Risk Aversion Holding Back Nonprofit Senior Living, Despite Affiliation Trends

Nonprofit senior living providers have shown an increased appetite for growth through affiliation and expanding existing campuses in recent years. Yet an aversion to risk born out of the post-2008 economic downturn has the sector trailing its for-profit peers.

These trends are on display in the 16th annual LZ 200 list of top nonprofit providers from industry association LeadingAge and investment bank Ziegler. The list, published on Oct. 31, ranks the largest not-for-profit systems providing aging services through senior living in the United States, in order of total owned market-rate units, as of the end of 2018. This also marks the second year the list ranks the top 200 providers, up from 150.

The list reflects LeadingAge and Ziegler’s ongoing commitment to try to capture a larger representation of the not-for-profit senior living marketplace, Ziegler Director, Senior Living Research and Development Lisa McCracken told Senior Housing News.


The top 10 largest organizations by count are:

  1. National Senior Campuses – 20,513 units
  2. The Evangelical Lutheran Good Samaritan Society – 16,557 units
  3. Acts Retirement Services, Inc. – 8,626 units
  4. Presbyterian Homes and Services – 7,824 units
  5. Ascension Living – 7,722 units (eighth on last year’s list)
  6. Trinity Health Senior Communities – 6,377 units
  7. Covenant Retirement Communities – 4,901 units (fifth on last year’s list)
  8. HumanGood – 4,714 units (seventh on last year’s list)
  9. Benedictine Health System – 4,561 units
  10. Retirement Housing Foundation – 4,097 units

While for-profit operators and a flood of new investors are entering the space seeking opportunities for growth, nonprofit providers have been mostly content with maintaining the status quo. That has resulted in nonprofit providers losing market share overall and could lead to a reckoning if it continues — one that has been trumpeted by leaders in the nonprofit space such as HumanGood CEO John Cochrane as recently as last week’s LeadingAge conference in San Diego.

McCraken agrees with Cochrane that nonprofits need to be taking bold steps.


“When you talk about scale and sophistication it is a new day, and it is an increasingly complex business to run,” she said.

More expansion, less new construction

For-profit operators have far outpaced their nonprofit counterparts on the development front in recent years. Ziegler analyzed SHN’s “In the Pipeline” coverage and found for-profits spearheaded 243 new ground-up building projects and 27 expansions and repositionings, compared to only 14 new campus projects and 14 expansions/repositionings by nonprofits.

Given the availability and low cost of capital, McCracken was surprised that nonprofits have been sitting on the sidelines in one of the busiest development periods in recent memory.

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“If you were to marry up the cost of capital historically and where growth has been in the not for profit space, it’s a bit of an anomaly,” she said.

Courtesy of LeadingAge and Ziegler
This chart shows the historic growth of expansions in nonprofit senior housing.

The majority of the nonprofit development activity is taking place on large campuses, where providers spent the post-recession period banking land and waiting for an uptick in the economy. The silver lining to this lack of development by nonprofits is that occupancy has held steady and in some cases is trending upward, particularly when compared to the quarterly occupancy data on for-profit communities provided by the National Investment Center for Seniors Housing & Care (NIC).

“We know that the not-for-profit occupancy has been strong. And I think that that’s because there has been this heavy commitment to continue to reinvest and repositioning your campus just to be relevant moving forward,” McCracken said.

Growth through affiliations

While nonprofits have been sluggish on ground-up development, there has been at least some momentum toward gaining scale through affiliation.

LeadingAge and Ziegler recorded 67 affiliations between 2015 and 2018, an increase from 52 from 2010 through 2014.

That trend has continued into 2019 with such high-profile mergers as HumanGood’s June affiliation with Presby’s Inspired Life, which gives HumanGood a national footprint and, barring any late affiliations in 2019, will see HumanGood jump to sixth on next year’s list.

Other notable affiliations include Lifespace Communities affiliating with Senior Quality Lifestyles Corporation; Acts Retirement-Life Communities merging with Integrace; and United Methodist Retirement Communities combining with Porter Hills Presbyterian Village.

Presbyterian Senior Living and Westminster Communities of Florida called off talks regarding a possible affiliation in July.

Courtesy of LeadingAge and Ziegler
This graph shows the pace of nonprofit senior housing affiliations from 1980 through 2018.

There are two primary benefits with affiliations: it allows for streamlined management and opens up growth opportunities through a unified platform. In the case of HumanGood’s affiliation with Presby’s, the latter’s CEO, Judee Bavaria, retired in June. Although both providers were in solid positions financially and operationally, Presby’s board determined that finding a strong partner was essential to the company’s future.

“There’s benefit to thriving rather than surviving, and being able to go from Point A to Point B much quicker than trying to do that on your own,” McCracken said.

Still, HumanGood’s aggressive affiliations over the last several years make the organization an outlier, and too many nonprofits are hesitant when it comes to affiliation, Cochrane argued at LeadingAge.

“We’ve got to do a better job of taking appropriate risk and scaling faster,” he said.

Aversion to risk

“Risk” is a key word. The biggest issue holding back nonprofits may be an aversion, if not an unwillingness, to take chances in a more competitive environment. Part of this reticence stems from the hard lessons learned during the Great Recession. Nonprofit providers historically have been slower to make decisions and change with the times.

Although the recession impacted nonprofit and for-profit providers equally, the expected rebound for nonprofits has not materialized, McCracken told SHN.

The aversion to risk has carried over into 2019 and looks poised to extend into 2020. LeadingAge and Ziegler polled nonprofit providers for this year’s LZ 200 to determine if they will add new communities or consider affiliations. Fifty-six percent responded they would not consider affiliating this year or next, while 50% of respondents said they would not add new communities.

Courtesy of LeadingAge and Ziegler
According to polling from LeadingAge and Ziegler, a majority of nonprofit providers are not planning to affiliate in 2019 or 2020.

The hesitancy to take risks is also contributing to for-profits taking the lead in long-term care strategies historically launched and advanced by nonprofits, such as home health services. If there is to be a rebound in the nonprofit space, providers need to look at their histories and be bold about championing their legacies moving forward. That involves taking a hard look at how they are operating, where for-profits are succeeding and what nonprofits can learn from the private operators, McCracken said.

“That should be a wake up call to providers that when you look at the demographics and opportunities, we’re in unprecedented times. Yet, our presence in the macro ecosystem and seniors housing and care is declining,” McCracken said.

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