In the past couple years, a Texas-based senior living provider has repositioned its portfolio’s focus from predominantly independent living to aging in place in a transformation that includes new risk and quality controls.
Capital Senior Living (NYSE:CSU) has been converting hundreds of independent living units to assisted living and memory care, with plans to license hundreds more for higher levels of care in addition to acquiring more assisted living assets. CEO Lawrence Cohen called 2013 a “transitional year” for the company during its fourth quarter earnings call.
By the end of 2013’s fourth quarter, CSU had a 11,114-unit portfolio, of which 5,888 (about 53%) were independent living, and a nearly 85% occupancy rate. The remaining 47% of the portfolio is assisted living, up from 42% in 2012 and 36% in 2011, according to data from the Assisted Living Federation of America.
Right now, the company has 360 vacant units located across 15 buildings slated for conversion from independent living to assisted living, which would serve to push independent living occupancy to 90.4%. Upon 90% stabilization of the newly-converted assisted living units, the overall assisted living portfolio would be 88.6%, for a total portfolio census of 89.5%, Cohen projected.
The strategy is in direct response to higher attrition rates attributed to a higher age of entry and acuity levels.
“What we’ve realized and recognize is the age of our resident keeps creeping up, they’re a little more frail and [for] our independent living residents we’ve seen the average length of stay shrink to 31 months,” Cohen said. “That has some impact.”
The improvement of the economy has lessened the noticeable impact of converting independent living to higher levels of care, as people are now better able to afford the move into a retirement community.
What’s kept the program going, though, Cohen said, is the success of the conversions: In the last two years, 10 communities have added more licensed units for assisted living and memory care, and all saw an increase in their occupancy of 10 percentage points—”very significant,” he commented. Some buildings went from 57% to 87% occupied, he said; others from 60% to 90%.
“It’s really a function of the aging residents that’s increased the attrition and we think it will resolve itself as we license these units in our properties to assisted living and memory care,” he said.
But higher risk accompanies a higher acuity census with greater ability for an independent living resident to age in place in a unit licensed for assisted living. During CSU’s fourth quarter earnings call, an analyst asked whether the company has changed its controls for quality of care and training now that it’s pursuing more assisted living acquisitions and unit conversions.
Last summer, Capital Senior Living hired a clinical director with 20 years of experience in nursing, Cohen responded. The company has also adopted the RealPage Care Manager platform for assessing residents on a regular basis, including when they move in and at 60-90 day intervals.
The platform also helps with billing, assessing care levels, and providing the proper staffing levels, and the company has developed several scoring metrics it uses to create care plans and correctional plans, Cohen said.
“We think we’re at the leading edge of this curve for the industry and for a company that three, four years ago was predominantly independent living, as we have expanded the assisted living, we’ve brought in a lot of resources, both in-house and out, to really provide one of the highest levels of care and quality assurance and training in the industry,” he said.
Written by Alyssa Gerace