This article is part of your SHN+ subscription. Top leaders of senior living organizations are busy preparing for the future – sometimes as far out as the next half-century. Senior Housing News has spoken with quite a few top leaders of senior living operators across the country in the past month – at the recent NIC and Senior Living 100 conferences, for our TRANSFORM podcast, and in other interviews. As I took stock of what those leaders told us, one quote in particular stuck out to me. It came during an interview with Sheri Peifer, who became the CEO of Carmichael, California-based Eskaton last September. In essence, Peifer said that she is preparing the organization not for the next decade, but for the next 50 years as the senior living industry continues to evolve. Under Peifer’s leadership, Eskaton is pivoting to private-pay senior living communities and away from skilled nursing, with new amenities and lifestyle services for residents. Looking across the industry, I see many more examples of CEOs taking the long view. While navigating current short-term challenges, such as the interest rate environment, they are speaking less about immediate pressures and more about bigger shifts in their operating models and portfolios to set their enterprises up for sustainable success in serving a new generation of consumers while integrating lessons learned during the last few tumultuous years.
In this week’s exclusive, members-only SHN+ Update, I offer analysis and some key takeaways from SHN’s recent conversations with CEOs of prominent senior living operators, including:
- How operators are pursuing growth amid development challenges
- How a consumer focus is shaping operating models
- Finding ways to scale up
The senior living industry in early April is still waiting for relief from both the cost of new development and the inability to source new capital. For many senior living operators, this has had the effect of creating obstacles for the usual growth avenues. For smaller companies seeking regional or national scale to grow for the arrival of the boomers in the coming years, this is among the worst times to press pause on growth. And yet, industry veterans including Dan Williams, Co-CEO of Denver-based Onelife Senior Living, see scale as an important factor for long-term financial stability, and ultimately, more growth.
“We still want to talk to new capital partners, clients who have third party opportunities to find a good operator,” Williams told SHN during a recent podcast appearance. “In order to handle that, we need to have our house in order.” Thanks to a merger in February with Williams’ former company, Ally Senior Living, Onelife now has 19 communities, half of which it manages for other companies. Through this combination, the company has been able to get better pricing on certain goods and services.
“You need some scale in order to get the resources to make the building successful,” Williams said. In growing through a merger, Onelife is playing the long game, Williams said. “We’ve seen the industry go down and we’ve seen it go back up, and we know it’s going back up now,” he said. “It’s just waiting it out and getting what you can in order to take that on during the good years.”
Aspenwood is another company that executed on internal improvements and is now turning to expansion, with a strategy of “explosive” growth achieved through executing on acquisitions to create a portfolio for the future. On the nonprofit side, there are perhaps even greater pressures for joining forces and scaling up. Nonprofit mergers must be vetted by two organizations’ board of directors, and they are sometimes at risk of falling apart as a result due to unique circumstances.
We’ve seen this occur in recent years, with some examples being an attempted affiliation of 3 Pennsylvania nonprofits, one of them Garden Spot Communities, that ultimately fizzled after it was announced in 2022. It is clear that some senior living nonprofits are finding more creative ways to scale up.
For example, Lutheran Senior Services recently combined its senior living operations with that of Diakon, a Lutheran-aligned senior living operator based in Pennsylvania. The deal is adding to LSS’ four life plan communities bringing the combined total portfolio to one dozen life plan communities, one assisted living community, and nine affordable senior housing communities. But Diakon is continuing on providing child and family services under the Diakon name, CEO Adam Marles told me last week. The organization has had to pivot due to changes over the last several years, including by refocusing its efforts more on the services and communities that the incoming generation of residents will want and need. In other words, Marles is focused on a long-term strategy rooted in a consumer focus.
“For us, a laser focus right now is making sure that we have sustainable communities for the long-term, recognizing that boomers’ demands are going to be so much different than our current consumer,” Marles told me.
Marles’ perspective – that successful long-term planning must be rooted in an understanding of the coming generation of consumer – is another key theme I’ve observed in our recent executive interviews. On one side, I see many operators coming to the realization that tomorrow’s seniors don’t want today’s senior living options. Time and time again, I have heard that the boomers will want more wellness- and lifestyle-oriented offerings in lieu of health care services. When surveyed by the American Seniors Housing Association (ASHA) last year, many members of the generation have said they prefer to be independent and pride themselves on their ability to help themselves. Looking at survey results like that, it makes sense to me that operators like Eskaton are looking to grow their holdings in things like independent living cottages and apartment-style rentals. It’s clear from Peifer’s words that the organization is doing so to preserve future flexibility as trends change down the road.
“We’re now looking at health care, residential hospitality, and more partnerships with residents versus this paternalistic approach of knowing exactly what they want and what they don’t,” Peifer said. “That’s important to recognize, and we need to understand the desires of the people wanting different engagement, choices, and the unbundling of services.”
Yet – as SHN’s Austin Montgomery laid out in his SHN+ Update last week – the industry also appears to be bifurcating, with certain providers focused on another growing segment, of higher acuity residents seeking a more integrated and effective health care offering than the industry has historically delivered. According to the ASHA survey, more than 55% of those likely to move into senior housing said they want to receive care in the setting where they live. Now, I see senior living operators catering to that trend in part by building in the kinds of programs to help serve those residents where they are in the community.
One of the biggest examples of this trend at work lies with Brookdale Senior Living (NYSE: BKD) and its HealthPlus program. Through HealthPlus, a nurse is tasked with coordinating care for residents, with the goal being better managing their health outcomes. A few weeks ago, I spoke with Brookdale CEO Cindy Baier about how the operator’s HealthPlus program is meant to offer the services residents need without also driving up operational costs. Baier told me she sees a world where “virtually every senior will be on a Medicare Advantage plan.” It’s no surprise to me that Brookdale is growing its HealthPlus program specifically to help manage resident health outcomes, especially given that the operator’s portfolio has more assisted living and memory care units than independent living.
All of this hinges on staffing, which leaders of other operators have said is a critical focus in the years to come. “You’re going to have higher acuity and you’re going to need additional staffing today,” Integral Senior Living CEO Collette Gray recently told Senior Housing News. “You’re also going to have to change your price offering and determine service levels that change alongside increasing expenses, and it’s just managing to that fine line.” It is not always easy to get right.
For example, Brookdale recently came under fire after a Washington Post investigation alleged its use of an algorithm called “Service Alignment” led to understaffing and understaffing at the company’s communities. Brookdale is not the only company to come under…
