Brightview, Discovery, Affinity CEOs: Senior Living Faces Transformational Changes

Senior living is in the middle of a transformative period.

Supply and demand dynamics are imbalanced. Providers are grappling with oversupply in markets across the United States, while determining how to address the arrival of the baby boomers and the growing middle market. And the available labor pool is at record lows during the longest economic growth period in the nation’s history. But that boom may be reaching an end, with rumblings of a possible recession in 2020.

In short, the industry is in the midst of a “sea change” — one that industry stakeholders should be taking a more proactive approach to address.


That was one message from the CEOs from Brightview Senior Living, Discovery Senior Living and Affinity Living Group, who shared their views on senior living’s future and how they are addressing the industry’s most pressing issues at Senior Housing News’ annual summit in Washington, D.C.

What are we missing? What are we doing wrong where we’re not able to increase [penetration rates]?

Discovery Senior Living CEO Richard Hutchinson

The discussion ranged from using technology to address the labor shortage; their plans for a potential recession; and first steps toward serving the vast middle market.


Preparing for a recession

The extended length of the current economic growth cycle has resulted in some unintended consequences, Brightview Senior Living CEO Marilynn Duker said. One is an excess of capital in the debt and equity markets looking to place deals.

“We would actually welcome a recession, because [the capital markets are] a bit too frothy. We’d like to see things settle down a bit, in that regard,” she said.

Duker added that the possibility of a recession will not adversely impact operations, and likely only slightly impact supply. Baltimore-based Brightview — which has a portfolio of 42 communities — has capital reserves in place in the event of a downturn, as it did during the Great Recession.

Discovery Senior Living CEO Richard Hutchinson concurred, noting that the Bonita Springs, Florida-based provider will use its capital to continue making wise investments and that there are aspects of its business that are resistant to a recession. Discovery’s portfolio encompasses 52 communities across 12 states.

For care levels more attuned to economic movements such as independent living, DIscovery has plans in place to hold the lineDiscovery is also taking steps to broaden the consumer base and hit lower price points, which would make Discovery even more resistant to recession.

Affinity Living Group founder and CEO Charlie Trefzger, meanwhile, is actively positioning the Hickory, North Carolina-based provider for an economic downturn. Affinity operates 143 communities, with a strong concentration across the Southeast.

Affinity Living Group CEO Charlie Trefzger; Nick Klein for Aging Media Network
Affinity Living Group CEO Charlie Trefzger

Affinity is creating liquidity wherever it can so that it has the necessary capital available to operate the business at all times. It looks to create economies of scale wherever possible through vendor relationships, scaling up the Affinity platform while market conditions are favorable and being ready to “tighten the belt” when a recession arrives.

Affinity regularly reviews its rates to see where it is positioned within its markets and remain competitive at all times. On the staffing side, Affinity is borrowing from the “gig economy” playbook and working to create opportunities for employees to have multiple jobs.

“As a recession occurs, people are going to have to move from two to three to four jobs, just to maintain their quality of life and standard of living,” Trefzger said.

Serving tomorrow’s customers today

The scramble to meet the dual demands of the baby boomers and middle-market has caught the industry flat-footed, Hutchinson said. On the latter issue, there is no magic answer, but finding the right operational model will require more creativity than the industry has tended to display. He believes the industry as a whole has prospered on a wave of demographics, and is not innovating.

That lack of innovation is reflected in the industry’s penetration rates, he argued. Penetration rates are static, according to CBRE’s Q2 2019 senior housing market insight report. In major markets, penetration rates have varied wildly.

This is a reflection of what the industry is not doing to capture that market demand today, and the situation could worsen if providers don’t have a “come to Jesus” moment about what they are missing, Hutchinson said.

“We’ve been working hard on this, asking ourselves, ‘What are we doing that’s not attractive to [the customers] who are not using our services and product? What are we missing? What are we doing wrong where we’re not able to increase [penetration rates]?’” Hutchinson said.

Discovery’s business intelligence group — forming it was “one of the best decisions I ever made as CEO,” Hutchinson said — parsed the company’s data to find ways to make independent living, in particular, more attractive to customers from a pricing standpoint. It hit upon the idea of a la carte services through having a better understanding the economic components of the services Discovery offered.

“You have to have your own menu of pricing in order to offer a la carte services, or you’re just hoping it works out,” he said. “And hope is not a plan.”

We would actually welcome a recession, because [the capital markets are] a bit too frothy. We’d like to see things settle down a bit, in that regard.

Brightview Senior Living CEO Marilynn Duker

A la carte pricing for services allows residents to modulate their personal economics with their environment, and allowing them to have more flexibility with their nest eggs when a recession arrives.

Moves like this could be a step toward the elusive goal of creating a scalable middle-market product.

“[The middle-market] is the unicorn we’ve never been able to capture,” he said.

Thinking regionally

Affinity has been steadfast in its mission to provide assisted living from a middle-market price point. The provider, which operates 143 communities, has favorable market conditions in its home base of North Carolina such as a robust reimbursement program for Medicaid recipients and a growing senior population. But that only goes so far, Trefzger said.

Affinity has succeeded in the middle market through regionalizing assisted living, which Trefzger believes will become more prevalent in the coming years. This allows providers to scale inside of a market and create the health care networks necessary for meeting customers at reasonable price points.

Trefzger believes providers need to become more vigilant on focusing on the type of care that primary care physicians and other medical professions are providing residents, and how this is improving resident wellness. He also challenged other providers to go into the weeds to find these efficiencies.

“If you do that, it will have a profound effect on staffing, care coordination, referrals and follow-ups,” Trefzger said.

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