As they say in the movies and on television: “The following is based on a true story. The names and places have been changed to protect the innocent.” Of course, in the case of this story, it is really an amalgam of a number of stories and incidents we have heard throughout our 35 years.
This is a cautionary tale.
The phone at Sunnyside Village’s front desk wouldn’t stop ringing that August weekend afternoon. One by one, residents of the prestigious Gulf Coast senior living community called to report the same problem: their air conditioning had stopped working. In the stifling Florida heat, the situation quickly evolved from an inconvenience to an emergency.
James Chen, Sunnyside’s Facilities Director, stood on the rooftop of the 160-unit independent living tower, his expression growing grimmer by the minute. Beside him, the HVAC contractor shook his head – the building’s central chiller had suffered a catastrophic failure. There would be no quick fix, no simple repair. As beads of sweat rolled down his face, James pulled out his phone to make the call no facilities director wants to make on a Saturday afternoon.
“I need to speak with Sarah immediately,” he told the CEO’s assistant. “It’s an emergency.” Sarah Martinez, Sunnyside’s CEO, was celebrating her daughter’s birthday when she got the call. Twenty minutes later, she sat in her office, absorbing the staggering numbers James presented.
“A replacement chiller costs $280,000 with a 16-week lead time,” James explained, his voice tense. “We can cut that to 12 weeks, but it comes with a $60,000 expediting fee. And that’s just the beginning.” Sarah leaned forward as James continued outlining their options – none of them good.
The temporary solution was a truck-mounted rental chiller at $35,000 per month. With the 12-week wait for a permanent replacement, they were looking at $105,000 in rental costs alone. But even this solution couldn’t help them immediately. Being weekend hours, the earliest they could get the rental unit delivered and installed was Tuesday morning.
“So what happens to our residents until then?” Sarah asked, though she already knew the answer. Emergency hotel arrangements for 160 seniors would cost nearly $100,000 for three nights. As she did the math in her head, the total kept climbing – over half a million dollars for what should have been a $280,000 replacement.
Later that evening, as Sarah watched her staff coordinate the emergency resident relocation, she couldn’t help but think about the deeper implications. Beyond the immediate financial hit, she worried about potential health risks to residents, possible water damage from the hydronic systems, the strain on her staff, and the immeasurable cost to Sunnyside’s reputation.
The crisis brought to mind something she’d read from facilities expert Todd Gieselin about the exponential cost of emergency repairs. He’d demonstrated how even a $50 failed toilet valve could lead to thousands in damage and disruption. Now she was living that principle on a massive scale.
A week later, with the rental chiller humming away and residents back in their homes, Sarah called her management team together. “We need a new approach to capital planning,” she announced, unveiling a risk assessment matrix that would help them evaluate both the probability and severity of potential equipment failures. “We’re going to plot every major system we have on this matrix, from the chillers to the backup generators.”
Today, Sunnyside Village has become a model for proactive capital planning in senior living communities. Their systematic approach to evaluating and prioritizing equipment replacement has prevented countless potential emergencies. Sarah often shares their story at industry conferences, reminding colleagues that in senior living, planning ahead isn’t just about protecting the bottom line – it’s about protecting the residents who call their communities home.
While this story is fictitious in its details, it is based on actual events. Not all are on the scale of the chiller example above, but the main point of each story remains the same: not having accurate forecasts and budgeting leads to costly replacements that will far exceed the cost if the replacement is handled on a more timely and systematic basis.
zumBrunnen has 35 years of experience in helping facility owners and operators plan for the future with a thorough Capital Reserve Audit that leads to a thoughtful forecast of capital needs. As we say, We Solve Problems By Preventing Them.
