Health care versus hospitality: it’s an ongoing debate in the senior living industry today. High-end properties with resort-style amenities grab headlines, but other companies are committed to a different niche.
For Premier Senior Living, success lies in maintaining a laser-focus on care and marketing that expertise.
The New York City-based company currently has 23 assisted living and memory care communities spread across New York, Pennsylvania, North Carolina, Ohio, Wisconsin and Michigan. And while other providers are targeting urban development for their hospitality-forward operations, Premier is committed to suburban and rural areas that support its model.
Senior Housing News caught up with Premier Co-Founder and Managing Member Wayne Kaplan to talk about how he got his start in a “hotel for old people,” and how Premier’s “whatever, whenever, wherever” motto differentiates it from competitors.
The following interview has been edited for length and clarity.
SHN: How did you get into the senior living business?
My family, my father, uncle, cousins, grandfather, they were in the motel business in New York. We had two motels on a very busy road. One did very well back in the ‘60s and ‘70s … the other one just didn’t. So, we’re sitting around in 1972 when I was a senior in high school school, and we were trying to figure out, what can we do with this hotel?
We said, let’s make a hotel for old people. There were no words like assisted living then. So, we hung a big sign in the window that said retirement hotel. And people came. It was a little 44-room, one-story motel, where you drive up to the door, put your key in, and go in. People came, so we added a second floor, and we added a wing out back. And we all went, holy cow, we got something here.
So we took another [hotel and] converted that into what’s now called assisted living. We worked in these assisted living facilities. We did everything from cooking the food and bathing people to doing maintenance, cleaning the toilets and making payroll on Friday. And to make a long story short, we split up with my uncle’s family in 1985. My father retired to Florida. My two brothers and I were left with one assisted living facility out on Long Island.
And you built the company up from there?
We started acquiring some existing facilities, we converted an office building, we converted a condo, we converted a couple motels. And in 1996, we took the company public. The company was called Kapson Senior Quarters. We went public six months after Sunrise [Senior Living] went public.
Within a year and a half, Lazard — back then it was called Lazard Freres, now it’s just called Lazard — did a tender offer and took our public company private.
Two months later, they took another company called Atria [Senior Living] private, and combined our two companies together. We were up and down the East Coast, [Louisville-based] Atria was mostly in the middle of the country back then, and Lazar owned another company called ARV on the West Coast. And they figured, we were going to put the whole country together. We said, OK, we’ll run the whole country out of New York. They said, nah, we’ll let the guys out of Louisville run it. So, I said OK, if that’s what you want to do.
They gave us two-year management agreements. I handled operations, legal, regulatory, all that stuff. A year into the two-year contract, the CEO comes to my office and says, Wayne, we’d like you to move down to Louisville. And I said, no thanks. So, we parted ways. I went home to my wife that night and said, guess what, I just got fired. But I was going to get paid for another year, and my kids were small, and they went off to summer camp. And over that summer of 1999, I was trying to figure out what I wanted to do.
Law firms came calling and said, hey, we want you to join and start a health care practice … I built up a big senior housing practice, but hated every minute of it.
Then an opportunity arose for you to get back in senior living operations?
So I bought this facility, which is called the 80th Street Residence, which I still own [apart from Premier] today. And a couple of months later, an investment banker who used to sit on our board at Kapson … introduced me to Bob Borsody, who was a health care lawyer who also wanted to stop practicing law. And Bob and I formed the company Premier Senior Living in 2006.
From there, we just started cold calling people to see if they wanted to sell their facilities and we found one in up in Oneonta, New York, which is upstate near Cooperstown, where the Baseball Hall of Fame is. And by dumb luck we found a guy who was ready to retire and sold us his facility, and that was Premier’s first facility. And then in 2009, when the whole financial markets were tanking, we bought two more in the Buffalo, New York, area.
And here we are, 12 years later, and we have 23 communities in six states. Bob and I go around to our facilities all the time. We’re constantly visiting. We have a very lean corporate staff. When we go to the facilities, most people know the story, and they know I’ve done their jobs. When we’re asking them to do something, it’s coming from a position of knowledge because I’ve been doing it for almost 40 years.
Looks like you guys have a care-focused model. Can you tell me about your philosophy there?
Our motto is WWW, which stands for whatever, whenever, wherever. We’ll do evening admits. We’ll do weekend admits. If somebody can’t tour the facility, we’ll take an iPad to them and show them a virtual tour. We’ll do whatever it takes just knowing that you can’t sit on your laurels.
A lot of people are having occupancy issues and labor issues, and we are too. We’ll do whatever it takes to get residents in and try to keep them. Our model is based more on the care. Most of our communities are not brand-new with all the bells and whistles and glitz and glitter. We base our story on the care that we give, not on the aesthetics of a brand-new building. And it works, because we have the referral sources.
We do very little advertising. We have a website, but we don’t do newspaper ads, radio ads, TV ads. We basically get most of our residents on referrals.
What’s your business model like from an ownership standpoint?
Of our 23 communities, we own six, the real estate plus operations. The other 17, we do triple-net leases from REITs, investor groups or joint ventures. So, we don’t do third-party. We own the property outright, or we do triple-net leases.
What REITs or other industry players do you currently work with?
We work with Welltower, actually the first property out in Oneonta. We work with Invesque, CareTrust REIT, we work with groups of investors, some of them are 1031 TIC, or Tenants in Common, guys. Some communities we have regular bank financing on. So, we’re kind of opportunistic. We don’t have a set way. We take each deal as it comes, and we finance it the best way possible. If we can buy it for our own portfolio, we’d prefer to do that. Sometimes it makes sense to do it and we can, and sometimes we can’t.
You mentioned referrals are a big part of your business. Where do your referrals generally come from?
The hospital discharge planners, the rehabs. The geriatric care managers. Professional referral sources. Although, sometimes we do boots-on-the-ground marketing. So, sometimes you get a referral from the dry cleaner, or the local food store guy. The word-of-mouth referrals are obviously the ones we like the most.
Premier is based in New York City. How do you feel about urban properties, which are a big development focus for some senior living companies now?
Urban senior housing is a lot different than suburban or rural senior housing. The labor pool is a different story. The cost of doing business in a big city, whether it’s New York, Chicago, San Francisco, is enormous. The price of everything is so outrageously expensive. It’s very tough to do business. You get higher rates than you do in the suburbs, but at the end of the day, are you making more money? I don’t know. It depends on how well you run your business and what your cost of your building is.
Urban senior housing is tough. Everybody sees the glitz and the glitter and the skyscrapers, but it’s not all it’s cracked up to be.
Where does Premier prefer to locate its communities?
We prefer suburban, even sometimes rural. A lot of our communities are in very small towns, Mayberry R.F.D. kind of towns. And we love it, because you’re usually the only game in town. You get the referral sources. We’re city guys, but we love rural communities. And a lot of our communities are out near farms, and it’s a nice change of pace when we go visit them.
What do you do when a competitor opens up a new community down the street?
It’s fairly easy. What we’re selling is our reputation for care. Especially with memory care. The adult children who are looking care about, are you gonna care for my mom? Is she going to be okay? Is she going to be clean? Is she going to be well-fed and taken care of? Is she going to get her meds on time? So, that’s what we tell people. We’ve been here for 10 years, we have a great reputation, most of the time we have deficiency-free surveys. Isn’t that what you really want, instead of these new carpets and chandeliers? So, that’s how you compete. We stake it on our reputation.
And sometimes you lose to a new competitor because somebody likes the bells and whistles. We had that happen in upstate New York. It was an older community, one mile away from a big, brand-new building, all the bells and whistles. I think we lost one resident who moved out, and they came back within three months. And then we had a bunch of residents from the new place come to us because we had better care. The new place had the bells and whistles, but they didn’t give the care. That’s how you compete with new guys. You can’t win all the time, especially if they’re going to discount rates because they want to put heads in beds.
This business sometimes is a roller coaster ride. Sometimes you’re up, sometimes you’re down. If you’re 100% full today, it doesn’t mean you’re going to be 100% full tomorrow. You have to keep on marketing. And when you’re full is when you need to be marketing the hardest and get your waiting list going.
What are your thoughts on senior living providers starting Medicare Advantage plans or trying to partner more closely with those payers, or health systems? Does Premier do anything like this?
With a lot of communities in rural areas, there’s only one hospital. We have very good relationships with them. We refer to to them, and they refer to us. So, we do hospital partnerships. The Medicare Advantage plans, it’s a little bit too new. We’re not a big enough company where we can start our own. We’re just going to have to wait and see how it shakes out.
How do you attract and retain the best employees?
It’s tough. You can’t sugarcoat it. It’s very tough to attract, it’s tough to hire, it’s tough to train, and it’s tough to retain. There’s a different work ethic in the younger generations than the older generations. It’s different because a lot of the younger employees want to have their cell phones on them all day. First we had a practice where they put their cell phones in their locker, but we changed our posture quickly because these younger people, they’re glued to their phones all day long. And I mean, if someone took my phone away on a business trip, I would feel lost. So, we said, we can’t be so solid in our old-fashioned ways.
So, you have to trust the employees.
We’re not anxious to put a live body into a job opening. We’d rather wait and fill it with someone who’s more capable. Our attitude is, if you come in and have the right attitude, most of the time we can teach you the job. For most of the other jobs in our communities in the senior housing industry, you can be taught, including executive directors, who are very hard to find.
Before we put either a new executive director or business office manager into one of our communities, we send them to one of our sister communities for usually a good week or more for training and to learn from a master. And then what we do is, in their first week back at their new community, the person they trained with a week ago comes to them to hold their hand and show them the ropes. That usually works, plus it makes a very good mentoring relationship. And it lets the executive director have a friend in the company.
What do you look for in an acquisition target?
We don’t want to do turnarounds. It takes way too much brain damage. We run a lean corporate staff. I don’t want to devote everybody on the entire team to a turnaround property. That’s why we won’t do new developments, either. For us, it’s not worth it. I’d rather do an acquisition that’s stabilized or near stabilized, and we can take a B property and bring it up to an A property, do a little bit of capital investment. Maybe do some more efficiencies of staff and purchasing … And I don’t want to do a building that has a bad reputation or a bad survey history, because sometimes you just can’t overcome the reputation.
What are your growth plans for the year ahead? It seems like you’re pretty stable at your current size.
We’re always seeking new acquisitions. We’re not doing any new development, not now anyway. If we don’t grow anymore, that’s fine. Our mainstay is to usually pick off one or two a year and grow slowly. We’re not looking to be Brookdale. Been there, done that. We’re very happy with where we are.
We don’t really have a growth plan. We have no growth or exit strategy. I love the business. It’s in my blood, been doing it for 40 years. I’m very happy to keep doing it the way we are.