Senior living operators have traditionally relied on increasing resident rates to offset lost margins, but this strategy is becoming less viable. Instead of imposing steep rate hikes, providers are diversifying their services by launching affiliated businesses and introducing public-facing membership models. This shift towards expanding offerings has prompted operators to reconsider staffing models and make significant changes to enhance resident lifestyle and wellness options. The challenge now lies in managing expenses while maintaining the value of senior living services.
In response to the unsustainable nature of continuous rate increases, operators like Juniper Communities are exploring alternative revenue streams. Juniper has introduced a home health care service and a private physician practice to generate additional income. They are also part of the Perennial Consortium, which focuses on value-based care through Medicare Advantage plans. By adapting to these new models, operators are finding success in improving their operating margins that had previously suffered.
Similarly, Revel Communities has implemented a program called Revel Seasonal Residences to encourage travel between their communities, resulting in increased permanent move-ins. They have also introduced a tiered membership program that allows residents to purchase “points” for various amenities, driving ancillary revenue. Holbrook Life has seen success with a country club-style membership program and public-facing catering and events that bring in additional revenue without raising rates.
Managing expenses and addressing staffing challenges remain crucial for operators. Juniper has focused on reducing overtime costs and leveraging their scale for purchasing power. Amidst a competitive labor market, operators are striving to retain staff, especially in key positions like nursing and medical technicians. By prioritizing employee retention and implementing performance-based incentives, operators are working towards sustainability and growth.
Looking ahead, operators must continue to shift public perception of senior living services and view ancillary revenue streams as independent business units. By adopting an entrepreneurial mindset, operators like Holbrook are taking risks and pivoting to ensure continued growth and success in the senior living industry.
