Third-party senior living referral services, which send residents in the direction of operators that pay their fees, are not good for the sector and should be spurned by large operators, according to several prominent CEOs in the senior housing industry.
These third-party brokers are “popping up like mushrooms,” Chartwell Retirement Residences President and CEO Brent Binions said at the Canadian Seniors Housing Symposium in Toronto last week. Chartwell owns and operates more than 200 residences across Canada and the United States, including independent living, assisted living and long-term care.
The proliferation of brokers makes sense, because they have low overhead costs and stand to make hefty profits simply by gaining Internet traction and enlisting many providers to work with them, Binions said. Successful brokers are skilled in search engine marketing, so that they appear prominently when a prospective customer searches the Web for a local senior housing option, hurting local homes’ organic search results.
“They are good marketers,” Binions told SHN. However, large providers with call centers, sophisticated websites and other resources should be able to market themselves more effectively than a third party, he said.
“I can understand why the smaller [operators] might use them, because they can’t market like we do,” he said. “I can’t believe my competitors use them. Collectively, big players are likely paying these guys $20 million to $30 million a year to do their job, which is to market their properties.”
Several panelists, including Heather Green, president and CEO of Greenhouse Marketing & Communications Inc., raised the point that brokers would go out of business if providers stopped working with them.
“If you don’t make a commitment to these companies that you will pay them 85% to 100% of that first month’s occupancy, they’ll die on the vine,” she said.
The brokers also may be responsible for seniors going to facilities that are not the right fit, because the brokers only present as options the communities that have agreed to pay them, said Robert Ezer, executive vice president of BayBridge Senior Living, which owns and/or operates 38 communities in Canada and seven in the United States, offering independent living, assisted living and other services, including dementia care.
However, the rise of these third-party brokers or aggregators also reflects that they are providing something consumers are looking for, noted Thomas G. Wellner, president and CEO of Revera Inc. The company has nearly 230 sites across Canada and the United States, including retirement communities, long-term care homes and U.S. nursing and rehab centers. Wellner took the helm in 2014 after being co-CEO of LifeLabs, a medical laboratory services company.
“I think, coming to the industry from the outside, what people want is an unbiased source of trusted information,” he said. “I’m not sure that the aggregators give it, and I think that quite frankly we have to look in the mirror and say, do we actually give the best solution for that particular client and their family in making their choice?”
As an industry, senior housing has to do a better job of educating consumers about what opportunities exist, and not assume that the public is familiar with subtleties such as what distinguishes independent living from assisted living, several of the CEOs at the Symposium agreed.
Meeting a Consumer Need?
A Place for Mom (APFM) is one of the largest of these senior living referral companies in the United States, with more than 20,000 provider partners. While APFM started in the States 15 years ago, it launched in Canada in July 2014.
Its entry into the Canadian market might be behind some of the concern expressed by the executives at the symposium, surmised Trina Carey, general manager of Canada for APFM.
“It might be that the larger providers are looking at their own marketing and what they’ve done in the past, and they say we do need to step up our game,” Carey told SHN. “The fact that A Place for Mom was going to make Canadian landscape change a little bit—it wasn’t going to be so much a culture of ’this is how we do business,’ and it would be a little more client-centered—I think that’s made things a little nerve-wracking for some of those larger providers.”
A Place for Mom currently operates only in Ontario and provinces to the west, but has plans to expand eastward, Carey said. The company launched in Canada with about 200 partners and had lead volume of 400 in the first week; that number now has reached 1,500 a week and APFM now has about 500 partners, including home care providers.
Those numbers demonstrate that consumers have a need for services of this type, Carey said. This is especially the case in more remote regions, such as Saskatchewan, where seniors might not have access to the larger providers that are concentrated in urban centers such as Toronto, Calgary and Vancouver, she added.
As far as matching prospective residents up with the most appropriate provider, Carey said that APFM considers three criteria: geographic location, acuity level and the financial circumstances of the potential resident. If no provider that is partnered with APFM fits given those three indicators, the company will help navigate the long-term care system outside of its provider partners, she said, emphasizing that its provider network is growing and already includes some of the country’s largest operators. Revera is among them.
Providers that work with A Place for Mom maintain their organic leads and say that they reach an additional 2% to 3% of leads, Carey said.
While some of the senior living execs explicitly said that the system of referral services in the United States is no better than the one developing in Canada, Carey believes that these services have become a normalized part of the U.S. senior living landscape and that Canada will follow suit.
“If you come and speak to me five years from now, you won’t have the negative vibe, so to speak,” she said. “I think in time you’ll see the Canada landscape look very similar to that of the U.S.”
Written by Tim Mullaney