Qualities that Separate Great Senior Living CFOs from Good Financial Leaders
One of the biggest misconceptions about finding a good CFO is that a great financial leader is a great financial leader in any industry. After decades of experience in the senior living finance world, we can say with certainty that that’s not the case. Senior living is unlike nearly any other industry, balancing healthcare reimbursement, hospitality, real estate, long-term capital planning, philanthropy, entrance fee obligations, mission, resident care, and more, all at once.
That’s why hiring the right CFO for your senior living organization is about so much more than simply finding someone who understands accounting.
Industry Expertise
A strong CFO for a senior living organization needs to understand and be comfortable working with the more unique financial mechanics that come with the industry. They have to understand how healthcare, hospitality, real estate, long-term capital planning, philanthropy, and mission-driven operations work together in this industry to create something wholly unique.
They also need to understand how occupancy rates impact the organization's finances, as for many communities, just a small change in occupancy percentage can have a dramatic impact on profitability. Occupancy is more than a percentage on a spreadsheet. Great senior living finance leaders understand the pace of move-ins and move-outs, the health of the sales pipeline, resident acuity, unit mix, pricing strategy, and how those variables impact staffing, cash flow, and long-term financial sustainability.
Experience with real estate is also strongly preferred. Senior living has been looked at through a real estate lens for decades, involving requirements around loans for new builds, renovations, and refinancing, as well as site and market evaluation. Over time, community buildings will accumulate wear and tear, eventually needing to be updated to keep up with industry standards. Senior living isn’t just about healthcare, it’s about housing too.
In the senior living industry, financial leaders need to understand entrance fee accounting, including refundable entrance fee obligations, capital replacement planning, debt financing and bond covenants, multi-level care economics, Medicare and Medicaid reimbursement, and more. Plus, they have to stay up to date on any regulatory changes, demographic changes, and trends in senior and family expectations, which are in constant flux.
Strategic Vision
An excellent CFO doesn't simply run the numbers, report their findings, and call it a day. They help set direction and plan for the future using forecasting models to predict the best move for the organization’s future. Senior living is an incredibly capital-intensive industry. A CFO should understand long-term capital planning, financing strategies, lender relationships, bond markets, and how today's decisions impact an organization's financial flexibility years to come.
Every financial decision requires balancing today's operational realities with tomorrow's strategic needs. A great CFO understands how to invest in staffing while preserving margins, fund capital improvements while maintaining liquidity, and support the organization's mission without compromising long-term sustainability. It’s a delicate balance with so many factors at play.
Financial leaders should be able to create forecasting models that account for the unique circumstances of senior living, like changing occupancy rates and labor market swings. They should move past next year’s budget and be able to make multi-year financial projections and plans.
Adaptability is also a must-have, as if something changes, they have to be comfortable revising their plans at any point in time to make the best decision possible with the information they have at the time. As new information becomes available, their plans may need to be amended.
Communication Skills
Any CFO needs to be able to communicate well with team members, other departments, and board members, but senior living CFOs also need to be able to speak well with donors, rating agencies, lenders, and more. A CFO that can only communicate effectively with other financial professionals is not a good fit for a senior living organization.
They’ll need to communicate with clinical and administrative leaders daily, and will frequently have the responsibility of translating complex financial situations into clear, understandable narratives for board members and residents. These narratives have to communicate the needs of the organization and the decisions that are being made in a way that builds trust instead of creating questions and uncertainties.
Experience with NFP
Many NFP communities have benevolent or charity care policies for residents who outlive their financial resources. A strong CFO understands and respects these policies, funding and forecasting them sustainably.
A NFP organization’s CFO also has to work with the philanthropy and foundation team, integrating the philanthropic revenue into the operating plan. Plus, there are tax implications for non-profit senior living organizations that aren’t relevant for other, for-profit companies that a CFO should have a grasp on.
Mission Alignment
In senior living, everyone is dedicated to the same mission of quality care and lifestyle. If the CFO isn’t just as dedicated to that goal as the caregivers themselves, it’s not a good fit. Particularly if your organization is a non-profit and/or faith-based, mission alignment is non-negotiable.
Senior living CFOs need to see care and financial discipline as complementary priorities, not competing ones. They need to make decisions that help further the mission in a way that makes good financial sense. Team and board members can tell when a CFO is simply tolerating a mission versus truly being motivated by it.
A senior living CFO candidate that meets every single criteria is rare, but these are some of the things you should consider. Think about what the most important things for your organization are based on your current situation. If you’re heading into an expansion, new build, or acquisition, maybe you want to prioritize real estate industry experience over strengthening board relationships. Every situation is unique.
If you’re looking for support while you find your new full-time CFO or guidance during a period of strategic growth, the KSH Consulting team is here to help. Our team members are experienced senior living finance leaders ready to help your organization thrive, through this period and into the future. Contact us to learn more.
