Are Senior Living Providers Investing in Technology?

The level of investment in technology among senior living organizations has either stayed the same or increased since 2012, according to a recent CFO Hotline survey conducted by LeadingAge Gold Partner Ziegler. 

However, a large proportion of organizations that offer home and community-based services (HCBS) did not budget any funds for HCBS-related technology in the past 12 months.

The study, completed in 2014 with input from LeadingAge CAST, was a repeat of a 2012 poll devoted to the same topic.

More than 130 chief financial officers (CFOs) participated in this year’s survey, compared with 80 CFOs in 2012. More than half (58%) of the 2014 respondents represented single-site organizations while 42% represented multi-site providers.

Technology Investments over the Past 12 Months

CFO Hotline survey respondents were asked to identify the aging services technologies in which they had invested during the prior 12 months, based on a list provided by Ziegler.

Organizations were most likely to identify the following technology purchases:

• 86% invested in infrastructure technologies like high-speed Internet connectivity, compared to 90% in 2012.

• 73.9% invested in resident access to the Internet and social networking sites, compared to 36.3% in 2012.

• 67.2% invested in electronic medical/health record systems, compared with 46.3% in 2012.

• 57.1% invested in electronic point of care/point of services technologies, up from 45% in 2012.

• 52.9% invested in access control/wander management systems, up from 43.8% in 2012.

3 Reasons for Investing in Internet and Social Networking

Why are Internet access and social networking such popular investments? CAST Executive Director Majd Alwan identified 3 reasons.

“Internet access and social networking applications require more frequent updates and ongoing support,” explains Alwan. “They also are in demand because they provide fun and connectivity applications that are appealing to residents and families who are becoming more demanding of technology and connectivity. Finally, this type of technology generally requires a lower cost investment and has a high marketing return on investment.”

Survey respondents were least likely to have purchased physical exercise or rehabilitation technologies and automatic fall detectors in the 12 months prior to the survey. Alwan suggests that these technologies generally require higher cost investments and less frequent updates.

“If an organization invested in them in 2012, they would not need to re-invest in 2014,” he says. “Of course, this comparison and the reasons for the changes assume that there is significant overlap between respondents to the 2012 and 2014 surveys, which is highly likely.”

Technology Budgets over the Past 12 Months

In general, providers budgeted between 2% to 3% of their total operating budgets and between 9.5% and 12.2% of their total capital budgets to purchase technologies listed in the survey.

Multi-site organizations devoted a slightly higher percentage of their budgets to technology than single-site providers. At least a dozen respondents said they allocated 25% or more of their capital budgets to technology. These responses are either special cases or erroneous, notes Alwan. Nevertheless, they increased the overall capital technology spending recorded during the survey.

On average, respondents devoted only 1.6% of their capital budgets and 1.2% of their operating budgets to technologies for HCBS. A median of zero percent suggests that a large proportion of organizations offering HCBS did not budget any funds for HCBS-related technology investments in the past 12 months.

Of those organizations investing in HCBS technologies:

• 56.3% upgraded an existing program or operation.
• 39.4% expanded an existing operation or program.
• 16.1% purchased a new operation or program.

Future Spending

Participants in the CFO Hotline survey were asked to specify whether they plan to invest, or increase their investment, in various technologies during the coming year. Their responses follow similar patterns to their spending in the past 12 months.

Internet connectivity, resident access to social networking sites, and electronic health/medical records top the list of anticipated expenditures. Physical exercise and rehabilitation technologies and automatic fall detectors were the least likely to appear on providers’ list of anticipated purchases.

The survey revealed additional technology categories in which providers plan to invest over the next 12 months. These include:

• Voice Over IP Telephony.
• Health Information Exchange.
• Cloud Systems and Virtualization.
• Emergency Notification Systems.
• Financial Systems.
• Scheduling and Human Resources Systems.
• Point of Sale Systems.
• Physical Plant and Maintenance Management Systems.
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