The Pros and Cons of Using Paid Referral Agencies

In today's podcast, we're diving deep into the maze of paid referral agencies. Buckle up; it's about to get real! 

Ever wondered about the dance between senior living providers and referral agencies? I spill the tea on this senior living love story debunking misconceptions and shedding light on the real cost implications for you and your business.

But hold up! Choosing the right agency is like picking the perfect dance partner. I've got strategies for you – from aligning with your brand to handling pushback from the case managers and discharge planners. 

We also dig into the nitty-gritty of contractual trip hazards, excessive commissions, retainer fees – we've all been there. Learn how to avoid these profit-margin pitfalls and why immediate payment to them might not be your best bet.

And here's the golden nugget, ticket, or child (movie reference...LOL): 
Personalized marketing is your secret sauce! Know your value, communicate it like a pro, and watch those relationships bloom.

Tune in, take notes, and let's waltz through the world of paid referral agencies together. Remember, Start With Occupancy is not just a podcast; it's your backstage pass to senior living community success! 

00:03 Introduction and Podcast Overview

01:35 The Sensitive Subject of Paid Referral Agencies

04:20 Understanding the Role of Paid Referral Agencies

07:11 When and How to Use Paid Referral Agencies

09:56 The Potential Pitfalls of Relying on Paid Referral Agencies

11:10 Choosing the Right Partner for Your Business

14:27 The Importance of Communication with Paid Referral Partners

15:00 Dealing with Criticism and Misunderstandings

16:07 The Dangers of Devaluing Your Community

16:48 How Much Should You Pay for Referrals?

16:58 The Importance of Communication and Understanding Your Market

17:22 The Risks of Over-reliance on Paid Referral Companies

17:39 The Importance of Retaining Control Over Your Business

20:58 The Dangers of 100% Contracts and Retainer Fees

23:42 The Importance of Generating Your Own Move-ins

25:51 The Importance of Understanding Your Value Proposition

28:46 Conclusion and Final Thoughts

Transcript

Tiffany Updated voice: 0:00

Uh huh. Welcome to Start With Occupancy, the podcast for senior living owners, operators, and sales professionals./Hi, I'm Tiffany, marketing strategist and former corporate baddie who got tired of producing results for wall street and wanted to make a change on main street./I provide quick tips, idea nuggets, and case studies to help you with proven sales, marketing, and business development strategies along with leadership concepts so that you can inspire change, impact lives, and improve outcomes for the aging, their families and your teams./I'm committed to equipping you with the tools, the knowledge and resources that you need to excel in your business./With over 12 years of experience working inside senior living companies, large and small, I've developed a deep passion for advocating for the aging adult and those who care for them, all while driving business growth./So whether you're already in the senior care industry or maybe you would like to be, if your mission is to serve them, my mission is to serve you./Join me as we unravel the strategies and tactics that drive success in your business while making a difference in someone's life./The goal in 2024 is to touch, guide, and impact the lives of 10 families per month!/Are you with me? It's time to be inspired, gain practical tips and own your future. Today, we're going to talk about a subject that is. Going around. I have been approached about it this week. I have seen. A few conversations. online. About paid referral agencies, and this is a sensitive subject. I say sensitive, meaning that you don't want to alienate people who are going to give you business. Right. However, this isn't just people giving you business. This is people being paid. To give you business. So it is a business relationship and we must never forget that. But there is a certain level of, um, I would like to say. Um, Disempowerment meaning that. There are owners, operators, sales professionals who feel like they are not empowered. Because their power has been shifted to these outside agencies. By way of not being able to get professional. referrals. From the sources, meaning the hospitals or the skilled nursing And while it is easier for them to send it to one person and they go find where this particular patient should go However, what happens is they don't always know meaning that professional referral. How the system works. They know it's easy for them. They can do it. Um, by sending it to one person and it gets off their plate. The problem is they don't understand sometimes that that is a paid service. That the company pays for the family doesn't so they are like, oh, perfect. It's free for the family. It's a win-win for everybody it's not because the family ultimately does pay for it. By the cost That their loved one has to pay that cost has to be spread out some way, some form, some fashion, right? And a lot of people don't know that. what we're going to talk today is all about professional paid referral sources. And how to work with them. And when you should use them. And, what kind of contracts you should have? There's some things going on in a marketplace because people are seeing. This demographic and this side of the market as a. Um, I'd like to say. I don't want to call it like a, a gold mine They're seeing it as rich in income. And the thing is, is that. With that comes some people with. I would like to say um, Their motives. I can't question anybody motives. But how you conduct business is the fruit. I say that comes out of your heart. That's what I say. So. With that I'm going to move forward. Let's start off with who is paid referral sources. Agencies is what we're talking about. So these are people that are paid much like a realtor. That's the easiest way I could think of it in terms of what it relates to. So a realtor goes and takes a family and finds them their home. A paid referral source or paid. Placement agency is sometimes that they're also called or paid senior advising company. Um, all of these are basically individuals who meet with families or gather their information. And. Through who they have contracted with will show them communities. That might be a great fit for them. Whenever money is involved in anything like that, you know? Motivations are questioned, right? I'll put it that way. Where do they only show the properties? I give them the highest percentage of commission. do they show properties that, they have a better relationship with, do they show only properties? that is offering a bonus for that particular month. I like to know who I'm dealing with and making sure that who they are aligns with, who I am and that their motivations are families and residents first. That is the first thing I would tell you if you're interviewing who to partner with in these paid referral situations. Is interview them. There's plenty out there. You don't have to use them all. Find out who will work with you, who aligns in the values that you have. Sometimes when you're with a big box company or a corporate company, you have to work with everybody. But, I say work with everybody, meaning that they have a contract, but you still get to choose. who you're going to work with? I call them the realtors of the senior living industry. Some people will always come to the community with their families. Some people will only send you the referral information and have you contact the families. Um, some people, um, are only online and they don't do anything with the family except send them to you. So there's all different types of ways or different styles that these companies come in. And you need to find out which one is going to work better for you. If they're online. And they're just sending you the referral through a website Um, understand how long is that family going to be owned? I'd like to say. By that entity. Some are two years. Some are within six months. Some are, you know, within one year, um, some are 30 days. It just depends on how new the entity is. And what their contract is. Okay. Now the question is, do you really need them? And do you need to work with them? And that is going to depend on you. It depends on your timing, what your needs are. Um, how well did you plan for your opening or if you have an opening? And you're having problems, um, you know, with, with filling it. It just all depends. Do you need to use them? The answer's no. I have plenty of communities that went from zero. Meaning. Lease up, meaning from built up from the ground who did not use any paid referral company and ended up being 100% within 12 months. So, is it possible 100%? It depends on your marketing plan. It depends on how aggressive you are with that marketing plan. And I don't mean that you have to be aggressive with the people, but meaning that you're hitting all cylinders, that's aggressive to me. Right. You're on the social media cylinder. You are on the events cylinder. You are firing off with a good sales process cylinder. You have a good program to keep them engaged cylinder. There's there's all these different cylinders that you can fire off. Right. And so that is the way to have a successful community. Without utilizing them. Now do I feel like they have a place in our market? 100%. I do support them. I've worked really well with several of them over the years. And they were like my, my besties. Right. Um, Um, and they really, really helped me out. As a. Sales manager. And as, as a regional. So I don't want to sound like I come off as. Negative towards them because I'm not. I really do and have loved what I call partners. In helping me to, increase my occupancy. What I see happen sometimes as the market has changed because in my area. I was there when the first person. Like local agency came into my market and interviewed with her because she wants to look at all the different places. She had no senior living experience. Um, but she had a heart to really help out. And so we worked really well together. And she was the first, since then, I can't begin to tell you how many there are in my market. That was like almost, I don't know. I 10, 11 years ago. Um, So. I am a big supporter of them. The thing is, is that the market has changed. The people who've come into the market has changed. Their motivations have changed. And so you have to be a little bit more careful in who you decide to what I call partner with. When should you use them? Well, if you are ramping up, if you're ramping up. And you have not spent the time in marketing. Um, and you're brand new. You didn't spend the time in networking. You didn't spend the time in getting things together cause you're so consumed with the. Opening and the licensing and all the operation stuff. Um, maybe you don't feel like you're good in sales right now, or your marketing person that you hired. Wasn't really good, you know, and you're needing to get that money in and that cash flow ASAP. That might be a good way for you, right? If you have a. room that is hard to fill. Let's say you're doing a shared room and you have a man and you're trying to find another man. Typically males are kind of hard to find. Um, who wants to share a space sometimes. And so that might be a time where you. You, what I call delegate or outsource? That piece of marketing. To a paid referral source. R a paid agency. I say all of that because you want to use them. when your occupancy is low, when you need hard of fill in spaces. Um, when maybe you're just coming into the market, those are the three main reasons. Or if you just want to keep your pipeline full, and they work with people, they keep people on, a nurture sequence for a long period of time. Usually. Which means that they are doing the constant. keeping up with. their own clientele. So at any moment in time that client can say, you know what, we're ready today. We're ready now. And you want to have it in with them so that you could be the place that they look to, utilize right. They should be a partner. I had one, one time who came in and would do the, you know, the, I call it a visits instead of tours, but for you guys sake we'll call it a tour. And. would tour with the family, but what ultimately starts selling the family? Like we'd be like, oh, and look over here. And so almost I could step back. And allow this person. To sell for me. But they wouldn't get all their information. Right. Because they didn't know all the stuff. So I had to make sure I told this person. I need you not to try and sell the family. Let me do my discovery. Let me find out what their needs are and let me do what I do best, which is try and find out what their needs are, because guess what? We may not be the right place for them, depending on what. There. Desires are. And I needed to know that I'm not, it's not a hard sell, like. Yes, you want the move-ins. But do you want someone who's going to move in? And in 60 days, move out. See, they don't care. They're going to get paid their money. So if the person moves in and it's not a right fit and they have to move out in 60 days, You number one has paid them. You have now have another move out. So you need a new person and guess what? They get to take them to another place and get another commission. I mean, it sounds harsh, but. It definitely is what happens in the industry. And it's not everybody. That's why I said find someone who you can partner with. That aligns with your values. That is just so very important. Because some people are in this and it is a sales job for them. It is a moneymaker for them. And their motives may not be in the same. Space as yours. And so. We don't want them to be your 100% outsource marketer, unless that's what you really want. Like, if that's what you want. And you're saying, TIFF, I don't want to do any marketing. I don't want any sales. I don't want to do all this. It is an expensive marketing route. I will tell you, and we'll talk about that next, but, you can do better. Because you're in this to make money. And if you're holistically only utilizing them. You're going to struggle unless you are a small community, you fill up. And your length of stay is longer. So now, okay. This is what I want to do. One other thing communicating with that paid referrals partner that you have. is so important. Because they need to know. Your value proposition. They need to know what you offer, why you're different, not only just your pricing, but they need to know what you're about. So that they can communicate that to the family. If they just come in and make their own suppositions. Um, I had someone this week who reached out to me and said that. She met with a paid, um, agency and the person. Started to critiquing her pricing. And said, well, because you were a new. You can't. Charge as much. And she's like, but I'm a nurse. I have. 20 years of nursing experience underneath me. And then this paid referral company was like, well, I don't feel comfortable telling families that your care is good. Like what. I just told her, you know, that's not the right partner for you. Because number one, his sales ability is only based on people who have. track record. So that means anyone new coming into that area. He wants you to be the low cost leader to come in for him to say that you're good to then, to then send you business. Uh, number one, he's not a good salesman. At the end of the day. You know what I'm saying? And he's not in it for the right reasons. At the end of the day. And I, I, I don't, I'm not passing judgment. I know it sounds like I am. But. Maybe I'm just so passionate about what we do that I see that. In the sales forum, like I see that as a sales. Ploy. And you should not have to devalue your community. For a outside referral source to refer to you because they're basing it on price only to make their sales job easier. I hope that make sense to you. But. That's what it was like. He wants you to make it easy for him to sell. So you're going to lower your pricing. And now he's going to sell a family to move into your place based on pricing and not based on the value that you can give. I know I said a lot. I'm a slow it down. But I am so passionate about this. I'm so passionate about this. So. Um, all right. The other part of this is, how much should you pay? I know I said communication is the key. I'm sorry. Let me go back. Communication is key. So the key. with the communication thing is knowing where their values are, making sure they know your pricing, making sure they know your value proposition, making sure they know where you are, niche in the market. What makes you so different and you can utilize them. As, research too So there's that. What should you pay? So I am, maybe I'm old school. I don't know, but. If you're looking at a local paid referral company. I say anywhere between 70 and 90%. Why do I say that? Not a hundred percent well. Because you have to make money. You have to make money. Like you can't give up your whole business. To an outside source. You can't delegate your income. So 70 to 90% of the rate and not the care. If you have it separated, if you're all inclusive and you do them all together, that's how you have it done. I would kind of go a little bit lower because you still have to pay for your caregivers. So how would that look? You're taking money out of your caregiver's pockets and giving it to an outside source. So basically you are going to pay out of your pocket the first month that person moves in. For the care because you delegated it to. Someplace else or outsource it someplace else for the move in. I personally don't think that's a smart business move. I don't think so. I think there's other ways for you to grow and to do your business without having to do that. Or if they're taking away from the community fee, if you charge a one-time non-refundable community fee and that's helping to offset some of the costs of the move in some of the new things that you're going to do to assimilate your resident into the community, some of the money from the community fee can go towards the upkeep of your community. If you put it in a special pot on your line item, you can do things with that community fee that is for the enrichment of the residents. If you're taking that and paying the referral source from that. So that you can then have the rent at least. I get it. However, it's still taking from the family. I say your community fee is yours. And your rent that you're going to pay paid referral source is theirs. Without the care because you have to pay your caregivers. It also gives you leeway to do bonus runs. So let's just say you're at 85% split. But this particular month, you have two move outs that are unexpected. Well guess what you can do. You can say for this month only I'm going to offer a 95% split for the next 30 days. Or for this month only, I'm doing an extra$500 bonus. Or a thousand dollar bonus or something different because you have given yourself leeway and room to do so. anything over that? Um, is, you know, You're in business to make money. And so the more communities. Decide to outsource their marketing and move ins to these third parties. The higher the cost is for affordability for families because you have a high cost. I mean, I know one of my communities. Um, than I had, or I didn't have at the time it was after I left, but They told me they were paying somewhere upwards, like a hundred thousand dollars in one month in fees to outside referral sources. a hundred thousand dollars, not including the two salespeople that they had on staff. Not including the sales persons bonuses for those move-ins. So you do the math, you do that every single month. And then you wonder why the rates are so high. So there's my little take on contracts. With do you want to be cautious of these are the things that I am going to give you warnings because it has come to my attention that some of these, companies. Are charging not only 100%. Of the rate for move in. But they are also charging retainer fees. Um, why, what are you retaining? What. And they're saying well, because we're going to be doing marketing for you. Um, You know, I have a whole lot to say about that. We're just going to say that's a no-go. If someone is charging a. Almost,$1500,$2000,$3000,$3500 a year retainer before a move in even happened. Yeah. That's a red flag run and run quickly. If they are 100%, we already talked about that. Um, you know, I am not a big fan of 100% contracts. and no, you shouldn't do them. Period point blank. I don't care. No. No. Um, Should you include care? No. Personally, no care goes to the caregivers and to the care of the resident rate can go towards your paid referral sources. The other thing I have talked to someone about is that they have to pay not only a hundred percent, but they have to pay at the time of move in. So your collecting their money at move in and sending it right back out. The person doesn't even have to live there. For any length of time. For the pay referral source to get paid. Um, That is a no go for me. Because. They can send to you everyone. Who's on the edge. And then what happens if something with that particular resident within the first 15 days or the first 20 days. Or what most places have is at least a 30 day clause. Most of the big boxes that I'm aware of have at least a 30 day window length of staying that the resident has to have moved in and stayed for them to pay. If they don't say to 30 days, No one gets paid. So. I say to all of you. Smaller communities that don't know this. 30 days. Should be the length of stay for the contract before anyone gets paid. If they move out before the 30 days, they do not get paid. Number one, it helps you to get residents. Where that person is looking at them to be coming a long-term resident for you, not someone to fill a bed and for them to get paid off of. I'm just giving you the hard core facts about this. So, because this is, has gotten out of control. I want to give you this. Thing to be cautious of. No more than 20%, 25%, 30% of your move-ins. Should be coming from these. Agencies. You should be generating your own move-ins for the majority and having them do no more than 20%, 25% case. In point, I had a community one time where something like 40% of their move ins came from paid referral sources. And the thing is, when that particular source. I got sick. And. Was shut down. That particular community weren't getting the referrals, they weren't getting the business because no one was. So I had her, go out and do the conversations with the skilled nursing. And the discharge planners But when that place didn't, couldn't. It was out of commission. Then they were scrambling. And those are the cautionary tales. Those are the messaging things that should go into your sales calls your meetings with discharge planners and social workers that you know, this can happen. And it does. These are independently owned, small business owners. If something happens to them and they're not available, Who are you sending your refers to? If you get into a pinch. And so those are the things that you want to make sure of. so that you can stay afloat, in your business. If you get pushed back, and this is the thing, and I've heard this week. From about four people, that the. The, professionals inside the medical facilities, meaning skilled nursing, the rehabs. The hospitals are saying, well, we just send all of our business to such and such, you know, we just, it's one person. We contact and that's it. Well, I will say to you, is that means There is a need to make their job easier. Number one. They're looking for ease. So my question to you is how easy are you making it for them. What, what are you doing to make their job easier so that they can think of you and your community? What does your community offer that is different than most communities that they need to know? If you don't know how to communicate your differentiator and say, well, yes, I do understand that you send everyone to this person, but do you realize that. Most communities around here, don't do X, Y, and Z. And what I do is I take your patients who have one, two, and three. And the reason why I'm able to do that is because of. Four or five and six, like you have to be able to communicate the messaging that is of utmost importance. And so for my particular client, she had a niche in her market that was hands down 100%. To die for most other places, don't do the things that she does because she is a nurse and she is able to, to flex and how she cares for her resident. specific residents who have, um, kidney disease. So. Where she got that pushback from skilled nursing facilities around her rehab facilities. That's they send everything out. We worked with a plan we got a marketing plan together. We talked about what her value proposition is. We went over all of that. The very next day, she went to a skilled nursing facility, talked to a discharge planner and walked out with a referral. That next day. Is that not amazing. And I say that because. If you get pushed back. You can accept it. You can ask more questions. But then you need to go home. And figure out what you're doing, how you're doing it, what's your messaging so that you can go back and say, listen, I thought about what you said. And I just wasn't sure if you knew. And then you go in. To who you are. How you serve, what is your story? Why did you get started in this? What is your value proposition to the greater community and how can you make it easier for them? for this particular person. She was like, if they go through a paid referral source, they do it Monday through Friday. They don't really come out on Saturdays and Sundays, but I'm flexible. I can do that. So I'm like, that needs to be one of your messages. That you do assessments on the weekend because believe me a lot of people aren't and so. She utilized that. Right. You have to figure out your way in, and you have to know what discharge planners and social workers and case managers are looking for to make their job easier so that you can get the referrals. And if you don't know, and you haven't identified, that is going to be harder for you to get in there because you don't know their lingo. You don't know what this they're, their pain points. And so for them, They just want to, they just want it off their desk. You need to know. So. I hope this was helpful. If there's more about this that you liked and you want me to expand a pound. A pond. I can't talk. If you would like me to expand. Upon, I guess that's right. Um, I'm happy to do so. Thank you so much. And until next time. Bye.