Erickson Living will bring in $1 billion in revenue for the first time in 2018 and is preparing to gain even more scale in the years ahead. The Catonsville, Maryland-based provider is pursuing a nearly $2 billion pipeline of new developments over the next five years, while planning to invest an additional $400 million in repositioning projects at its communities.
Currently, Erickson Living operates 19 communities and is planning to open a sales center for its 20th in January. Most of its properties are large continuing care retirement communities (CCRCs) that exceed 1,000 units, and the company’s portfolio includes more than 20,100 units overall. Industry association Argentum ranked Erickson Living as the sixth-largest senior housing operator in the nation as of 2018.
“This year, we brought on over 800 units, next year, we’re planning on bringing on over 500 units,” Dan Dunne, Erickson’s director of external communications, told Senior Housing News. “We’re pursuing very aggressive growth, and we can do that because of our structure as a private company and because we’re at about 95% occupancy.”
The company’s structure includes an in-house development arm, which oversees the process from land acquisition and entitlements right through to opening. Erickson recently launched a dedicated website to promote its development capabilities. The goal of the site is to provide information about Erickson Living to community groups, consumers and other stakeholders who are interested in bringing senior housing to their local areas.
Currently, Erickson Living has a number of development projects in the works. Because they are still in relatively early stages, Dunne declined to provide a list of where these potential development sites are located, but he identified Maryland, New Jersey and Virginia as states of interest. Erickson already has a strong presence along the East Coast, as well as in Texas, Kansas and Colorado.
Other western locations are also being evaluated for new development, Dunne said.
A wrap-around experience
Even though senior housing as a whole is facing headwinds such as oversupply and a labor crunch, it’s a boom time for CCRCs across the nation.
Strong home prices have enabled seniors to sell their houses and use the proceeds for CCRC entrance fees, while these sprawling campuses have been relatively insulated from new supply. These favorable CCRC trends should continue into 2019, according to a recently released report from credit rating agency Fitch.
While Erickson Living is doubtless benefiting from these macro trends, Dunne credits the company’s operating model for driving its high occupancy. That model starts with sales and marketing.
“We invest more marketing dollars than average,” Dunne said. “The sales process with a senior takes two to three years, normally, so you have to be patient and deliberate with messaging.”
Erickson Living’s large scale enables it to provide wrap-around services for residents once they move in. These services include not only programming and amenities but robust and convenient health care.
For instance, the provider has been ahead of the industry curve on Medicare Advantage, launching its own plan, dubbed Erickson Advantage, which now has more than 4,900 members. Erickson can manage residents’ insurance benefits directly through this plan, while it also has on-site medical centers where care is provided by physicians employed by the company.
“Over 90% of our residents use our doctors — these are our doctors, not contracted doctors,” Dunne said. “One of the differentiators when people visit our communities is, they want to know medical care is available, and to have it right on campus is a factor for them.”
Recently compiled metrics show that residents spend about 30 minutes with an Erickson physician, on average, compared with about 12 minutes when patients see doctors outside the campus, he said. Same-day appointments are also easier to come by, with 32,000 provided in 2018.
While on-site health care and in-house insurance are key pillars of Erickson Living’s value proposition, its communities are not designed to feel medical. The company’s newest buildings give a sense of what its forthcoming developments will look like, Dunne said.
In particular, he singled out Siena Lakes (pictured above), which is planned for North Naples, Florida. It will be the second Erickson Living community in the Sunshine State when it opens. The opening is slated to take place within about two years. The sales office is scheduled to open next month.
The CCRC design includes Tuscan-inspired architecture and a variety of water features, as well as a panoply of high-end senior living amenities such as a swimming pool and fitness center, multiple dining venues, classrooms and library, and a theater room. The campus will include single-story apartment homes as well as the full continuum of care, pending approvals that Erickson Living anticipates receiving.
Even as new communities like Siena Lakes come out of the ground, Erickson Living will be turning its attention to its existing portfolio. This year, for instance, it opened a new residential building at Ashby Ponds, a CCRC that first opened in 2008. Further construction is ongoing there, as well.
Despite its ambitious growth trajectory, Erickson Living is also evaluating markets carefully, Dunne said. Even though oversupply has become an issue in certain areas, there are still opportunities for new development — and, like other providers, Erickson is trying to create a platform to serve the coming wave of aging baby boomers.
“We’re trying to meet demand for senior living in different markets,” Dunne said.
Written by Tim Mullaney