Frontier Management hit an important milestone last year: its 100th community.
While the Portland, Oregon-based senior living operator had been on an upward growth trajectory, its portfolio expanded rapidly last June with the addition of 20 memory care communities owned by real estate investment trust Welltower (NYSE: WELL) and formerly operated by Silverado. Now — with three senior living projects under construction and calls for new community partnerships coming in every day — Frontier’s biggest challenge is not growth, but how to scale its culture and operations while meeting all of the new demand it’s taking on.
“We have to be very mindful of what we can handle,” Frontier Management CEO Greg Roderick told Senior Housing News. “Once you hit that 100 mark, you have to be much more mindful about strategically what fits in and what does not.”
Roderick’s five focus points looking ahead are growing occupancy, financial responsibility, compliance with state licensing requirements, hospitality and taking care of his employees.
On the operations side, Frontier is implementing innovative techniques in memory care and importing hospitality flair from Max’s Bistro, a restaurant in Fresno, California that Roderick owns. All the while, it’s balancing maintaining census while raising rates — which is something that Roderick believes the industry needs to do with more confidence. Looking further ahead, Frontier is exploring new service lines such as active adult.
Today, the company has a total occupancy rate of 76%, with an 86% occupancy rate for buildings aged two years or older. For comparison, average senior housing occupancy was just north of 88% as of the fourth quarter of 2019, according to the latest data from the National Investment Center for Seniors Housing & Care (NIC).
And with 106 properties under its belt in 17 states, the company isn’t done growing, either.
“Over the next three years we’ve got … about a dozen properties anticipated throughout the country,” Roderick said.
When Frontier took on the portfolio of Silverado communities last year, the communities were not in poor physical shape, Roderick recalled. The communities, which have been rebranded under the Auberge name, are located in Texas, Arizona, Illinois, Utah and Wisconsin, were already seeing high levels of family engagement when Frontier came in.
“They just needed some occupancy improvement,” he said. “They were in need of a new fresh look at the life enrichment [or an upgrade to] the restaurant program.”
That’s not to say the communities didn’t get facelifts. And while Silverado is an acknowledged pioneer in memory care programming, Frontier also is driving change at these communities with its own new memory care approach.
The company’s memory care philosophy, called Spark, takes inspiration from the Montessori style of teaching, a popular approach often seen in K-12 schools that is meant to encourage freedom of choice and self-expression. While Frontier has long used Montessori-style methods in its memory care programming, the company coined the name Spark about a year ago.
Though many senior living providers have implemented Montessori-style memory care practices over the years, the teaching style has gained steam among companies that want to differentiate or upgrade their memory care offerings.
Frontier’s Spark program is rooted in creating social roles for residents, improving their skills, setting goals and helping them progress and fostering the skills they still possess. Frontier also has a partnership with the Center for Applied Research in Dementia, which helps inform its memory care community design, staff training and lifestyle programming.
At the core of Spark is the belief that memory care residents are capable of doing much more than some assume. At Frontier, residents — including those living with dementia — participate in activities such as going to the hardware store and buying tools, making bath salts, infusing tequilas and gardening.
“We’re able to see our residents have a full day, not just sit and watch The Price is Right,” Roderick said. “They eat better, they sleep longer, they have a much more active, fully engaged day and less agitation.”
On the memory care side, Frontier’s occupancy currently sits at about 72% for the entire portfolio, and lies in the “upper 80s” for stabilized communities, Roderick said. But getting to that point is a hard-fought battle at times, considering memory care has faced a slow road to recovery in many markets across the U.S.
“Until we get our Spark programming going, until we get our what we call our ‘open house ready’ going, our exceptional service delivery going, census does remain generally low,” Roderick said. “You have to be running on all cylinders if you’re going to see occupancy grow.”
Another tenet of Frontier’s operations is its focus on hospitality. For Roderick — who is the majority owner of a 170-seat restaurant called Max’s Bistro in Fresno, California — dining programs are among the most important parts of the senior living business.
“I own a restaurant, so I certainly see the benefit of hiring an executive chef at every property,” Roderick said. “There’s been some real crossover benefits in taking our hospitality up a notch.”
A typical Frontier community will have restaurant-style dining venues and offer activities such as happy hours or even beer-brewing programs. Wine is another big focus in Frontier’s dining program — so much so that Roderick has brought in a business partner and his restaurant’s manager to hold training sessions on pouring and presenting it. And, having a liquor license in California even helps the operator source and buy wine.
“I remember we had a building in California we were managing, and the staff were pouring wine into these giant water goblets and filling them almost to the rim,” Roderick said. “We call that a country club pour.”
And although the operator wants to avoid what Roderick jokingly called the country club wine pour, it does strive to instill a more country club atmosphere in its communities.
“Our philosophy is based around hospitality,” Roderick said. “We want to emulate those types of club-feeling, special, excite-and-delight programming throughout our communities.”
On trying to hit that right atmosphere, Roderick often uses his own tastes as a barometer.
“There are certain buildings that I could see myself spending a lot more time in as I get older and enjoying every minute of it,” he said.
Steady as she grows
As Frontier expands at a steady pace, it’s a balancing act of maintaining occupancy, keeping turnover at a manageable level and raising rates at the same time.
On the pricing front, Frontier is able to justify a 5% to 7% annual increase in rates by demonstrating the value of its communities. This helps offset the rising cost of labor, among other expenses.
“The building has to be beautiful and refreshed and clearly kept up,” Roderick said. “What people are looking for in their last 12 to 36 months in life are not [service] reductions.”
It also helps that many of Frontier’s communities fall within a middle-market range, with rates starting at around $2,500 for independent living, $3,000 for assisted living and $4,000 for memory care, Roderick said.
“Having fear around raising the rents is, I think, normal,” Roderick said. “But as an industry, we have to find more confidence and we’ve got to keep up with these wage pressures and with the new tax rates that we’re seeing.”
Another effort for the company is keeping turnover low — at least to the extent that it can.
“If a brand-new hotel opens up blocks from your building and they’re offering $3 more an hour, you cannot control turnover,” Roderick said.
Where the company can affect turnover, Roderick employs consistent communication and frequent community visits to build a culture that employees feel proud of. Frontier also offers competitive health insurance benefits, recognizes employee achievements and checks in with employees frequently. The company also invests money in back-of-the-house spaces such as employee break rooms and replaces uniforms as often as needed.
“[We] give our employees an ambience where they can be proud of their uniform, of their lounge, of their benefit package and of their community,” Roderick said. “We call it creating an atmosphere of success.”
Looking ahead, Frontier hopes to grow its relationships with its partners such as Welltower, Colony NorthStar (NYSE: CLNY), American Realty Capital, Ventas (NYSE: VTR) and others. The company will also likely dabble in new service types, such as active adult. Already, Frontier is engaging with multiple potential partners on those types of projects.
And being based in Portland, where there’s a high concentration of senior living providers, informs Frontier’s approach to doing business in an increasingly competitive industry.
“We’re friendly competitors,” Roderick said. “We know that there’s plenty of business to go around, and we want to see everybody do well.”