CEO: Brookdale Will Be First and Only National Senior Living Provider

With two major deals under way that will expand Brookdale Senior Living’s (NYSE:BKD) footprint well beyond its current reach, the company says it is aiming to be the one and only nationwide senior living brand in the years to come.

Brookdale and Emeritus Corp. (NYSE:ESC), announced a $2.8 billion deal in February that brings the provider to a community count of more than 1,100 and control of an estimated 10% of the total senior living market.

Its subsequent $1.2 billion joint venture with HCP (NYSE:HCP), is further expanding the company’s presence in the entry-fee CCRC space; a big bet on a market segment that has had challenges of late in weathering the recent economic storm.

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The company’s chief executive sees these deals setting it to be the most well known brand the senior living industry has ever seen.

“We firmly believe that five years from now we will have established the first and only national senior living brand name,” Brookdale CEO Andy Smith told SHN. “That’s a big differentiator for us and will set us apart from the balance of the industry.”

But a senior living giant of the scope Brookdale is promising has not received a unanimous endorsement from the remainder of the industry.

Some question its ability to take a business that has historically been built on regional care infrastructure and mom-and-pop based operators to the national level.

“When you create a mega-corporation like what will be produced from this merger—it’s going to take senior management that much further away from the individual properties, which is the challenge,” Capitol Seniors Housing Founder and Managing Partner Scott Stewart told SHN following the announcement of the merger.

Analysts have also pointed to the potential for widespread consolidation of the market for continuing care retirement communities with its recent foray into the entry fee model via its partnership with HCP.

In addressing the skepticism, however, Smith says the company is positioned for success starting with its staff, that will be 80,000 strong as a result of the merger.

“Some people have said [a single operator] can’t manage 500 communities. We’re already managing 650,” Smith said. “The way we’re going to be successful here is to integrate our two companies, finding the best of both companies and identifying the places where each can improve.”

Looking to the future of senior living, a topic that Smith and his senior living executive counterparts will be addressing during the Assisted Living Federation of America conference this week, the company sees not only its physical plant shifting in its appearance, but also its role in the larger health care spectrum in the United States.

“It’s all about maximizing the value of our communities,” Smith said. “In order to do that, we have to continually reposition to meet and fulfill our promises to existing residents and their families but also have our communities evolve so we can match the wants and needs of our future residents. We are already in the process of causing our physical plant to evolve now by adding more of the continuum of care to our campuses.”

During the first quarter of 2014, the company’s redevelopment program dubbed “Program Max” continues to scale up, expecting to deploy almost $150 million, Smith told analysts during a company earnings call earlier this year.

This month, the company announced the addition of a health care center to one of its Alabama communities that will transition the existing campus into a continuing care retirement community.

“If we have just an assisted living community, we would prefer to have memory care at that campus,” Smith Said. “That’s a better care product. With as many elements in one campus or in a connected network, you’re better off. Five years from now we will be providing a much broader set of service solutions.”

It might extend through services including more home care, more hospice and palliative care, and even services like Meals on Wheels, Smith said.

“Over time we will extend our brand where we have geographic concentration into the general community to provide to services to those who need them but are not yet ready to move into senior living,” he said. “No matter what your view on public policy, the Affordable Care Act is going to lead to the post-acute continuum needing to be more coordinated, more enmeshed, in order to provide better outcomes at lower cost.”

Written by Elizabeth Ecker

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