Bigger is not always better in senior living. The struggles of industry giant Brookdale (NYSE: BKD) are evidence of this, but a different provider—St. Louis-based Provision Living—offers another case study in the merits of being a leaner, more focused enterprise.
Founded in 2005, Provision had grown to about 40 properties in 11 states by 2015, in a variety of financial and ownership structures, including as a third-party manager and as an owner/operator. At that point, the company was stretched too thinly, co-founder and CEO Todd Spittal tells Senior Housing News.
“We had chewed up bandwidth of creativity and innovation keeping up with the growth,” he says.
So, as turned 10 years old, Provision needed to hit the reset button.
With the company’s development pipeline on pause, Spittal and his colleagues analyzed Provision’s culture and the direction of senior living generally. They decided to pursue a more streamlined business model that would focus on the coming wave of higher acuity seniors—older, frailer and with more cognitive challenges than the typical senior housing consumer of the past.
A new template
The ultimate goal was a more unified company that would be able to grow by bringing a distinct product to different markets.
“We wanted to be in a spot where we were focused very clearly on who we are, what our product is, and [have] the discipline to deliver on it over and over again,” Spittal says.
Before being able to grow again, Provision had to shrink. It unwound its development pipeline and trimmed its portfolio through divestitures.
Meanwhile, it began developing a new template. Provision would back away from third-party management and focus on developing communities from the ground-up, as owner and operator.
“We built a service model that we felt would fit that [higher acuity] customer and re-designed our physical plant to develop buildings that would fit with what our customers would truly need,” Spittal says. “It involved considerable review, tweaking, assessment.”
From a culture standpoint, Provision identified four types of stakeholders that all needed to be “winners”: residents, family members, staff and investors.
“If we define winning correctly, we can create something special for all four groups,” Spittal says.
Now, Provision has established its new identity and is expanding.
Its basic model is an 80-100 unit mixed assisted living and memory care building with amenities such as beauty salons, therapy and exercise rooms, movie theaters, and upscale dining rooms. All 12 of the Provision communities open today were built within the last four years. There are three additional projects in the works.
Most recently, construction began on a planned $22 million community (pictured above) in Grand Rapids, Michigan, on the site of a former YMCA. This will be Provision’s third community in Michigan, which is one of four states where the organization operates. The others are Missouri, Kentucky and Mississippi.
There are a few other markets that the company is exploring, but it has learned from the past and is growing very deliberately. There are “hundreds of checkboxes” for any location under consideration, Spittal says.
There are some ways that the new iteration of Provision remains a work in progress. Recently, it rolled out a “Leadership and Culture Roadmap,” laying out how team members are coached and trained, and how leaders should be empowered.
“That [roadmap] in and of itself is a big piece, having a common language that as an owner we stand behind,” Spittal says.
While declining to share numbers on occupancy or revenue, he says the “trendlines all look up” and are exceeding industry averages.
Provision’s history might suggest that Spittal is now skeptical that large-scale senior living companies can be successful. But he simply says that quantity does not always win. Personally, he’s become more comfortable balancing the “tension” between planning for growth and ensuring that quality remains excellent, he says.
And he’s blunt that resisting the urge to grow a senior living company can be difficult.
“It seems like there’s a jet stream in the senior housing industry to grow, grow, grow, and you get caught up in that,” he says. “For us, there was a point in time where we needed to stop … we began that process of becoming smaller to become better.”
Written by Tim Mullaney