Merrill Gardens Co-Founder Quietly Builds Wellness-Focused Operator GenCare

GenCare Lifestyle is not a large senior living provider, but the Seattle-based company is making a mark. Helmed by industry veteran Leon Grundstein, GenCare has been on the leading edge of wellness-focused operations, with particular innovation in the area of dining, and has started working with a new capital partner to support the company’s continued growth.

Grundstein is a familiar name to senior housing insiders — prior to starting GenCare, he had co-founded Seattle-based Merrill Gardens, which has become one of the largest providers in the nation. But Grundstein’s path to senior living, and to the Pacific Northwest, was not straightforward.

Coming out of grad school at Michigan State, Grundstein ended up flipping houses in Columbus, Ohio. Soon, though, he was itching for a change.

“I got tired of the Midwest and said, wherever I get a job first, I’m moving,” he told Senior Housing News. “My first job offer I took was in Seattle, and so I moved out here and didn’t know anybody, and started working for a land development firm finding sites for single-family homes.”

Grundstein also began doing medical office development, and through this work, he “stumbled across” senior housing in the mid- to late-1980s. Liking the potential returns, he built a few retirement homes and started to learn the business. When the R.D. Merrill company — a giant of the region’s timber industry — decided to diversify into senior living, Grundstein came on board, co-founding Merrill Gardens and focusing on operations and business development.

By the time he left Merrill Gardens about five years later, in 1998, Grundstein had helped the company grow to 27 communities. With a daughter at home, Grundstein wanted to cut back on travel. He decided to start his own senior living company, and the GenCare story began.

‘Whole life living’

Before officially founding GenCare in 2000, Grundstein did some big-picture thinking.

“When I left Merrill, I really had a chance to sit back and contemplate a lot of things,” he said. “One thing I said was, in senior living, in an ideal situation, what do you really want to do? What are we providing people who want to move in?”

Ultimately, he formulated a “whole life living” framework, based on four dimensions: culinary, vitality (related to physical fitness), mental sharpness and purpose.

This four-dimensional approach made GenCare a pioneer of a multi-faceted wellness programming. Today, this model has become more widespread. In fact, it is set to become the foundation of operations for a majority of senior living providers by 2023, according to survey results released just last week by the International Council on Active Aging (ICAA).

Of GenCare’s four dimensions of whole life living, its approach to culinary is particularly innovative. So much so, its organic and whole food program won the ICAA’s Industry Innovator Award for Creativity in Lifestyle Management in 2008.

Grundstein — a competitive sprinter into his late 20s — has always been aware of healthy eating and the trends and research related to diet.

“I saw, as the years went by, how the health care industry and sports industry got more attuned to what keeps an athlete healthiest and how that rolls over into a person’s life — a regular Joe Blow’s life,” he said.

In consultation with Bastyr University — which specializes in the study of science-based natural medicine — GenCare revamped its menus to develop an organic food program. Today, about 95% of GenCare’s food is prepared on-site rather than pre-made, Grundstein said. GenCare also offers completely gluten-free menus for interested residents and is the nation’s only senior living provider to be certified gluten-free by the Gluten Intolerance Group of America.

The food program does come at a cost. GenCare’s food budget is probably 25% higher than is typical in senior living, Grundstein estimated, but the returns are worthwhile.

“Dining is a differentiator,” he said. “Not only did we do it because we thought it healthier, it gives us a market niche no one else has.”

No Mr. Big

Today, GenCare’s portfolio includes five fully operational communities, including the recent $16.6 million acquisition of a 93-unit community in Federal Way, Washington. There is also a 159-unit community under construction in the Point Ruston area of Tacoma, Washington, slated to open in July 2019.

From the outset, Grundstein has seen the benefits of being a smaller provider. Before embarking on acquisitions or developments, he does the same rigorous, numbers-based market research that he conducted at Merrill Gardens — but being attuned to the local area also gives him an intuition about how a project will be received.

There are workforce-related benefits to being a smaller provider, as well.

“I get a lot of people in the industry who come to work with us because of our scale and programming, and they feel they can make a difference here … whereas in a larger company, things trickle down from a central corporate office, and there’s not as much sensitivity to the local nuances,” he said.

These nuances include variations across the portfolio in programming, pricing and unit mix.

Two communities — in the Washington towns of Granite Falls and Lynwood — are more solidly middle-market, versus more high-end communities in Seattle and Tacoma, with Renton and the new Federal Way building somewhere in between, Grundstein said. GenCare offers independent living and assisted living and is increasing its focus on memory care.

“Our two most recent buildings have memory care, because we’re seeing that continuum of care as a real advantage in the marketplace,” he said. “I’m converting a wing of another building to memory care, as well.”

With all these advantages in maintaining a smaller footprint, Grundstein has no ambitions to scale up beyond 10 to 12 communities.

“We have no goals to be Mr. Big,” he said.

Still, GenCare has come of age in certain ways. While he had raised investor capital from family and friends for earlier projects, Grundstein started working with a new partner on GenCare’s two most recent projects, in Tacoma and Federal Way.

“I was approached a few years ago by Pacific Medical Buildings (PMB) out of San Diego, and we hit it off,” Grundstein said. “They have a similar mindset that I do — not [to do] a lot of deals, but [to do] good, quality deals and be prudent in our placement of equity.”

PMB has a relationship with Harrison Street, the Chicago-based real estate investment firm, which provided 90% of the equity for the Federal Way and Renton projects.

Given that PMB is an experienced medical office developer — including as a partner of real estate investment trust Ventas Inc. (NYSE: VTR) — the relationship offers GenCare advantages, considering that senior living is becoming more integrated into the health care system overall. GenCare and PMB are already working to connect senior living communities with more care and rehab services, Grundstein said.

With PMB and Harrison Street now in its corner, it may seem that GenCare is set to enter a new chapter and further elevate its operating model. But if this happens, don’t expect Grundstein to trumpet the fact too loudly — it’s not his style to court publicity and he even hesitated to speak with SHN for this article, he said.

He prefers to quietly focus on the business of running a solid senior living company. He takes particular pride in GenCare following through on its plans and promises to residents, associates and investors.

“Our difference is in what we implement and doing what we say we’re going to do,” he said.