As your senior living organization operates and expands, there are numerous capital expenditures that you’re likely to have in the budget, such as funds for new buildings, renovations to existing spaces, HVAC implementation and maintenance, and purchase of new equipment.
But as you look over those line items, you may be missing one crucial component: information technology.
When it comes to putting IT in an organization’s financial mix, IT tends to get included in operating expenses, the same way you might spend money for an advertising campaign or temporary staffing solutions. But shifting IT to the capital expenditure side of the business is a smart move, since it turns technology into a long-term asset and gives you more flexibility for implementing equipment and innovations that will be needed for expansion.
There are two types of capital expenditures. One kind is used to maintain an existing level of operation within a company — such as that HVAC system — and the other is considered an investment designed to foster future growth. That might be a new wing on an assisted living center, for example, or simply a larger dining room that allows you to attract more residents.
By making your IT implementation into a capital expenditure, you can tie it to future cash flow and track your return on investment. That allows you to have much more flexibility and insight than you would get from making IT into a day-to-day operating expense. With that level of knowledge, you would be able to identify other areas worthy of technology investment, and create a technology roadmap that offers long-term advantages.
Operating Cost Reduction
For many organizations, operating costs can become a concern if cost-saving measures aren’t put into place to control them. Expenses begin to add up, creating a budget bottleneck that can ultimately impact growth, as well as resident retention and staff turnover.
Shifting IT into the category of capital expenditure allows a senior living operation to get a better perspective about what it needs in the long run for technology investment, with the added benefit of lowering operating costs that were once tied to IT. That can free up funds for other initiatives or hiring, helping an organization to meet short-term needs as well as larger goals.
Putting Technology in Play
Some senior living organizations aren’t yet at the point where they’re deciding between operating vs. capital expenditures for IT, because they simply haven’t made technology enough of a budget item. These setups might include some ad hoc equipment, cobbled together with network resources and low-cost software. In a case like this, simply seeing IT as worthy of investment may be a leap, but it’s certainly one worth making. Given the importance of; quality of care, security issues, retention levels and other factors, it’s crucial to see IT as part of an organization’s success — not a drain on its resources.
If you’re lacking in IT investment as part of your senior living capital expenditures, it can be challenging to know where to start when you’re ready to implement a more robust system. In trying to navigate the various solutions and setups, consider turning to a healthcare IT consultant who can provide strategy and insights that make sense for your organization, especially with healthcare regulations and requirements in mind.