Timothy Tucker explains how this senior care provider diversified its services to secure its future.

Although its portfolio of services has significantly diversified since its humble beginnings in 1896, each step Augustana Care Corporation takes focuses on the spirit of generosity and social responsibility that’s been present from the beginning. In the past 12 years, the organization added ancillary services and reinvested into its flagship facility to ensure another 110 years of service to its communities.

Timothy Tucker

Building capital
Augustana Care faces the same challenges of senior service providers across the country. Nearly 70% of the organization’s revenues come from its assisted living, nursing, and rehabilitation beds, but it loses between $14 and $20 per day on each Medicaid resident.

When Tucker first came to the organization, he was charged with developing a team that could think outside the box to shore up some of the losses the Augustana Care experienced from reimbursement while also growing the company. About the same time, the organization became dissatisfied with the quality of therapy services its patients were receiving.

“Although it wasn’t so much a way to develop an ancillary income stream as much as it was to make sure we were getting quality therapy services, we decided to create our own therapy company,” said Tucker. “Firstly, we wanted to service our own facilities, patients, and residents, and it eventually became a service we offered to other like-minded organizations in our region.”

Since its inception in 2000, Augustana Therapy Services has added roughly $5.5 million per year to Augustana Care’s top-line growth. But Tucker and his team didn’t stop there. In 2003, the organization developed a management team specializing in HUD property management for senior and multi-family projects. Augustana Senior Development’s purpose is to assist unrelated senior healthcare organizations to develop, build, and manage senior housing projects. Augustana Senior Development manages projects throughout greater Minnesota and works with the Minneapolis Public Housing Authority.

“Minneapolis Public Housing Authority hadn’t built any senior facilities in at least 30 years,” said Tucker. “In 2006, they built a state-of-the-art senior care building, and we were chosen to be the service provider. It’s opened the door to other possibilities, and we now help organization’s similar to ours develop strategic plans to ensure future stability.”

Giving back
While the therapy and property management ancillary companies balanced out Augustana Care’s financial struggles, Tucker investigated developing a service that would both bring additional revenue and gave something back to the community. The organization partnered with Minneapolis-based Community Emergency Services, a food distributor, and developed its own Meals-on-Wheels program for seniors.

“We have facilities located throughout many communities, and each one has a kitchen,” Tucker explained. “We knew we could do a reasonably good job with that program, and in the last quarter, Augustana Care delivered more than 25,000 meals on wheels.”

Once the infrastructure for the Meals-on-Wheels program was developed, it became apparent that more could be done. Tucker and his executive team decided to branch out and develop a catering company. “We’ve got the buying power, and many of our locations are open 24/7, so it just made sense,” he said.

In the month of June, Augustana Care catered roughly eight events for high school graduation parties, wedding receptions, and corporate clients. Since the development of the Augustana Care Services and Table Talk, the catering company, the organization has seen a revenue increase of more than $2 million annually.

“It’s hard to equate nursing home beds to catering and meals on wheels, but somehow looking at the income streams, we’re riding out the inability to collect and be reimbursed for the services we actually generate,” explained Tucker. “We have a clear-cut business plan to focus on ancillary business development and reduce our dependency on our healthcare-related beds.”

Facing the future
Although Augustana Care Corporation has not reduced that dependency as much as Tucker would like, the revenues from the three ancillary businesses gave him the opportunity to reinvest in the organization’s flagship campus in downtown Minneapolis. The Elliott Park facility had once stood as a beacon of hope for women and children until, in the 1950s, the need for such a facility changed and the focus became senior care.

When confronted with how to position the facility for the future, Tucker and his team realized senior care might not be the way to go. “We see our populations changing, and right now 60% of our patients stay less than a month, receive rehabilitation, and are discharged back to their own homes,” said Tucker. “We saw the facility changing from long-term lighter-care resident to a post-acute and chronic care.”

The organization took advantage of Minnesota’s Moratorium Exception Process. The administration presented a plan for the downtown location, including new elevators, urgency response systems, exercise units, a health and wellness center, as well as expanded therapy and rehab square footage; presented a case study to explain why the renovations were necessary; and gave the state a proposal regarding the scope and size of the renovation project.

“At the end of the day, when you fulfill everything you said you would, the state increases your reimbursement rate designed to recover your renovation cost,” explained Tucker. “With the facility’s unique location surrounded by a number of teaching hospitals, the renovations gave us an opportunity to prepare for the future while maintaining solid financial health.”