In Super-Dense Senior Housing Market, ‘Co-opetition’ Helps Providers Thrive

It’s common wisdom that the more crowded a senior housing market is, the more cutthroat the tactics are among its different competitors. The recent period of oversupply has given rise to aggressive pricing tactics and stories of staff being wooed by the newest communities in town.

But there are a handful of markets where there is both a lot of supply and where competing providers work together, and these could provide a model for such “co-opetition” in other parts of the country.

One of those markets is Lancaster County in Pennsylvania, one of the densest in the nation in terms of senior housing options, particularly continuing care retirement communities (CCRCs).

Yet, the providers in Lancaster have devised a number of ways to collaborate with each other, which could be one reason for the region’s high penetration rate and occupancy numbers.

In one example of this so-called “co-opetition,” 16 not-for-profit life plan community providers collaborate on an annual open house event each fall called Explore Retirement Living. On a predetermined day in the fall, providers including Garden Spot Communities, Landis Communities and Mennonite Home Communities open their doors to thousands of prospective residents, all in a coordinated effort to promote local non-profit senior housing.

The event is unique in that the different providers eschew pricing wars or secret shopping and instead work together to promote each other’s strengths to residents, even by recommending their peers to residents when they think they’d serve as a better fit. The providers — who are all members of a larger organization called Lancaster Area Senior Services (LASS) — also host quarterly breakfast meetings to swap best practices and hold annual legislative meetings to educate policymakers.

This level of collaboration is generally only seen in places where senior housing markets are well-established and consumers are well-educated about the product type, according to Lana Peck, a senior principal with the National Investment Center for Seniors Housing & Care (NIC).

“These are old, well-established types of senior housing that people trust,” Peck told Senior Housing News. “In some of these metro areas — Philadelphia, other parts of Pennsylvania, Minnesota and the Pacific Northwest — they’ve been around for a long time.”

In the case of Lancaster County, market conditions have also likely helped push senior housing providers closer together, as there’s more than enough demand to go around. In the third quarter of 2019, the market had a penetration rate of 38.7%, according to NIC data — far higher than the average of 11% for the top 99 markets in the U.S. Lancaster also had an average occupancy rate of 94.3% during that period, which is far higher than the most recent national average occupancy of 88%.

While these numbers are notable when compared to the rest of the country, they’re even more so considering the sheer density of life plan communities in the Lancaster market. Lancaster County has 20 life plan communities but just 87,460 older adults, according to a Ziegler Investment Banking analysis of 2018 U.S Census Bureau data. That’s a ratio of one life plan community for every 4,300 older adults.

There is a question as to whether increased collaboration and transparency among senior housing providers in Lancaster created a rising tide that lifted all boats. While the Explore Retirement Living event started in 2011, providers in Lancaster have worked together in one way or another since at least the mid-‘90s, and that may have served the market well over the years. That may have played a part in growing the market’s penetration rate and occupancy over the years.

“Transparency … creates more trust among the consumers, and with more trust comes greater reputation, greater familiarity of product,” Peck said. “It boosts penetration, it boosts occupancy, and it really serves the seniors well.”

While all of the participating communities in Lancaster are faith-based with mission at the forefront of their operations, the “co-opetition” concept could also work among for-profit communities, provided they’re willing to put the resident first.

“If you’ve got relationships across the competitive marketplace and your goal is to best serve the resident, I think the reputation of all of the properties goes up,” Peck said. “For-profits, they can do it as well.”

‘Congenial competitors’

Explore Retirement Living was born out of the Great Recession. The idea to host a coordinated event first came up at a normal quarterly breakfast meeting during the height of the housing crisis, according to Deborah Laws-Landis, director of marketing and communications for Landis Communities.

“In 2008, when the economy tanked, we really felt it at the different retirement communities,” Laws-Landis told Senior Housing News. “[We thought], why don’t we do our own open house where all of us can participate … and do one mailer, which costs a lot less?”

The first Explore Retirement Living occurred in 2011, and was a “super success” with 15 different locations included in the open house, Laws-Landis said. Since then, the event has expanded to 18 different locations, with a growing mailing list of as many as 150,000 people today.

Each year, Explore Retirement Living attracts about 300 to 500 prospective residents to Landis Communities — residents that likely wouldn’t have visited otherwise. But not all of them end up moving in. Some of them end up at communities elsewhere in Lancaster — even at Landis Communities’ suggestion.

“We see ourselves as congenial competitors,” Laws-Landis said. “If somebody is looking for a particular feature and our community doesn’t have it, we know who to refer them to.”

The annual open house is just one way the nonprofits collaborate. The providers’ CEOs are also in close contact, and the communities will routinely share information with one another regarding occupancy, labor, market conditions — even just words of encouragement, according to Connie Buckwalter, director of marketing for Mennonite Home Communities.

“If you’re simply having a bad day, someone [from another community] will usually tell you that you’re not the only one,” Buckwalter told SHN. “And that can make you feel like, OK, it’s not just me.”

Mentality change

One of the biggest roadblocks to creating a marketplace of “co-opetition” lies in providers that feel as though they need to fight competitors for residents or go out of business, according to Garden Spot Communities CEO Steve Lindsey.

“It comes out of a mindset of abundance as opposed to a mindset of scarcity,” Lindsey said. “We believe there is a market out there that is growing and big enough for all of us to not just survive, but to thrive.”

Cooperating with your competitors is easier said than done in markets hit by a high rate of new supply and fierce competition. But the general idea is that by elevating the local senior housing market, providers can seize their own destiny and create new demand in the process, even in hard-hit markets for supply and occupancy.

For instance, many in the industry believe there is a real opportunity to increase the low penetration rates that plague many markets across the U.S. And while having a well-established senior housing market and senior-friendly infrastructure do not always equate to rising penetration rates, it’s still a good idea to explore, Lindsey explained.

“If we could develop that mindset more readily in other areas, it would help to educate and expand the market, which is what we’ve seen here in Lancaster County,” he said. “By working together, we’ve made it more successful for everybody.”

There is some evidence that this mentality shift is happening elsewhere in the country, at least among nonprofits. For instance, Doug Leidig, CEO of Frederick, Maryland-based Asbury Communities, said that he is in favor of “co-opetition” when interviewed earlier this year for the SHN Transform podcast.

“There’s always somebody doing something, a part of your business, better than what you’re doing,” he said. “My stance is, why do we have to recreate that? Let’s learn off somebody and see if we can partner for the benefit of both.”