Pacific Retirement Services (PRS) was in talks for new senior housing projects with eight different universities last year when the pandemic hit and demand for those projects dried up.
But that doesn’t worry Eric Sholty, who took the reins as the Medford, Oregon-based organization’s new president and CEO on Jan. 1. Sholty believes it’s only a matter of time before universities return to the table ready to collaborate.
“My belief is that it will pick back up pretty quickly,” Sholty told Senior Housing News during a recent appearance on the Senior Housing podcast, Transform. “Once this pandemic ends and people start to be more comfortable, we’ll be back talking with many of these universities again.”
In the meantime, the organization is focusing on building census at Mirabella at ASU, a newly opened continuing care retirement community (CCRC) that PRS developed on the campus of Arizona State University in Tempe, Arizona.
The company was affected early in the pandemic, as it shared a medical director with the Kirkland nursing home where the first U.S. Covid-19 outbreak occurred. But, PRS managed to avoid serious outbreaks and now has its sights set on the future.
In addition to reviving university projects, PRS is looking for smaller, single-site providers seeking to affiliate with a larger organization as a result of the pandemic’s pressures, Sholty said. And in addition to its portfolio of 12 CCRCs, PRS is also committed to growing its portfolio of 25 community housing properties that serve low-income adults.
“We do think early 2022, and maybe into 2023, is when we’ll start seeing ourselves come out of the pandemic and regain our steam to refill some of our empty units,” Sholty said. “But this is going to change us forever.”
Highlights of Sholty’s podcast interview are below, edited for length and clarity. Subscribe to Transform via Apple Podcasts and SoundCloud. The interview took place in mid-February.
On taking the reins as PRS’ new CEO this year, and what that means for the company:
I stepped into the position January 1. Previous to that, I had been the COO and executive vice president of development. I have been with PRS for just under five years. I came from California originally, and started my career, ironically, as a maintenance man for my first senior living community when I was 19 years old.
I’ll never forget my first day on the job, where I met someone who is still one of my favorite people. Her name is Beverly, and her husband had just passed away that weekend before I started, and my job as a 19-year-old kid in 1997 was to move Beverly from her assisted living apartment back to her independent living apartment. And I spent eight hours with her and heard all of her stories about her husband, Jean, and how sad she was, but that the care he received was amazing. And there was an epiphany for me, even as a young man trying to figure out where I was going in my life. I had kind of fallen in love with Beverly and her story and her husband, and I’ve worked in this industry, since then, for several different companies across California, now in Oregon.
Our longtime CEO, Brian Macklemore, retired after 35 years of service. And when I look at where we’re headed as a company, there are not deep changes that are going to take place. Brian and I and our board have agreed for many, many years on strategically where we want our company to be, how we’re going to get there, what that looks like.
When we look at our communities and campuses and what we do, we want to make sure that the things that we’re providing our residents — the care and services in whatever fashion — those are done at the highest possible level. So, we are committed to bringing in experts in various fields, such as dining. We do all of our own in-house dining, and we have a vice president of culinary services who assists through all of that.
One of the things we do that most people don’t know is that we do all of our in-house media. We found it to be far more effective to do that in-house, working through our websites and not needing to go outside for logos, brochures, ads, et cetera. At the same time, for things that maybe we’re not great at, we’re going to look for partners. We do that with our therapy companies, and we do it in other areas with other skill sets, like disaster preparedness.
I think we’ve always had maybe a more conservative approach to growth and development. And we’ll continue to do that. We like to do start-ups, and we’re starting up Mirabella at ASU as we speak. Our first residents moved in on December 28 of last year. No one could have imagined when we started this project four and a half years ago that we would be opening in a pandemic. But our team is doing great. We have about 50 families living in the building now, and expect here within the first couple of months to have more than 100 families.
It certainly comes with its challenges, but we also think we’re really good at repositioning. We’ve had a longstanding history of taking communities that struggled and that maybe have been more faith- or fraternal-based, coming in and doing turnarounds. And then, of course, affiliations. We’ve actually just closed on a refinancing in the first 30 days of the year, and that’s beneficial to three of our communities, creating an obligated group with them. That’s gone really well.
On dealing with Covid-19:
It’s definitely been a challenging year for us.
Ironically, we hold a leadership summit every year for all of our communities. We all went back to our respective places of business with the idea that we were going to have an amazing year and just hit out of the ballpark. Unfortunately, it was the following week when Covid-19 first broke, and the community that was identified early on — this is in March of 2020 — was a nursing home in Kirkland, Washington. We shared the same medical director as they did. And so it started off fast and furious for us as a direct result of that. Thankfully, we only had one positive test. But that was our first test — it was the second week of March — and it’s been Covid, Covid, Covid since then, unfortunately.
When I look back at the year, I think more than anything, I just can’t talk about how proud I am of our teams. They, in this face of uncertainty every single day, showed up not knowing when they were getting tested, not knowing who was getting tested, not knowing what they were going to find in terms of new policies, procedures and regulations.
Probably our single biggest challenge through this all has been operating in six states, and having six different states …. all with their own review processes, their own regulations on when we could open dining and when we can’t, who could use the fitness center and when they can’t, how often we test. We found difficulty even in the testing process where we experienced false positives on multiple occasions.
But I would also say that I think it’s gone better than we thought it would. We were hearing news of these skilled nursing facilities in Kirkland or in other parts of the states … with some challenges in terms of the number of deaths. We’ve not experienced that at all. We feel actually really good about where we’ve been quick to act. We knew early on that our greatest risk was our employees. So, we’ve put the policies and procedures in place that have been necessary for us to be successful.
I’ll tell you, though, that being a multi-site provider has really been the greatest thing for us. We have a chief health care officer who’s a nurse by background, we have an epidemiologist who helped navigate and guide us through outbreaks that we may have had. At the end of the day, as we look at Covid and we start to see vaccines, we’re seeing more than 95% of our residents getting the vaccine.
I can’t imagine us being a single-site facility. Just this past week, I was at a single-site facility that’s struggling and looking for assistance. And the executive director shared that in one outbreak, they lost over 20 residents as a direct result. And again, we have not experienced that, we have not had those numbers, and we’re thankful for that. But it also brings to light the need of the smaller single-site or smaller systems that we can assist, and bring them some expertise that they don’t normally have in house.
On whether life plan communities are more resilient to occupancy losses:
We’ve done well, but that’s not to say that we haven’t seen dips in occupancy.
We had nine people scheduled to move into our Mirabella in Seattle project right as the pandemic hit, and while all nine of those people decided to delay their move-in, they have since moved in. We’re still making sales. Because the length of the CCRC sales cycle is long, we have a lot of people in the pipeline. Some of our communities have over 100, 200 on the waitlist. Some of our communities that are older and might have a struggling occupancy before the pandemic have continued to struggle with occupancy. But all of our communities have seen move-ins.
We did see, though, our leads drop significantly. Where we would normally have a significant lead database through the late spring, summer, and then even into the early fall, we saw our leads drop dramatically. But we expected that was going to be the case when this happened.
At any given point, we have people who are ready to move into our communities. We would be in contact with them on a regular basis, helping them work through this, giving them guidance in terms of the pandemic and how we’re treating that. One of the things that we established through this is a resident leadership group, where there’s about three to four residents from each of our communities. We’ve been on monthly calls with them, updating them, having our epidemiologists present for them and our resident councils. That’s also helped because our best leads come usually from our residents. And so, as our residents have been happy and safe and healthy, and as we’ve not had outbreaks, they’ve continued to tell their friends, ‘Hey, you should come move in.’
The good news is that the housing market is still strong. If there was a recession or a housing fall-off in the middle of this, we might be having a very, very different discussion and response from our communities. But because people are still selling their homes in record time and for record prices, that continues to help us with our move-ins and our occupancy.
I just think it’s a different client. The relationship between our sales team and our prospects is different, and the way we operate is very different. So when you add all of that in, I think that’s why you’ve seen some success, and that’s why you’ve seen occupancy stay higher. We have a community that’s 100% full. It was also the last community to have a positive case of Covid-19. I think we were six to seven months into the pandemic before our last community had their first positive.
So, we feel really good about where we are in the market. We feel good about where our communities are. Our operations and sales and marketing teams are already putting plans in place, post-pandemic, about getting the word out and making sure everyone understands what we did and how we did it in our industry. We’re excited to move and shift our focus in that direction, and away from the pandemic.
On whether Covid-19 will make university-aligned projects harder in the future:
Mirabella at ASU on the Tempe campus had gotten so much press coverage, and people were so interested in it. Prior to the pandemic, we were talking with eight other universities, all wanted to do something similar to this — some wanted to just follow that same blueprint, but others wanted to look at more creative options. But as the pandemic hit, as you can imagine, most of those conversations came to a halt.
Our industry has had a little bit of bad press, maybe you’d even call it a lot of bad press. I can’t stress more that what we read is not what we’re experiencing. I don’t believe it’s what most of our industry or the life plan community industry is experiencing. But, that bad press has hurt, for sure, occupancy in some of our older communities.
We have a long leash in terms of filling up, from the time residents decide to look at a community to the time they move in. So, we’re going to have to work through some of that bad press. We’re members of various not-for-profit groups, and we’re already having discussions on how to look at CCRCs and life plan communities in a different light. We argue that, if you’re a senior sitting in your home by yourself, you’re not having meals delivered, you’re not having activities, you’re not streaming fitness classes across our platforms, you really have been isolated. In our communities, we’ve been able to open, depending on the state and the county.
My belief is that it will pick back up pretty quickly. We’ve already had a few groups inquire with us about some Mirabella [projects] in some larger metropolitan areas. Mirabella is a great community. It’s been amazing to watch it unfold over the last four and a half years, and to have such an amazing partnership with [ASU President Dr. Michael Crow] and ASU. We think this is going to continue, and once this pandemic ends and people start to be more comfortable, we’ll be back talking with many of these universities again about a project or potential projects like Mirabella at ASU.
But we’re also looking at campus environments and middle-income. We’re going to want to grow our community housing portfolio. We have 25 community housing projects across our states. And we know that there’s a need for that and we’re committed to growing that.
How PRS plans to grow in 2021 and beyond:
Our number one focus right now is opening Mirabelle at ASU. We have our entire Medford PRS operations team down there opening and trying to create memorable moments and an amazing climate and culture for our new residents. ASU actually created their own saliva test [for Covid-19], and so we test all of our staff and residents before moving in.
As I said, we were in talks with eight other universities prior to the pandemic. And I suspect that as things clear, and tensions about the pandemic lower, we’ll continue to have dialogue with those.
And as we think about our friends who are single sites who are struggling, we’re reaching out to them and trying to provide them assistance, support, dialogue, whatever it may be. And we think we may see some growth there. I think you’re probably going to have some boards and single-sites who say, ‘That was just too much for us, and we should really look at becoming a part of a larger organization that has chief health care officers and epidemiologists.’ We’ve already begun some early discussions with single-sites who are interested in that.
We also see growth in our community housing portfolio, happening specifically in Southern Oregon to start with, but continuing through other states, such as California and in Texas, where we have our other community housing projects.
On the prospect of a wider senior housing recovery in 2021:
What we’re talking to our teams about is really to be prepared for wearing masks and PPE, and taking all the current precautions that we have in place into late summer or even early fall. As we talk to residents and we update them, that’s kind of our message, that it could be this whole calendar year … until herd immunity happens.
We do think early 2022, and maybe into 2023, is when we’ll start seeing ourselves come out of the pandemic and regain our steam to refill some of our empty units. But this is going to change us forever. How and what that looks like we’re still working through in our mind. What does that do to our sales cycles, and how do we engage with residents? With Zoom and everything else, we might change how we operate and communicate with residents.
So, the pandemic is going to have far-reaching impacts on us as a company. But at our core of who we are — life plan communities, community housing, provider of senior services — I think we’ll get back to some normalcy in 2022 and that people will start to be more apt to maybe shake hands again and give each other a hug, which is lacking at most of our communities right now.
This is an opportunity for us in what we call ‘leadership for a new age.’ It’s our tagline, and prior to the pandemic, we spent several days with all of our directors and executive directors and heads of departments across all of our communities, talking about what leadership for a new age means, what that looks like for us and who we are.
We missed the opportunity to get many initiatives completed this year just because of the pandemic. So, our residents and our employees are anxious to be able to start working on some initiatives that we believe are going to move the needle for us both in customer experience and satisfaction, as well as day-to-day operations. Our communities are tired. This has been a long, long year for them. They have done an amazing job communicating with their residents and supporting their staff. We see 2022 probably as the real next momentous step in the pandemic, where people are now comfortable and we have herd immunity, and we’re ready to open our doors and become the community that we were, pre-coronavirus.
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