In founding Eclipse Senior Living in 2017, CEO Kai Hsiao wanted to leverage his experience in both senior living and hospitality to build an innovative operating platform. Innovations are needed, he believes, to reach the “unspoken 88%” of older adults who find current senior living options unappealing.
Now, with a portfolio of about 100 communities under management, Hsiao is starting to make good on those intentions.
Eclipse is taking a page of the hospitality industry playbook by pursuing a multi-brand strategy. The company is also creating a different operating approach than some of its competitors. For instance, some other senior living providers describe their executive directors as CEOs of their communities, but Hsiao wants “almost the opposite” — to free up executive directors from certain CEO-like responsibilities so that they can have a laser-focus on the resident experience.
Hsiao shared this perspective during an interview for Senior Housing News’ new podcast, Transform, sponsored by PointClickCare. Transform will highlight the people and ideas shaping the future of senior living. Hsiao was a guest on the first episode of Transform, which focuses on new operating companies that are bringing a fresh approach to the business.
Highlights from the interview are below, edited for length and clarity.
On transitioning from being an executive vice president with real estate investment trust HCP (NYSE: HCP) back into operations by starting Eclipse:
I did want to get back in operations and there were opportunities to choose from out there, but at the end of the day, a lot of the opportunities came with strings attached. Some were with developer/operators who probably put development first. In a lot of those situations, operations is sort of a loss leader to development.
And then there are other opportunities where maybe the operator was highly leveraged or had lease issues tied to it, things like that. I really wanted to build out a platform that had a clean corporate structure. That was really the goal behind forming Eclipse. One, having a platform that could be clean and two, work with people who I love working with. Luckily, I was able to get the band back together with some of the folks I worked with before back at Holiday.
On creating a distinct culture at Eclipse, despite the company’s deep roots in Holiday:
The culture isn’t really defined by the product, whether it’s IL [independent living], AL [assisted living], memory care. I think it’s more about our attitude and how we approach the business. We think senior housing is still an industry that’s in its infancy, in development, which means that a lot of us at Eclipse come from outside the industry, so we’ve been able to pull best practices in from hospitality or multifamily or retail, web, things like that. That’s the sort of startup culture that’s willing to try to new things and look at different ways of doing it.
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We’re a pretty competitive bunch. If you talk to most people, you’ll hear we’re a pretty sales driven culture. We believe 100% in being able to achieve mission and margin. That’s part of the culture as well.
On how Eclipse differentiates itself from the competition, including through investing in technology:
Technology is a tool for us to attain the results we have, and we believe in investing in that infrastructure. I think a lot of times out there, in today’s senior housing world where operating platforms maybe don’t have the ability to reinvest back into the platform and grow out that infrastructure, we’ve been able to to that. Whether it be our ERP [enterprise resource planning] system, whether it be bringing in our revenue management system, whether it be looking at what labor systems we can put in to make labor more efficient, I think that all plays into it.
The other thing that differentiates us is looking at how we scale and the balance between centralization and standardization. We think both are actually good. The ability to centralize takes a lot of the pressure off at the community level, so we can do more important things, which is focus on residents.
I’ve heard some other companies talking about, we want our EDs to be CEOs of our communities. That’s frankly sort of the opposite of how we think about things. We want our EDs to be the best EDs possible. As a CEO, I can tell you, there’s a lot of stuff you have to deal with, and I don’t want to put those types of pressures on our EDs. I just want them to focus on, how do I provide the best care for our residents?
On creating sub-brands Elmcroft by Eclipse and Embark by Eclipse, to serve different price points and levels of care under the Eclipse umbrella:
We’re taking a page out of hospitality. We’re taking a page out of retail. For instance, Hilton has multiple brands, whether it be the Waldorf Astoria to the Hampton Inn. What they’re able to share are back office systems. They can share … efficiencies that come with scale for all those things. Similar to in retail, Banana Republic and Gap, same company but they’re able to share back office efficiencies. That’s exactly what we’re doing here. So, a lot of the back office support systems and services we provide come from Portland, but they’re out there for both Embark and Eclipse to tap into.
I think it’s important to have the separate brands out there because there are customers who are looking for different things. Not all residents are created the same. Each has unique desires and needs but it’s our job to match up what they’re looking for to be the best brand out there.
On whether Eclipse is a turnaround specialist, having built the portfolio by taking over Elmcroft and Brookdale communities with upside potential:
I don’t think we set out when we formed Eclipse and said, “We’re going to be the turnaround company.” I think it’s a reflection of the people who are calling us and what they’re looking for.
If I were to break down the last 10 phone calls I got from folks, probably three of the 10 are folks who are owners who are looking for a different result, you’ve got another three out of 10 who are developers who are trying to get their project green-lit but can’t because of finance telling them you need a more experienced operator at the helm, and another three of 10 are developers who already have a project underway but they’re not hitting their marks, so they’re looking to make a change there. The final one of 10 are folks that are like capital from China who saw my name and decided to give me a call. There was no intention on our side to say we’re going to be the turnaround company. I think it’s a matter of folks knowing our track record and giving us a call with those challenges.
That said, we live today in a challenged senior housing environment, with new supply, with labor out there, everyone feeling the pinch. I think people are looking for operators who are well-run and well-structured, have the ability to scale and have the infrastructure and track record to deliver results.
On what the future holds as Eclipse continues to expand:
We’ll continue to grow, and I think there are other pockets of seniors who aren’t being addressed yet. Like I said before, not all seniors are the same, and everyone’s looking for something that speaks to them.
I was speaking on a panel a while back talking about why hasn’t senior housing penetration increased that much over the years. Most people on the panel were developers, and they all said, I don’t think we market ourselves very well, people don’t know the benefits of senior housing. My perspective was a little bit different.
I don’t think that we’ve built something yet that the other 88% are looking for. Our goal is start tapping in and going after that unspoken 88% out there.
On the biggest challenge in getting Eclipse up and running:
I think that the biggest challenge is … I wish I’d brought on an investments person sooner rather than later, because frankly I’ve been surprised by the number of phone calls and inquiries we’ve received. It’s hard to sift through all that … I guess it’s a high-class problem to have, but it’s been a challenge.
On what he’s proudest of accomplishing with Eclipse so far:
One of the things I’m proudest about is just the people standpoint, how the folks in Eclipse have risen to the challenge. We are a startup. We’re just over a year old and we’re 100 communities now. We’ve taken on communities that were with other operators, so there was a transition there, and with transitions always comes some drama. Everyone’s been patient and worked through all the transition noise out there while still getting results. That’s something to be proud of.