On the Record: Tom Grape, Benchmark Senior Living Chairman & CEO

Senior Housing News recently spoke with New England-based Benchmark Senior Living’s chairman and chief executive officer, Tom Grape, to get his perspective on the future of assisted living and the idea of an affordable model (he doesn’t exactly think it’s possible). Grape has been in the senior living industry for just about 20 years, and he spoke to us about his vision for Benchmark’s services going into the future, especially as Boomers begin to reach retirement age.

Senior Housing News: There’s been a lot of information about the rising costs of healthcare and senior housing, the growing senior demographic, and at the same time, people being less prepared for retirement and long-term care costs. What are your views on the viability of affordable assisted living?

Tom Grape: My views are that it’s a very difficult thing to accomplish, to make a meaningful difference in the cost of assisted living without compromising the service. The only real way to provide truly affordable assisted living is with a reimbursement or grant of some form from the government or something.


If you think about the economics of an assisted living community, roughly 70 cents of every dollar goes for operating costs, staff, utilities, insurance, etc. Roughly 20 cents goes for mortgage or debt services, and roughly 10 cents is  for cash flow.

Someone could give you the building for free, and it would reduce costs by 20%. But once you start chipping away at 70% of operating expenses… you can chip away at the margin, but you still have to provide three meals a day, and all the other basic services. There’s no way to offer truly affordable assisted living without some payment from an outside source, and I don’t think that’s going to happen in the near term.

SHN: What is your company doing to adjust to a clientele that may not have the resources to sustainably pay for their care?


TG: We participate in a state Medicaid program in a couple states, but that really is– the reimbursement is insufficient to use it on as large a scale as we might like. We’re always looking to conscientiously manage costs. I don’t believe there’s a legitimate way to make assisted living affordable.

SHN: How do you see residents paying for their care in the next 10 years?

TG: What happens today is that a lot of family members are required to chip in. The long-term solution that is best for the country is an expanded long-term care insurance product, whether publicly or privately sponsored, but I don’t think a new large-scale reimbursement program from the government is likely, so I think the situation will likely remain as is for most of those 10 years.

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SHN: What is the role of the consumer in shaping the landscape of assisted living, and how has it changed because of the customer?

TG: The adult child today are baby boomers, and the baby boomer generation has turned everything on its head that it has touched since the 1960s. This won’t be any different. They’re used to having the services they want, when they want them, they’re used to paying for things the way they want to, and they’re used to flexibility and having businesses respond to their needs, not having to adjust to a business model. It’s going to have a dramatic effect on our industry.

The voice of the customer has never been more powerful than it is today, and it will only grow. Twenty years ago, when assisted living was pretty new, the list of basic services that was provided was considered all-inclusive: meals, laundry, transportation, and some personal care. As the industry has matured, and the acuity of the residents has increased, the industry by and large still provides those basic services, but they’re no longer considered comprehensive. Residents are very frequently bringing in outside services. The industry is no longer as full-service as it was originally seen to be by the customer.

In the future, boomers will want more services, they’ll want us to provide true care management. They’re gonna want to have different ways of paying, than just writing a monthly rental check. They will want the building to include different amenities, and be in a wider variety of locations. Right now, about 85% are 2-3 story buildings on a five acre plot of land. Boomers are going to want urban settings, mixed-use settings, so they have a full array of choices.

SHN: How are you preparing for these changes?

TG: We’re constantly reevaluating our service offerings, and trying to add additional ancillary services ourselves. We’re constantly updating what our building consists of. We’re working on some different pricing schemes. We get loud and clear that this changing landscape could either be a threat or something to embrace and be used by our being more responsive, and we think this could give us an advantage over our competitors.

SHN: What are your thoughts on staffing levels and the ability to keep employee costs down as cost of living rises and demand for quality people increases?

TG: This is a universal challenge in our industry and in any business. Our associates are the service we provide to our residents and families, so it’s– increasing costs, particularly benefits, are a pressure that all of us feel. We’re constantly wrestling with that struggle of wanting to provide full support to our employees, but also trying to control the costs so the product is till affordable to our residents.

SHN: I see that you’re involved in assisted living, independent living, short-term care, and memory care. How much of your business is memory care, and what are your plans in terms of growth?

TG: We’re roughly 25% memory care. It’s a segment where we continue to want to expand it and build more of it, buy more of it; we know there’s a significant demand there. We see it as an area where there’s continuing unmet demand.

SHN: Most of your communities are East Coast/New England. Why is New England good for retirees?

TG: We build our communities where the demand exists. There are a lot of older folks in New England who want to stay where they are. Demand is strong for that reason. The number of folks who might move out of the northern states to the south in their 60s often move back in their 80s to be near to family.

SHN: Massachusetts, Vermont, and Connecticut were recently rated as some of the worst states to retire in due to high income and property taxes. Do these factors impact the decisions of seniors in your region to move to any of your communities?

TG: No. The big driver for us is where their adult children or family is. I’ve not heard of a single instance where someone decided not to move in because of the state’s tax rates.

SHN: With a warm winter, are you seeing anything unusual about occupancy at your communities as a result?

TG: It sort of cuts both ways. Our occupancy’s very strong. Some would argue the warmer weather makes it easier for folks to come out and visit communities, but others argue a cold winter reinforces the need for a more supportive setting. I’m not sure if we’re better off with good weather or bad, I just try to stick to things I can control.

SHN: With baseball season around the corner, are you expecting the Red Sox to win the pennant?  How about the departure of [former Boston general manager] Theo Epstein to the Chicago Cubs [as team president]?

TG: The Red Sox had a tough September, and there’s a lot of turmoil in the team. Right now, I’m more focused on the Patriots winning the Superbowl. [As for Theo] You’ve got a very capable guy there who did a pretty miraculous job with the Red Sox, getting them the World Series championship after 80 years without one, and Lord knows the Cubs could use those same skills.

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