0.38
Median - Not For Profit Providers
14
TABLE 5.4
Capital Investment Ratio - 2009
The Capital Investment Ratio shows the amount of cash used to purchase fixed assets in relation to annual depreciation expense. A ratio of 1.00 would imply that the provider is replacing its physical plant and assets as they are depreciated. The median for our population was .85. A provider may have a large ratio in the year of a large capital project, such as an expansion of the community.
12
11.65
10 8 6 4 2
0.35
0.003
1.37
1.18
0.85
0 Worst
25th
Capital Investment Ratio
50th
75th
Best
Average
2006
2007
2008
2009
Change
Median
1.05
1.12
0.97
0.85
(0.12)
Median - For Profit Providers
0.58
0.35
0.38
0.32
(0.06)
Median - Not For Profit Providers
0.98
1.56
1.34
0.93
(0.41)
15
TABLE 5.5
Long-term Debt to Total Assets Ratio - 2009
The Long-term Debt to Total Assets Ratio indicates an organization’s amount of long-term debt relative to its total assets. A higher percentage indicates a weaker capital structure than a provider with a lower percentage. Typically, start-up organizations or providers that have recently undergone an expansion or significant capital outlay would be expected to have a higher percentage than mature organizations.
140.00%
138%
120.00% 100.00%
59%
80.00% 60.00%
36%
31%
40.00%
6% 0%
20.00% 0.00% Worst
25th
Long-Term Debt to Total Assets
50th
75th
Best
Average
2006
2007
2008
2009
Change
Median
35%
39%
37%
31%
6%
Median - For Profit Providers
40%
39%
38%
29%
11%
Median - Not For Profit Providers
33%
36%
35%
31%
4%
16
CHAPTER 6. OPERATING RESULTS OCCUPANCY Median occupancy rates for independent living units at Florida CCRCs were approximately 87%. Skilled nursing units reported the highest median occupancy rate of 89% and assisted living units reported median occupancy of 84%. TABLE 6.0
Independent Living Occupancy - 2009
97%
91% 85%
100%
83%
79%
90%
80% 70% 60% 38%
50% 40% 30%
20% 10% 0% Worst
25th
Independent Living Occupancy
50th
75th
Best
Average
2006
2007
2008
2009
Change
Median
94%
92%
89%
85%
-4%
Median - For Profit Providers
94%
89%
85%
82%
-3%
Median - Not For Profit Providers
94%
93%
90%
85%
-5%
17
TABLE 6.1
Independent Living Occupancy by Region - 2009
89% 87% 90% 88%
83%
86%
81%
84% 82% 80% 78%
76% Northeast
TABLE 6.2
Northwest
Southeast
Southwest
Assisted Living Occupancy - 2009 100%
95% 90% 100%
83%
78%
90% 80%
70% 60% 50%
40%
20%
30% 20%
10% 0% Worst
25th
Assisted Living Occupancy Median Median - For Profit Providers Median - Not For Profit Providers
50th
75th
Best
Average
2006
2007
2008
2009
Change
87%
88%
89%
90%
1%
100%
98%
88%
92%
4%
86%
87%
89%
90%
1%
18
TABLE 6.3
Assisted Living Occupancy by Region - 2009
92%
95%
86%
90%
81% 79%
85%
80% 75% 70% Northeast
TABLE 6.4
Northwest
Southeast
Southwest
Skilled Nursing Occupancy - 2009
100%
94%
89%
100%
86%
79%
90% 80%
60%
70%
60% 50% 40%
30% 20% 10%
0% Worst
25th
Skilled Nursing Occupancy
50th
75th
Best
Average
2006
2007
2008
2009
Change
Median
89%
89%
88%
89%
1%
Median - For Profit Providers
80%
86%
84%
81%
-3%
Median - Not For Profit Providers
90%
89%
90%
90%
-
19
TABLE 6.5
Skilled Nursing Occupancy by Region - 2009
94%
88%
95%
83%
90%
81% 85% 80% 75% 70% Northeast
Northwest
Southeast
Southwest
20
TABLE 6.6
Average Occupancy Comparisons by Region Independent Living Occupancy Rates
Region
2008/2009
2006
2007
2008
2009
NE
93%
92%
87%
87%
-
NW
94%
94%
93%
89%
-4%
SE
93%
92%
88%
83%
-5%
SW
91%
88%
84%
81%
-3%
Change
Assisted Living Occupancy Rates Region
2008/2009
2006
2007
2008
2009
NE
82%
86%
84%
81%
-3%
NW
81%
80%
81%
92%
11%
SE
75%
85%
79%
86%
7%
SW
80%
82%
79%
79%
-
Change
Skilled Nursing Occupancy Rates Region
2008/2009
2006
2007
2008
2009
NE
88%
90%
88%
88%
-
NW
87%
89%
92%
94%
2%
SE
77%
83%
81%
81%
-
SW
83%
80%
81%
83%
2%
Change
21
ENTRANCE FEES Providers are asked to specify the range of entrance fees. The following table depicts the range of providers’ entrance fees as reported by the applicants. Providers are asked to report the lowest and highest entrance fees offered in the Annual Report submitted to the State. The following table represents the ranges of highest and lowest entrance fees reported. TABLE 6.7
High Entrance Fees Reported - 2009
$1,890,000 $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $556,320
$800,000 $231,625
$600,000
$435,643
$369,650
$75,000
$400,000 $200,000 $0
Worst
High Entrance Fees
25th
50th
2006
75th
2007
Best
Average
2008
2009
Change
Median
$346,200
$342,500
$359,880
$369,650
2.7%
Median - For Profit Providers
$512,200
$507,609
$560,189
$535,400
-4.4%
Median - Not For Profit Providers
$234,650
$270,500
$284,850
$257,250
-9.7%
22
TABLE 6.7a Low Entrance Fees Reported - 2009
$282,900 $300,000 $250,000 $200,000 $125,063 $150,000
$96,182
$79,445
$54,725
$100,000 $24,198 $50,000 $0
Worst
Low Entrance Fees
25th
50th
75th
Best
Average
2006
2007
2008
2009
Change
Median
$74,900
$79,900
$82,900
$79,445
-4.2%
Median - For Profit Providers
$97,450
$104,750
$92,213
$97,425
-4.4%
Median - Not For Profit Providers
$60,600
$68,531
$67,390
$67,240
-0.2%
23
The following two tables analyze the average high and low price points by region, as provided by the applicants. TABLE 6.8
Median Entrance Fees (High) By Region – 2009
$379,900
$400,000
$369,400
$359,880
$356,200
$350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000
$0 Northeast
TABLE 6.9
Northwest
Southeast
Southwest
Median Entrance Fees (Low) By Region - 2009
$92,900 $100,000 $75,327
$80,000
$70,445 $63,675
$60,000 $40,000 $20,000 $0 Northeast
Northwest
Southeast
Southwest
24
Average Entrance Fee (High) 2006
2007
2008
2009
2008/2009 Change $
2008/2009 Change %
Average
$395,576
$404,567
$454,003
$435,643
-$18,360
-4.04%
Median
$342,500
$341,900
$359,880
$369,650
$9,770
2.71%
Average Entrance Fee (Low) 2008/2009 Change $
2008/2009 Change %
2006
2007
2008
2009
Average
$93,442
$99,107
$95,338
$96,182
$844
0.8%
Median
$74,900
$79,900
$81,900
$79,445
-$2,455
-3.0%
25
FEE INCREASES
Fee increase information was derived from the FOIR report section discussing planned fee increases for those communities reporting a fee increase in the Annual Report. TABLE 6.10 Fee Increases by Community - 2009
7.00 7.00 4.93
6.00
3.95
5.00
3.56 2.69
4.00 3.00 2.00
0.00
1.00 0.00 Highest
25th Percentile
Fee Increase
Median
75th Percentile
Lowest
Average
2006
2007
2008
2009
Change
Median
2.85%
4.00%
4.00%
3.95%
-0.05%
Median - For Profit Providers
5.00%
4.58%
4.80%
5.00%
0.20%
Median - Not For Profit Providers
4.00%
4.00%
3.90%
2.50%
-1.40%
26
ANNUAL FINANCIAL RESULTS PER OCCUPIED UNIT Revenue per Occupied Unit is calculated as Total Revenues divided by the number of occupied units at the community. Total Revenues represent Total Revenue (as reported by the applicant) less Earned Entrance Fees. Occupied Units represent all independent living, assisted living, rental, and skilled nursing units reported as sold or rented in the annual report. Median Revenue per Occupied Unit was approximately $45,200 in 2009. This represents an approximate 13% increase over revenue per occupied unit in 2008 of approximately $39,900. TABLE 6.11 Total Revenue per Occupied Unit - 2009
$144,488 $160,000 $140,000 $120,000 $100,000 $80,000
$45,211
$49,351
$35,998
$60,000 $40,000
$56,239
$18,898
$20,000 $0 Lowest
25th Percentile
Median
75th Percentile
Highest
Average
27
TABLE 6.12 Total Healthcare Revenue per Occupied SNF Unit - 2009
Revenue per Unit
2008/2009 % Change
2006
2007
2008
2009
Average Revenue per Occupied Unit
$38,818
$40,981
$39,919
$45,211
18.07%
Median Revenue per Occupied Unit - Profit
$39,968
$39,645
$49,565
$47,688
-3.80%
Median Revenue per Occupied Unit - Not for Profit
$38,912
$41,519
$39,830
$44,639
12.07%
Median Healthcare Revenue per Occupied SNF Bed
$71,795
$75,431
$86,013
$92,900
8.00%
Median Healthcare Revenue per Occupied SNF Bed Profit
$87,827
$93,487
$118,146
$125,501
6.23%
Median Healthcare Revenue per Occupied SNF Bed Not for Profit
$71,795
$74,723
$81,648
$83,675
2.48%
28
SALARY AND BENEFITS AS A PERCENT OF TOTAL EXPENSES As a provider’s management looks to reduce cost and overhead, salaries and benefits are always scrutinized. The average provider incurs 51% of its total costs of employees as salaries and wages. TABLE 6.13 Salary and Benefits as a Percent of Total Expenses - 2009
80% 70%
73%
57%
52%
50%
60%
43%
50% 40%
21%
30% 20% 10% 0% Highest
25th
50th
75th
Lowest
Average
2006
2007
2008
2009
2008/2009 % Change
Median
50%
49%
50%
52%
2%
Median - Profit
38%
37%
40%
41%
1%
Median - Not for Profit
53%
54%
54%
55%
1%
Salary and Benefits over Total Expenses
29
TABLE 6.14 Provider Insurance Cost as a Percent of Provider Market Value (per $1,000 of value) 2009 This ratio shows the ratio of a provider’s 2009 property insurance cost over the most recent market value of the provider.
24.14 25.00
20.00
15.00 8.71
6.69
6.29
10.00 3.78 5.00
0.11
Worst
25th
Provider Insurance Cost Over Provider Market Value
50th
75th
Best
Average
2006
2007
2008
2009
2008/2009 % Change
Median
5.5
6.4
7.0
6.29
-0.71
Median - Profit
3.7
4.8
2.9
3.5
0.60
Median - Not for Profit
5.3
6.4
7.6
6.9
-0.70
30
MANAGEMENT FEES AS A PERCENT OF TOTAL REVENUE The following table represents management fees as a percent of total revenue during 2009 for those providers reporting management fees paid. During 2009, 43 providers reported paying management fees. TABLE 6.15 Management Fees as a Percent of Total Revenue - 2009
11.22% 12.00% 10.00% 8.00%
5.90%
4.61%
4.31% 6.00% 2.85% 4.00% 0.15% 2.00%
0.00% Lowest
25th
50th
75th
Highest
Average
Management Fees as a % of Total Revenues
2006
2007
2008
2009
2008/2009 % Change
Median
4.67%
4.54%
4.86%
4.31%
-0.55%
Median - Profit
5.31%
5.54%
5.04%
5.17%
0.13%
Median - Not for Profit
3.58%
3.51%
3.52%
3.17%
-0.35%
31
TABLE 6.16 Management Fees as a Percent of Total Revenue by Region - 2009 The following table represents management fees as a percent of total revenue during 2009 by region for those providers reporting management fees paid.
4.94%
4.94%
4.60% 5.00%
3.72%
4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Northeast
Northwest
Southeast
Southwest
32
PROPERTY INSURANCE PER UNIT The following table represents property insurance paid per unit at the community (including all IL, AL, rental, and SNF units). TABLE 6.17 Property Insurance per Unit - 2009
$4,000
$3,891
$3,500 $3,000 $2,500 $2,000
$1,185 $959
$1,500
$739 $460
$1,000
$45
$500 $0 Worst
25th
50th
75th
Best
Average
2006
2007
2008
2009
2008/2009 Change
Median
$687
$1,047
$967
$739
-$228
Median - Profit
$748
$1,490
$992
$704
-$288
Median - Not for Profit
$655
$979
$955
$871
-$84
Property Insurance per Unit
33
PROPERTY INSURANCE PER UNIT BY REGION The following table represents the average property insurance paid per unit at the community (including all IL, AL, rental, and SNF units) by region of Florida. TABLE 6.18 Property Insurance per Unit by Region - 2009
$1,178
$1,178
$1,200 $907 $1,000
$827
$800 $600 $400 $200 $0 Northeast
Northwest
Southeast
Southwest
34
PROPERTY TAXES PER UNIT The following table represents average property taxes paid per unit. TABLE 6.19 Property Taxes per Unit - 2009
$6,000
$5,416 $5,000 $4,000 $3,000
$1,354 $2,000
$1,027
$855
$357
$16
$1,000
$0 Highest
Property Taxes per Unit Median Median - Profit Median - Not for Profit
25th
50th
75th
Lowest
Average
2008/2009 Change
2006
2007
2008
2009
$821
$772
$829
$855
$26
$1,394
$1,535
$1,424
$1,620
$196
$436
$498
$449
$512
$63
35
