Strategic Plan - Rev.Aug.2

American Baptist Homes of the Midwest

Strategic Plan 2023-2027

Strategic Plan 2023 – 2027 ABHM Mission: “Create healthy Christian communities that empower older adults, families and people with disabilities. Provide choices for housing, services and technology that enrich body, mind and spirit.”

Plan Summary • Purpose Share the vision for the future of ABHM that was developed through a collaborative approach with community/home office leaders and the board of directors.

• Background ABHM seeks to develop and implement a vision through operations, culture, fundraising, new initiatives, and new business development. This emphasis is influenced by the changing work environment, demand for new and continued services (home care, assisted living, memory care, independent living), continued drive to get the correct mix of services and challenging government reimbursement. Internal focus will be on improving quality of services, engaging employees, fundraising and strong stewardship.

• Vision To fulfill our mission, ABHM seeks to concentrate our efforts in six areas: 1) Exceptional Care, 2) Engaged Employees, 3) Strong Financial Performance, 4) New Development/Growth, 5) Current Operations Profile, 6) Culture. We will strive to improve quality of operations, grow in new markets to reflect a strong mix of services, improve employee culture and establish long term financial viability. Our focus will be on the current geographical locations (states) of our current communities.

In addition to growth, an analysis of current operations is necessary to adjust our lines of business to reflect an acceptable mix. Nursing home beds generate 54% of ABHM’s revenue. In order to be successful, the nursing home percentage should be 40% with other revenue sources bringing in the remaining 60%. This necessary swing in revenue would come from growth, new acquisitions and a realignment of our current senior living operations.

Planning Assumptions and Risks • Liquidity Historically, liquidity (days cash on hand) has been a challenge. It is a weak point regarding potential financing. In addition, it has prevented us from potential growth. Based on our investment banker, the bondholders would like to see around 115 days cash on hand.

Ultimately, ABHM needs to consider the advantageous of increased cash on hand versus the ability to use our cash for potential growth or stability.

• Current operations Due to the Covid pandemic and severe staffing shortages, our current operations are not achieving the performance needed to maintain a solid financial position. In order to be successful, ABHM will need to maintain at least at 1.35 debt service coverage ratio. This give us the opportunity to build financial strength and increase our liquidity for the long term.

• Staffing challenges The ability to find employees to work in the senior living sector has been a challenge. This challenge has been intensified as society continues to struggle with the availability of workers. In order to achieve success, ABHM needs to improve our ability to hire additional employees and maintain a healthy culture that promotes long term retention.

• Pay In general, the work in a senior living community can be rewarding but the pay doesn’t always match the level of pay in other industries. ABHM will always be competitive in the market but we also have to be aware of the financial implications. ABHM relies on government funding as the largest source of revenue. That type of reimbursement is challenging to pay at the upper end and maintain healthy financial performant.

• Other benefits Beyond wages, ABHM needs to be aware of “other benefits” given to employees. In the current environment, we need to be continually looking at employee needs and how that can help build retention and stability.

• Skilled nursing beds It is important to have a good mix in regards to our lines of business. Over the years, ABHM has divested in nursing homes and brought down the number of beds in relation to assisted living, independent living and developmentally disabled units. Skilled beds require more intense staffing and with government reimbursement, the financial performance can be more challenging. In addition, the pandemic had brought uncertainty on who nursing homes will be serving in the future. Currently, nursing homes beds make up 40% of our total available units for residents. The opportunity to dilute that percentage through internal growth or acquisition will be important. There will always be a need for nursing home beds and how ABHM deploys them is important.

• Regulatory compliance Regulatory compliance (especially in nursing homes) has increased over the years. This puts more pressure on administrator and communities as they stay abreast of all the changes.

The increased compliance along with required staffing ratios must be considered as we strive for success.

• Community viability In order for ABHM to be successful, it is important to understand each community and how they are performing financially. Different factors like location (rural/urban), lines of business, staffing availability and resident referrals must be reviewed to assure a stable and profitable future.

• Current debt leverage Currently, ABHM has over $130M in outstanding debt with bondholders. This debt was taken as we repositioned our communities over the past ten years. Although this was necessary to build a strong future, it was 100% financed. This has left ABHM with very little room to take on additional debt without increased financial performance.

• Competition In 2021, 70% of all new senior living communities were built by for profit organizations. The increase in for profit chains in our sector has increased the competition in our locations.

Areas like Denver, Milwaukee and Sioux Falls have seen an increase in competition over recent years.

• Employee culture ABHM’s culture at our communities is a mix of individuality and organizational ideas.

Although each community needs to have an identity, the overall mission and purpose of our organization is better served if consistent across all communities.

Strategies/Values

Christian Faith Our faith is our foundation. ABHM relies on strong Christian principles to guide our team, support our mission and enrich the lives of those we serve.

• GOAL - Improve culture that redefines Christian faith in our mission Strategy - Daily standup - CEO In order to engage employees with ABHM’s purpose, mission and Christian faith, all communities will participate in a daily standup. This short meeting will be an opportunity to focus on the key components of our mission. It will be organized in advance and consistent at every community. This standup will allow employees to understand their purpose and how we enrich the lives of those we serve.

•Metric – Standup participation, employee survey results, employee reviews

Strategy - Celebration of Life - CEO The residents at our communities are why we exist. In order to properly pay our respects, any person that passes away is brought through the front door and given respect and honor from all available employees.

•Metric – Resident survey results, staff participation, family feedback

Strategy - Pastoral engagement - CEO ABHM was founded on Christian principles. In order to fulfill our mission, every employee and resident should have the opportunity to have access to our pastoral care director. In addition, pastoral directors will have interaction with various churches in the local community.

•Metric – Customer satisfaction survey, number of churches engaged with the community

Service Excellence We are called to serve. ABHM is committed to providing the highest quality care and service within an environment of compassion, integrity and respect.

• GOAL – Improve resident culture Strategy – Welcoming resident onboarding process - COO For all ABHM communities, establish a consistent, welcoming and engaging onboarding process. In addition, enlighten residents on our mission and purpose so they understand why we exist.

•Metric – Resident satisfaction surveys, family feedback

Strategy - Consistent marketing/admission initiatives for future residents and broader community - CEO For all communities, establish a consistent marketing message for each line of business.

Define best uses of media to create a mission driven approach to attracting future residents. Define a standard as it relates to marketing material, logo, website and other information presented to the residents and broader community.

•Metric – Conversion ratio, future resident feedback, defined standards implemented to the communities and Crest Services

• GOAL – Provide quality service Strategy – Technology implementation - CFO Advanced technology will help ABHM fulfill their mission. Implement technology improvements that enhance residents’ lives. Consider technology that eases the strain on staffing and improves employee well-being.

•Metric – Implement two technology projects that enhance resident or employee satisfaction

Strategy – Wellness - COO Reinvigorate participation rates for all levels of care with specific focus on the restorative nursing program in Skilled Nursing. ABHM will set a baseline consistently optimizing the case mix through education and documentation.

•Metric – Case Mix, participation rates

Strategy - Survey readiness - COO In order to attain the highest quality and achieve strong survey results, ABHM will develop and implement a survey readiness program that includes mock surveys, staff interviews, training and resident interviews.

•Metric – At or below the number of survey tags compared to the state average. No substandard level of care.

Increase in “health inspections” score on CMS 5-star rating

Trusted Stewardship Our reputation relies on trust. At ABHM, we are committed to being honest, effective stewards of the diverse resources entrusted to our care.

• GOAL – Improve operating margin for current communities Strategy – Refinance 2013 tax exempt bonds - CFO Refinance the Series 2013 bonds to achieve no less than a 5% NPV savings. Opportunity to refinance comes 90 days before the ten year call period.

•Metric – Partner with investment banker to refinance 2013 bonds that meet specific criteria

Strategy – Consistent admission process - COO A consistent admission process is necessary to guarantee proper reimbursement from payors. In addition, all private pay residents must be vetted for needed financial assets.

ABHM will implement an ABHM standard for admissions in all lines of business that ensures a complete and accurate process.

•Metric – 90% completion rate per ABHM internal audits

Strategy – Consistent MDS process for maximized reimbursement - COO Achieving the highest reimbursement is necessary in today’s financial environment. In order to maximize our revenue, ABHM will develop a consistent MDS process at all SNF communities.

•Metric – Increased reimbursement rate

Strategy - Define/establish market viability at each location - CEO In order to be good stewards and maximize operating margin and quality care, analyze ABHM communities. Define proper lines of business and specify strengths/weaknesses.

Determine any changes to improve operational performance while providing the best care possible.

•Metric - Provide board of directors with specific reports for each community

• GOAL – Expand ABHM services Strategy - Expand Crest to two new locations. Increase census capacity in current counties. Review types of services provided in our locations. - CEO Implement a plan to expand Crest Services in three ways: • Increase capacity at our current locations by adding new homes to our portfolio.

• Expand services to two new counties in Iowa.

• Increase the types of services provided that meet our mission and purpose. Example psych services.

•Metric – Increased census, services in new counties, new programing services

Strategy - Expand Home Care to Albert Lea (Mn) and Denver (Co) locations CEO In order to provide In Home care at our various locations, ABHM will continue implementation in Albert Lea (Mn) and Denver (Co) markets.

•Metric – Implementation of Home Care in the specific market

Strategy - Acquire two Assisted Living or Assisted Living/Memory Care - CEO Add two new communities to the ABHM obligated group. Specifically focus on assisted living or assisted living/memory care. The additions would need to be in our current geographical location. The intent is to purchase with a significant equity contribution.

• GOAL – Grow Foundation through donations and specific projects Strategy – Increase the Foundation assets through donations, outreach and community projects.

•Metric – Increased donations, increased number of donations, increased number of community projects funded by donations

Engaged Employees Our strength lies in our people. At ABHM, we embrace the diverse talents of our team, recognize their dedication and support their ongoing success.

• GOAL – Improve employee culture Strategy - Welcoming employee onboarding – VP/HR To improve the employee experience, ABHM will develop a consistent process for onboarding new employees. This new experience will include the best practices from our various communities.

•Metric – Employee satisfaction survey, turnover rate

Strategy - Employee appreciation program – VP/HR In order to recognize the great work of our employees, ABHM will develop a consistent appreciation program for employees. This process will consider current practices at the communities as well as new programs.

•Metric – Employee satisfaction survey, turnover rate

Strategy - Leadership development – VP/HR Leadership at the community level is a key driver when it comes to employee satisfaction and retention. In order achieve a healthy culture, ABHM will establish a leadership development program to assist supervisors in understanding their role and keys to success.

•Metric – Employee satisfaction, turnover rate

• GOAL – Provide quality staff Strategy - Continue foreign nurse program – VP/HR As staffing challenges increase, ABHM will look at other methods of attracting new employees. A foreign nurse program was started in 2022 to hire strong nurses and C N A’s. If successful, ABHM will continue this program on a long term basis.

•Metric – Lower nurse agency costs, employee satisfaction, retention rate of foreign nurses

Strategy – Mentor Program – VP/HR In order to achieve a strong employee culture, every new employees needs to feel comfortable in their job and environment. In order to maintain successful employees, a mentor program will be developed to assist new employees in their day to day role.

•Metric – Employee satisfaction, turnover rate

Create healthy Christian communities that empower older adults, families and people with disabilities. Provide choices for housing, services and technology that enrich body, mind and spirit.