A Medical Device Daily

Sunrise Senior Living (McLean, Virginia) reported details of its efforts to reduce overhead spending and become a leaner organization. Sunrise said it expects to realize more than $20 million of annual recurring savings from a reduction in non-care related administrative costs.

Sunrise said it has identified at least 150 positions to be eliminated at its corporate headquarters, in Germany, and in Sunrise's regional support group (costs above the community level). Sunrise currently expects to record additional severance expense of about $4.5 million in 2009 as a result of this plan, which is expected to be completed by early 2010.

In connection with this announcement, Richard Nadeau, Sunrise's CFO, will transition from his role on or before June 15, at which time Julie Pangelinan, Sunrise's chief accounting officer, will succeed Nadeau as CFO of Sunrise.

The company said Nadeau's departure was based on mutual agreement and accordingly is pursuant to the "other than for cause" clause under his employment agreement with Sunrise.

"We continue to work on a number of fronts to strengthen the financial position of Sunrise," said Mark Ordan, Sunrise's CEO. "The decision to reduce the number of people at Sunrise is never easy, but it was essential given today's economic environment and our need to further reduce spending. We want to be completely clear that none of these changes will affect the extraordinary care and services we provide in our communities."

The company said its plan for downsizing its overhead is designed to reduce non-care related corporate expenses by reorganizing Sunrise's corporate cost structure, including through a reduction in spending related to administrative processes, vendors and consultants. Sunrise expects the plan will reduce the its annual recurring general and administrative expenses by more than $20 million, from the 2009 budgeted annual recurring level of about $120 million to about $100 million, and to reduce its centrally administered services, which are charged to the communities, by about $1.5 million.

Sunrise employs about 40,000 people. As of Dec. 31, 2008, it operated 435 communities in the U.S., Canada, Germany and the UK, with a combined capacity for about 54,000 residents.

Sunrise offers a full range of personalized senior living services, including independent living, assisted living, care for individuals with Alzheimer's and other forms of memory loss, as well as nursing, rehabilitative and hospice care.