Holiday Strategic Planning Guide for Senior Living CFOs: Beyond Budgets into 2026 Growth
- kayte44
- Nov 18
- 7 min read
By Lindsey Hacker, President & CFO, Distinctive Living | Head of Proviso
As we close out 2025 and finalize our 2026 budgets, I want to share some strategic thinking that's been shaping how I approach the year ahead—both at Distinctive and in the conversations I'm having with CFOs across our industry.
Budget season is typically about defense: controlling labor costs, reducing expenses, managing occupancy pressures. But 2026 needs to be different. The silver wave we've been anticipating for years is finally here. The 65+ population is growing 3x faster than the general population, and we're sitting on unprecedented demand.
So why are we still operating like it's 2019?
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The Traditional Playbook Is Broken
Here's the pattern I see across most portfolios:
Labor costs: 55-65% of operating expenses, managed primarily through staffing minimums and turnover absorption
Revenue strategy: Occupancy-driven with standard rate cards and early-move-in discounts to hit census targets
Margin focus: Expense control to maintain debt service coverage ratios (typically 1.20x-1.35x DSCR)
Community positioning: Homogenized across portfolio with minimal differentiation
The result? We're leaving significant revenue on the table while exhausting our teams trying to control costs that are largely fixed.
Let me share a different framework I'm using for 2026 planning.
Rethinking Community-Level Strategy: The Individualization Imperative
The fundamental shift: Stop managing your portfolio as a collection of identical units. Start managing it as a portfolio of distinct market positions.
Here's what I mean:
Community A: The Programming Powerhouse
One of our communities has an exceptional programming director—the kind of person who creates experiences residents talk about for weeks. We analyzed her impact:
Resident satisfaction scores: 94% (vs. 87% portfolio average)
Referral rate: 38% of new move-ins (vs. 23% portfolio average)
Family engagement: 6.2 family visits per resident monthly (vs. 4.1 average)
Traditional approach: Pay her the standard programming director salary ($48K-$52K), ask her to do what everyone else does, hope she doesn't leave.
New approach for 2026:
Elevate her compensation to reflect her impact ($65K + performance bonus)
Invest in enhanced programming budget (+$35K annually for trips, experiences, speakers)
Create premium programming packages residents can opt into:
"Explorer Package": Monthly off-site cultural experiences - $250/month
"Lifelong Learning Series": Specialized classes and workshops - $150/month
"Adventure Club": Quarterly weekend getaways - $400/quarter
Projected impact:
30% of residents opt into at least one package
Average additional revenue per participating resident: $200/month
For 100-bed community with 92% occupancy: $55K+ in annual ancillary revenue
Margin on programming services: 65-70% (vs. 25-30% on base rent)
But here's the bigger impact: Premium programming becomes a competitive differentiator. We can eliminate early-move-in discounts (currently costing us $180K annually at this community) because we're not competing on price—we're competing on experience.
Net financial impact: $235K in additional annual contribution margin, plus improved retention (10% reduction in move-outs = $156K in avoided vacancy costs).
Community B: The Wellness Hub
Different community, different strength. This property has:
PT/OT space that's underutilized (built for 40 sessions/week, currently doing 18)
Strong relationships with local healthcare providers
Demographics skewing toward younger seniors (75-82 vs. 82-87 at other communities)
Traditional approach: Use the therapy space for the residents who need it, leave it empty otherwise.
New approach for 2026:
Partner with local PT/OT practices to offer services to community + external clients
Create wellness packages for residents:
"Active Aging Program": Personal training, nutrition counseling, wellness coaching - $300/month
"Preventive Care Package": Monthly health screenings, fall prevention, medication management - $200/month
Offer community-based therapy services to local seniors (non-residents) - generates revenue + pipeline
Projected impact:
25% of residents opt into wellness packages: $138K annual revenue
External therapy clients: $95K annual revenue (10 clients weekly at $90/session)
Combined margin: 68% (primarily incremental revenue on existing fixed costs)
Strategic benefit: The wellness positioning attracts a different demographic—healthier, younger seniors with longer expected tenure and higher lifetime value. Our actuarial analysis shows this reduces expected move-out rates by 15% and extends average length of stay by 14 months.
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Market Assessment & Strategic Positioning: Know Your Competitive Reality
Most portfolio-level market assessments I see are too broad to be actionable. "Strong market demographics, moderate competition, favorable growth trends."
That tells me nothing about how to win.
The 2026 approach: Community-specific competitive intelligence that drives pricing and positioning strategy.
Framework I'm using:
Community-Level Market Analysis
For each community, answer these questions:
What is our actual competitive set? (Not "senior living communities within 5 miles"—which specific communities are we losing prospects to, and why?)
What is our pricing position relative to direct competitors? (Not average market pricing—pricing for comparable units at the 3-5 communities we compete with most directly)
What are our occupancy trends relative to direct competitors? (Are we growing while they decline? Stable while they grow? What does that tell us?)
What do lost prospects tell us? (Track every lost prospect: where did they go, why did they choose that community, what was the decision driver?)
What do our current residents value most? (Survey data + actual behavior: What do they use? What do they recommend to friends? What would they pay extra for?)
Example: Community C Market Assessment
Traditional analysis:
Market: 15,000 seniors 75+, growing 8% over 5 years
Competition: 8 senior living communities within 5 miles
Our occupancy: 89%
Conclusion: "Healthy market, moderate competition, opportunity to grow occupancy"
Actionable analysis:
Our actual competitive set: 3 specific communities (we lose 78% of prospects to these three)
Why we lose:
Competitor A: $450/month less expensive, comparable amenities (43% of losses)
Competitor B: Better location (walkable downtown), newer building (28% of losses)
Competitor C: Superior dining program, chef-driven menu (29% of losses)
Our occupancy trend: Flat at 89% for 18 months while market average grew to 92%
What our residents value most:
Community culture and resident relationships (92% cite this)
Staff consistency and quality (88%)
Activities and programming (81%)
Dining variety (76%)
Location (68%)
Strategic implications for 2026:
Competitor A (price-driven): Don't compete on price. We'll never win that game sustainably. Instead, emphasize culture, staff quality, and programming (our strengths vs. their offering). Create mid-tier entry options that address price sensitivity without across-the-board discounting.
Competitor B (location/building): Can't change our location or building age. Can emphasize our compensating advantages: mature landscaping, established community culture, staff tenure. Consider shuttle service to downtown area as added amenity.
Competitor C (dining): This is addressable. Invest in dining program enhancement:
Hire experienced chef (vs. food service manager): +$35K annually
Enhanced food budget: +$2.50 per resident per day = +$84K annually
Create restaurant-style dining option for dinner
Total investment: $125K annually
Expected return: Win 15% more of prospects currently lost to Competitor C = 8 additional move-ins = $432K incremental revenue
The key insight: We're not in a "healthy market with opportunity to grow." We're in a competitive market where we're losing specific prospects to specific competitors for specific, addressable reasons. Now we can do something about it.
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Capital Structure & Partner Returns: The 2026 Financing Reality
Interest rates have fundamentally changed the game. The 3.5%-4.5% debt we refinanced in 2020-2021 is now 6.5%-7.5% for new financing or refinancing.
What this means for operating performance requirements:
Example community debt structure:
Property value: $25M
Debt: $18M (72% LTV)
Interest rate: 6.75%
Annual debt service: $1.52M
Required DSCR: 1.25x minimum
Required NOI: $1.90M minimum
But here's what most CFOs aren't calculating:
Your partners (whether equity investors, developers, or ownership) didn't invest to achieve 1.25x DSCR. They invested for returns.
Typical return expectations:
Preferred return: 8-10% annually
IRR target: 15-18%
Cash-on-cash return: 10-12% after stabilization
For the example above:
Equity invested: $7M
Preferred return (8%): $560K annually
Combined requirements: Debt service ($1.52M) + Preferred return ($560K) = $2.08M NOI minimum
That's 1.37x DSCR just to meet partner expectations—not 1.25x.
The gap I'm seeing: Most operators are managing to DSCR covenants (1.20x-1.25x) but not to actual return requirements. That creates tension with ownership, limits growth capital, and constrains strategic flexibility.
The 2026 imperative: Operate for partner returns, not just covenant compliance.
This is why the ancillary revenue strategy matters so much:
Traditional community (from earlier example):
NOI: $1.9M
Debt service: $1.52M
DSCR: 1.25x ✓ (meets covenant)
Remaining for equity returns: $380K
Return on $7M equity: 5.4% (fails partner expectations)
Repositioned community with ancillary strategy:
NOI: $2.5M (+32%)
Debt service: $1.52M (unchanged)
DSCR: 1.64x ✓✓ (strong coverage)
Remaining for equity returns: $980K
Return on $7M equity: 14% ✓ (meets partner expectations)
What this enables:
Access to growth capital for acquisitions or developments
Partnership confidence and alignment
Your credibility as an operator who understands the full capital stack
Strategic flexibility to invest in value-creation initiatives
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Final Thought: This Is Our Moment
The senior living industry has spent the past five years recovering from COVID, managing labor challenges, and navigating economic uncertainty. We've been in defensive mode.
But the demographic wave we've been anticipating for decades is finally here. The 65+ population is growing by 10,000 people per day. They're healthier, wealthier, and have higher expectations than previous generations.
They don't want institutional care. They want lifestyle, experience, community, and services that enhance their independence.
We can provide that—but not with 2019 operational models.
2026 is the year we shift from defense to offense. From cost control to revenue innovation. From homogenized portfolios to strategically differentiated communities. From covenant compliance to partner value creation.
The operators who make this shift will thrive. The ones who don't will struggle to compete.
I hope this framework is useful as you finalize your plans for the year ahead. I'd welcome your thoughts, questions, or challenges to anything I've outlined here.
Here's to a strategically ambitious 2026.
Question Worth Asking:
How long does your month-end close actually take? And what strategic work could your finance team do with the recovered time?
Thank you for being an important part of this industry.
“I know firsthand the balance we walk as senior housing CFOs — between mission and margin, between care and capital. My goal is to help you lead with clarity, confidence, and purpose.”
-Lindsey Hacker
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