The Cost Reality of Placement Agencies in Group Living

Utilizing placement agencies as a marketing tool for the assisted living community is not new.  Placement agencies often interact rather consistently with professional guardians and others and while most are not clinical case management professionals, they are called upon to arrange group living services for adults with varying diagnosis.  This includes the mentally ill, the medically fragile elderly and disabled United States veterans.


All placement agencies get paid for the referral – not from the new resident or their representative – but from the facility accepting the placement.  The formula could be a percentage of the first couple of months of assisted living payments, the complete first month or a lengthier payment arrangement.  Is it worth it?  Well it could be.

Let’s say the service charges the first month of payment as a commission or approximately nine- percent, (9%).  If the resident remains with you for three, (3) months you still earned.  If they stay six, (6) months or a year you have earned even more.  The cost of sales is a reality of business.  Imagine an auto dealer firing the sales staff concluding, “they cost money!”.  That dealership would end up with no customers.


Obviously if there are placements coming from other sources wherein a commission is not attached, you will lean toward those first.  However, there is this reality that contract placements reimbursed via public dollars may not be as lucrative as those coming from private placement agencies.  No one earns from empty beds.  This might be a hard pill to swallow for those accustomed to receiving referrals from community mental health agencies, etc. but the scene of the business is changing, requiring providers to do the same.

Of course a provider can turn down any referral.  What is important is that we do not cut off our nose to spite our face.  Better to do the math than take a position that sends us into a long-term cash crunch while waiting for what we perceive to be the ideal placement.

Penny for you thoughts.



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