A Time and Place for Outside Support: A Framework for Senior Living Outsourcing Decisions
A practical framework for senior living outsourcing decisions: how consultants and outsourced partners can help Aging Services leaders lower cost, lift performance, and strengthen quality and compliance.
Executive Summary
Every department in an Aging Services organization runs on an operating model, whether leadership chose it deliberately or inherited it. Dining, rehabilitation, facilities, housekeeping, IT, and finance can each be run in-house, run in-house with subject-matter-expert (SME) support, or delivered by an outsourced partner. This paper gives C-suite leaders a practical framework for deciding when and where outside expertise delivers the best combination of economy and performance, and how to build partnerships that keep delivering.
The operating-model decision is a strategic-fit decision. For many departments, the strongest results in cost, performance, quality, and compliance come from pairing the organization’s own team with high-quality consultants and outsourced partners.
Outside partners bring what a single organization rarely can build alone: specialized expertise, purchasing scale, recruiting depth, proven systems, and current regulatory knowledge. Used well, they can lower total cost while raising performance.
The best partnerships are structured to succeed. Clear scopes, aligned incentives, shared performance data, and regular market-informed reviews keep good relationships strong and sustainable for both sides.
The Opportunity
Why the operating model is a C-suite decision
Labor dominates the Aging Services budget, and leaders are right to watch it closely. Ziegler’s 2026 workforce survey found that employee compensation averages 56.2% of operating budgets, that 90% of providers reported higher staffing costs over the prior year, and that turnover across the workforce stands at 35.4% [1]. The remaining roughly 44 cents of every operating dollar, spent on services, supplies, and contracts supporting dining, rehabilitation, pharmacy, facilities, and administrative and technology services, is where specialized partners and consultants can make a great difference. Yet the underlying operating decisions rarely receive attention until third-party contracts come up for renewal [2]. The partner-addressable pool is even larger, because the 56.2% compensation share includes the staff of every self-operated dining, rehabilitation, housekeeping, and maintenance department, so operating-model decisions reach into the labor cost bucket as well [1].
Choosing to self-operate the kitchen, partner with a therapy provider, or outsource payroll shapes the organization’s cost structure, performance, and risk for years. Agreements that are not revisited can drift from the market over time, even when the partnership itself is excellent. Regular, collaborative review keeps pricing aligned with the market and protects the relationship.
56.2% compensation share of budget
40.0% dining services turnover
80% plan to hold or grow outsourcing (cross-industry)
Sources: Ziegler CFO Hotline, 2026 [1]; Deloitte Global Outsourcing Survey, 2024 [3]
Across industries, leaders continue to lean on outside partners. Deloitte’s 2024 Global Outsourcing Survey found that 80% of executives across industries plan to maintain or increase their investment in third-party outsourcing. The same survey found that 70% had selectively brought some previously outsourced scope back in-house over five years, a sign that organizations are refining which work goes to which partner, not retreating from partnership [3]. Sophisticated organizations match the model to the function and revisit the match as conditions change.
The question is not whether outside expertise has value. It is where it creates the most value, and in what form.
Three operating models, defined
In-house (self-operated).
What you own: staff, management, systems, and results.
What a partner provides: supplies and discrete services.
Best fit when: scale supports dedicated leadership, culture demands self-operation, and the enterprise is committed to necessary investment.
Keys to success: capital investment, strong leaders, good systems, and periodic outside benchmarking to confirm performance.
Hybrid (in-house with SME support).
What you own: frontline staff, culture, and the budget.
What a partner provides: management, compliance oversight, systems, benchmarking, or project expertise.
Best fit when: the organization values its own team but needs expertise or systems it cannot build economically.
Keys to success: clear division of roles and shared performance metrics.
Outsourced (managed services).
What you own: the relationship, oversight, and ultimate accountability for outcomes and regulatory compliance.
What a partner provides: staff, management, systems, specialized expertise, and (potentially) capital.
Best fit when: specialized expertise, scale, or complexity make a partner the most effective and economical choice.
Keys to success: well-defined scope, aligned fee structures, and regular joint performance reviews.
In-house delivery can be economical when the organization can invest in the right leaders and in systems that track key metrics and report accurately. Outsourced partners often deliver better net economics and stronger performance when scale, specialization, or regulatory complexity make those investments impractical for a single organization. Hybrid models combine the two: the organization employs the team and keeps its culture, while a partner supplies management, systems, and specialized expertise [2]. Each model has a time and place, and each works best with a partner or advisor who brings market perspective. Whatever the model, the license stays with the organization: CMS holds a nursing home responsible for services furnished under outside arrangements [18], so outsourcing transfers the work, not the accountability. Operators should require partners to maintain and report on compliance, while recognizing that a survey citation lands on the facility itself.
Five questions that point to the right model
The right operating model for any department depends on five factors. Leadership teams that answer them candidly, function by function, usually arrive at a mixed departmental portfolio in which outside partners play a meaningful role.
Scale. Is volume large enough to support qualified, dedicated leadership and the systems that the leader needs? A partner can spread the cost of leadership, software, and compliance infrastructure across many clients, giving a single-site community capabilities it could not afford alone.
Specialization and regulatory exposure. Does the function depend on expertise that changes quickly, such as Medicare payment rules, life safety codes, cybersecurity threats, or cost report requirements? Specialist partners invest heavily in staying abreast of these changes.
Workforce stability. Can the organization recruit and retain for this function? Partners with regional or national recruiting pipelines, training programs, and bench depth can stabilize hard-to-staff departments.
Resident-experience centrality. How visible is the function to residents and families? Highly visible services benefit from both strong culture and strong expertise, which is why many providers pair their own frontline teams with experienced partner management.
Capital and leadership bandwidth. Does the model require capital or management attention the organization cannot spare? Partners can bring investment along with leadership capacity. However, leaders should evaluate any partner financing based on its total cost over the life of the agreement (including any unamortized balance the organization would owe if the agreement ends early).
When outside expertise adds the most value
These conditions signal that a consultant, an outsourced partner, or a benchmarking review is likely to pay for itself many times over:
A major contract renews within the next 12 to 18 months
A department leadership position is vacant, or about to be
Turnover or agency use runs above peer levels
A payment or regulatory change alters the economics (as PDPM did in 2019)
Survey deficiencies, a failed inspection, or a cyber incident
Budget variances that recur without a clear explanation
A major capital project or a change in campus footprint
Senior living outsourcing, department by department
1. Dining Services
Dining is among the most visible services a community delivers, among the most important to residents and families, and among the hardest to staff. Dining turnover reached 40.0% in 2026, and 48.5% of providers named dining staff among their hardest positions to fill [1]. At the same time, resident expectations keep rising: restaurant-style and experience dining, wellness-focused menus, mobile ordering, and consistent, hotel-caliber hospitality [4]. Meeting those expectations every day takes culinary talent, purchasing power, technology, and management depth that few single organizations can sustain on their own.
This is where experienced third-party dining operators excel. A strong partner can take a dining program to the level of sophistication, economy, and resident experience the organization targets, and then hold itself accountable for staying there.
In-house: Dining is a signature of the community’s brand, the organization can support a highly experienced director with a comprehensive skill set, and procurement is disciplined.
Hybrid: A strong in-house team gains culinary leadership, menu engineering, purchasing power, and cost controls through a management agreement or a dining SME.
Outsourced: The organization wants a proven culinary, hospitality, and workforce platform that delivers its targeted resident experience at a predictable cost, especially where turnover is persistent or the program spans several levels of care with complex therapeutic diets.
Partnership lever. Structure fees so both parties win: a fixed management fee with a capped annual escalator, a gainshare on verified cost improvements, and incentives tied to resident satisfaction and budget performance. Require that rebates, volume allowances, and other purchasing income be disclosed and either credited to the organization or reflected in the fee. Shared, transparent reporting on labor, insurance, food cost, and purchasing income builds trust on both sides [5]. Setting clear targets at the outset for resident satisfaction, food quality, and cost per resident day lets the partner design the program to hit them.
What a third-party dining partner brings. For many communities, a third-party dining partner is often the most direct route to a dining program that performs at the level leadership wants, at a cost it can predict:
Sophistication. Registered dietitians, executive chefs, and menu-planning, recipe-costing, and nutrition-analysis technology, including AI-assisted menu optimization and real-time performance tracking against industry benchmarks [6]. Partners also bring structured culinary training (one national operator runs a culinary advancement series with the Culinary Institute of America [7]).
Economy. National purchasing scale and direct access to large food-procurement networks [7], provider-reported savings of 8 to 10% on capital equipment [8], and cost-control tools that manage food cost, production, and labor scheduling to budget.
Workforce stability. Recruiting pipelines, onboarding, training, career paths, and relief management that stabilize a department where turnover runs at 40% [1][7].
Resident experience at the targeted level. Hospitality training platforms, experience dining, and wellness programming [4], delivered to service standards and satisfaction metrics the organization defines and the partner is accountable for.
Compliance and safety. Current expertise in food-safety regulations and sanitation standards, with monitoring tools that support survey readiness [6][7].
2. Rehabilitation
Rehab is where the operating-model choice carries large revenue consequence. The Patient Driven Payment Model (PDPM) reshaped therapy economics. Since October 2019, Medicare Part A payment has been driven by resident clinical characteristics rather than therapy minutes, which rewards programs that manage outcomes, documentation accuracy, and cost rather than volume. Therapy partners bring compliance infrastructure, clinical programs, outcome analytics, and payer expertise that many operators cannot build internally. Hybrid structures, with in-house therapists and third-party operational and compliance oversight, can control costs and improve functional outcomes and revenue when well-designed [9].
In-house: The organization has clinical leadership and is willing to invest in systems to manage productivity, denials, Section GG and outcomes analytics, and compliance.
Hybrid: The organization employs its therapists and engages a partner for program management, compliance, and analytics [9].
Outsourced: Skilled census is very small or large, billing is complex, or the organization values a partner’s full clinical, reimbursement, and compliance platform.
Partnership lever. Revisit rate structures with your partner periodically against the market. Terms written years ago can drift, and the case study below shows how a third-party review can capture value while preserving a valued partnership. Benchmark Medicare Advantage and other payer rates alongside Part A. Keep each reimbursement category and line of business at fair market value.
Case in point: weighing every option for a three-site rehab program. An operator with roughly 150 skilled nursing beds across three full-continuum campuses had partnered with the same rehab provider for many years. Clinical quality and resident satisfaction were excellent. When the operator engaged Expense Consulting to review its spend, our benchmarking found the Medicare Part A rate, billed as a percentage of the Medicare Part A per diem, at 22% against a regional market of 12 to 14%, a legacy of terms written years earlier. All figures below are annual.
Update Part A rates to market with the incumbent partner (same model): $430,000 est. savings
Update the outpatient office lease to market: $15,900 revenue offset
Bill outpatient services under the operator’s own provider number: $307,000 net revenue gain
Move skilled rehab to a hybrid model (in-house staff, partner management): $580,000 est. savings
Bring the entire program in-house: $888,000 est. savings
The three staffing-model options were alternatives, but not additive. A fully in-house program showed the largest gross savings, but it did not match this operator’s capabilities, culture, or priorities, and it would have given up the clinical platform and expertise the partner provided. Updating terms with the incumbent partner captured nearly half of the gross in-house savings, with none of the transition risk or added management burden, while keeping a relationship residents and staff valued. The lesson: one size does not fit all, and the right partner, on market-sound terms, is often the best option.
3. Facilities Management
Facilities combine day-to-day maintenance, long-range capital planning, and regulatory exposure. CMS requires nursing homes to meet the 2012 editions of the Life Safety Code (NFPA 101) and the Health Care Facilities Code (NFPA 99) [10], and sprinkler installation and maintenance have ranked among the most frequently cited life safety deficiencies [11]. Maintenance teams are relatively stable, with 24.4% turnover [1], but specialized trades, code expertise, and engineering-led capital planning are areas where experienced partners add clear value.
In-house: Day-to-day maintenance, resident work orders, and grounds, where responsiveness shapes the resident experience.
Hybrid: In-house maintenance staff supported by a partner for facilities leadership, capital reserve planning, or life safety compliance, with specialized trades (fire protection, elevators, HVAC controls, generators) under service agreements with qualified providers.
Outsourced: A full facilities management partner brings engineering depth, preventive-maintenance systems, and capital planning, especially for large or aging campuses.
Partnership lever. Consolidate preventive-maintenance and trade agreements with qualified partners, align them on clear service levels, and review pricing against the market on a regular cycle.
4. Housekeeping and Environmental Services
Housekeeping and laundry are labor-intensive, process-driven, and central to infection prevention. Housekeeping and environmental services turnover ran 26.9% in 2026 [1]. The outsourced market is mature and experienced: Healthcare Services Group, a national provider, delivers environmental services, laundry, linen, facility maintenance, and dietary services to approximately 2,800 facilities [12]. Partners at that scale bring standardized training, infection-control protocols, supervision depth, and purchasing leverage on chemicals and linen.
In-house: The workforce is stable, housekeepers are part of daily resident relationships (particularly in independent and assisted living), and a strong supervisor is in place.
Hybrid: In-house staff supported by partner management, training, and chemical or linen programs, or a laundry partner alongside an in-house housekeeping team.
Outsourced: A partner’s training, supervision, and protocols can strengthen infection control and survey readiness, or laundry volume benefits from a provider’s economies of scale.
Partnership lever. Agree on clear service standards and pricing per square foot or per resident day, and review staffing-plan fill together, including credits for vacant positions.
5. Pharmacy
Pharmacy touches clinical quality, survey risk, and cost at once, and few Aging Services organizations dispense their own medications. Federal rules require a licensed pharmacist to review each resident’s drug regimen at least monthly and require routine and emergency medications to be dispensed through a licensed pharmacy. Under PDPM, the non-therapy ancillary (NTA) component pays for high-cost drug conditions, so pharmacy data and coding accuracy carry revenue consequences as well as cost. Drug pricing and Part D plan coverage move quickly, which is why pharmacy contracts should be reviewed annually.
In-house: Rare. Large multi-site systems with the volume to license and staff a closed-door pharmacy, and to carry the inventory, staffing, and regulatory burden that comes with it.
Hybrid: In-house nursing and medication management supported by a long-term care pharmacy partner and an independent consultant pharmacist for regimen reviews, with the organization owning formulary decisions and pricing oversight.
Outsourced: A long-term care pharmacy provides dispensing, packaging, delivery, consultant pharmacist services, Part D and Medicaid billing support, and medication-management technology. This is the standard model for most communities.
Partnership lever. Benchmark dispensing fees, per-unit drug pricing, house-stock and non-covered charges, and the returns-and-credits policy against the market. Require formulary-compliance reporting, delivery and medication-error metrics, and a clearly defined consultant-pharmacist scope.
6. IT Services
Healthcare has recorded the highest data breach costs of any industry for 14 consecutive years. IBM’s 2025 report put the average healthcare breach at $7.42 million, with a 279-day cycle to identify and contain it [13]. Managed service providers can deliver around-the-clock monitoring, security operations, and the safeguards HHS and LeadingAge recommend, including risk assessments, penetration testing, and multifactor authentication [14][15].
In-house: Larger multi-site organizations that can staff an IT director or CIO to own strategy, the EHR, and user support.
Hybrid: An in-house IT leader who owns the roadmap, with a managed services partner for help desk, network monitoring, and security operations. For most mid-size organizations, this is the strongest option.
Outsourced: Fully managed IT with a virtual CIO gives smaller organizations enterprise-grade capability without the cost of an internal department.
Partnership lever. Define service levels and security responsibilities in writing and confirm the partner meets your cyber insurance requirements. Review licenses and agreements with your partner periodically to keep them aligned with actual use.
7. CFO and Finance Functions
Finance already relies on outside specialists across much of the sector. Ziegler’s January 2025 CFO Hotline found that more than half of senior living respondents outsource at least one accounting function. Among those that do, the most common were cost reports (25%), skilled nursing billing (14%), and tax preparation (14%) [16]. Outsourced accounting and fractional CFO support bring specialized expertise, scalability, faster and more accurate monthly closes, and stronger board reporting [17].
In-house: The CFO, controller, budgeting, and board reporting are all addressed in-house, where scale allows a full internal team.
Hybrid: In-house finance leadership with outside specialists for cost reports, reimbursement, revenue cycle, audit, actuarial studies, and expense benchmarking.
Outsourced: Outsourced accounting and fractional CFO support give smaller organizations, or any organization covering a vacancy, senior expertise at a fraction of the cost of a full-time hire.
Partnership lever. The CFO is the natural steward of partner relationships and the executive best placed to decide where outside expertise will deliver the greatest return in departments run in-house or under a hybrid model.
Building partnerships that perform
The operating model sets the structure. Partnership practices determine how well it performs. Five disciplines keep every department, and every partner relationship, strong and market-sound [2]:
Operational decision-making. Be clear about who defines requirements, who selects partners, who approves changes in scope or spend.
Performance review. Meet with partners on a schedule to review results against shared expectations. Good partners welcome the structure, and it surfaces improvements early.
Billing accuracy. Reconcile invoices against agreed rates and actual utilization as a routine, shared discipline that protects both sides from errors.
Market benchmarking. Compare terms with comparable organizations in the local, regional, and national market, so partnerships stay competitive and sustainable.
Competitive validation. Test the market periodically, even with partners you intend to keep. Most Requests for Proposal confirm the incumbent and strengthen the relationship. Track auto-renewal dates and notice windows so the organization never loses the chance to test the market.
Four recommendations for the C-suite
Bring in expertise early. Engage consultants and prospective partners before a renewal, vacancy, or regulatory change forces a rushed decision.
Choose partners for capability and alignment, not price alone. The best value comes from partners whose expertise, systems, and incentives match your goals for cost, quality, and compliance.
Update terms collaboratively before restructuring. Working with a valued incumbent to bring terms to market is often the fastest, least disruptive way to capture savings, as the case study shows.
Make review a recurring discipline. Build partner and department review into the annual budget calendar, report it to the finance committee alongside labor and reimbursement metrics, and benchmark each category every three to five years (or annually for fast-moving categories such as pharmacy and dining).
Beyond Cost
Mission, experience, and the right partner at the right time.
The organizations that perform best are rarely the ones that do everything themselves, or the ones that hand everything off. They are the ones that know, department by department, where outside expertise will lift performance and lower cost, and that build partnerships designed to deliver both. In a not-for-profit setting, the stakes are clear: every dollar a strong partnership saves, and every point of quality or compliance it gains, can be reinvested in residents, staff, and mission.
There is a right model for each function, for this organization, at this moment. Very often, it includes the right partner.
We pair operational improvement with contract negotiation, and we are paid only from the savings we find. Helping you build the partnerships you want.
References
Ziegler. "2026 State of the Senior Living & Care Workforce." CFO Hotline Report, July 2026. ziegler.com
Mercugliano, D. "The Quiet Margin: Vendor Governance and Cost Containment as a C-Suite Discipline." ACHCA New England Alliance, Portland, ME, September 2026; and Expense Consulting, "Cost Containment in Aging Services & Seniors Housing," April 2026.
Deloitte. "Global Outsourcing Survey 2024." deloitte.com/ca/en/services/consulting/perspectives/global-outsourcing-survey-2024
FoodService Director (Gingerella, B.). "4 Senior Living Dining Trends to Keep an Eye On in 2025." Jan. 9, 2025. foodservicedirector.com
Expense Consulting. "Reducing Dining Costs: A Cost-Savings Framework for Aging Services, Higher Education, and Independent School Leaders." September 2026. expenseconsulting.com
Aramark. "Technology Drives Resident Satisfaction and Operational Outcomes in Senior Living Communities." Mar. 25, 2025. aramark.com
Morrison Living. "Why Outsource Senior Living Dining Services." Updated Dec. 1, 2021. morrisonliving.com
Association for Healthcare Foodservice (AHF). "Contract Management vs. Self-Operated Food & Nutrition Services." May 2021. healthcarefoodservice.org
Gravity Consulting. "Contract Therapy vs. In-House Rehab: What SNFs Need to Know in 2026." Mar. 3, 2026. gravityconsulting.com
Centers for Medicare & Medicaid Services. "Life Safety Code & Health Care Facilities Code Requirements." cms.gov
LeadingAge New York. "Life Safety Code and Emergency Preparedness Deficiencies." leadingageny.org
Healthcare Services Group, Inc. Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2025. sec.gov
IBM Security. "Cost of a Data Breach Report 2025," as reported in HIPAA Journal, "Average Cost of a Healthcare Data Breach Falls to $7.42 Million," July 30, 2025. hipaajournal.com
U.S. Department of Health and Human Services, 405(d) Program. "Health Industry Cybersecurity Practices, Technical Volume 1: Cybersecurity Practices for Small Healthcare Organizations." 2023 Edition. 405d.hhs.gov
LeadingAge. "Cybersecurity: Q&A for Aging Services Providers." Oct. 2, 2023. leadingage.org
Ziegler. "Accounting Practices in the Senior Living Sector." CFO Hotline Report, January 2025. ziegler.com
Forvis Mazars (Haffner, L.). "Fractional CFO Help & Outsourced Accounting for Nonprofits." Mar. 10, 2026. forvismazars.us
Centers for Medicare & Medicaid Services. 42 CFR 483.70(g), "Use of outside resources," and State Operations Manual, Appendix PP, F-tag F840. ecfr.gov; cms.gov
© 2026 Expense Consulting. All rights reserved. Distribution permitted with attribution. This document is published for informational purposes and does not constitute professional advice for any specific engagement.
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