Sunshine Retirement CEO: We Can’t Sustain Industry-Wide Lockdown For Much Longer

Like many other senior living providers in its shoes, Sunshine Retirement Living has not received any financial assistance from the government since the pandemic began, despite Covid-19 hurting its bottom line.

The provider’s occupancy has dipped 250 basis points in independent living and 800 basis points in memory care since the provider enacted its infection control strategy in the beginning of March. But CEO Luis Serrano is determined to make do with the hand that the Bend, Oregon-company was dealt, and he thinks the pandemic could have a silver lining, too. For instance, it might result in pent-up demand for senior living services or increased demand in middle-market senior living, a focus for Sunshine and its 32 communities. The provider’s “sweet spot” for rates lies between $1,800 and $3,500.

“We believe that some of that demand is just delayed … and hopefully we can capture at least part of that as states start reopening and families start feeling more comfortable,” Serrano told Senior Housing News. “It’s certainly hurting us financially.”

As of May 15, the company had just one outbreak at a community in Colorado, a fact that Serrano attributes to the company’s strict Covid-19 precautions. Still, while Serrano is grateful that the nationwide lockdowns seemed to have worked in flattening the curve, so to speak, he also believes the industry cannot sustain itself long-term under present conditions.

“The lockdown has other medical implications that we can not ignore: isolation, depression, reduced access to medical care,” Serrano said. “And that’s just on the medical side, forget about the financial side, which is also dramatic.”

Sunshine Retirement Living traces its roots back to Holiday Retirement, the senior living provider formerly headquartered in Lake Oswego, Oregon. Serrano’s late wife and the co-founder of Sunshine Retirement Living, May Sunshine Hasso Serrano, was on the board of Holiday Retirement, and worked alongside Holiday Founder Bill Colson until Fortress Investment Group (NYSE: FIG) acquired the company in 2007.

“When the company sold, my family did not want to get out of the senior living industry and decided to keep most of the communities,” Serrano said. “May and I started Sunshine in 2009 to manage the family-owned senior living portfolio.”

Highlights of Serrano’s podcast interview are below, edited for length and clarity. Subscribe to Transform via Apple Podcasts, SoundCloud or Google Play.

On the potential for pent-up demand and new interest in middle-market communities:

We call it the “forgotten class.” Many operators focus on this subsidized, low-income market, and others focus on the very high-end, with golf courses and high-end amenities. We’ve always focused on the middle-class. We provide transportation, housekeeping, all-day dining, activities, and we do all those things at a very average and cost-effective price point. And you could argue that, as the crisis intensifies, and people will try to be potentially more frugal, our product might become more attractive, since we are cost-effective while providing very strong quality.

We believe that some of the demand is just delayed … and hopefully we can capture at least part of that as states start reopening and families start feeling more comfortable. It’s certainly hurting us financially, but we hope that is a short-term issue and we can go back to taking care of seniors in our communities and offering the lifestyle they deserve in their senior years.

As the crisis intensifies, people will try to be potentially more frugal. Our product might become more attractive, since we are really cost-effective and affordable while providing a very strong quality. So, I think it’s possible, but I don’t have a crystal ball.

On staffing during Covid-19, and how Sunshine Retirement Living moved away from Holiday’s live-in manager concept:

We actually started with the model of live-in managers when we started Sunshine in 2009. But, we moved away from that model for two reasons. One, because we needed to professionalize the executive director, which is a more professional role with a higher caliber of education. We also think that it’s important for the team members to get a break, and be able to recharge outside the community. It’s a very draining job. And so we think that getting them out of the community and back is actually more positive with regard to the pandemic and the coronavirus.

We have protocols in place that are very strict. We take temperatures multiple times a day from all the staff members, we have everybody wearing PPE. If anybody [comes into contact] with somebody that has had the coronavirus, they stay away from the community. So, we’ve been able to keep all the residents completely safe without having to resort to drastic measures [like having team members sleep in the community], and I would say we’ve had a very strong impact on the lives of our staff.

On finding a lab for Covid-19 testing and procuring PPE:

It was absolutely challenging. There were no testing [kits] available for a long period of time. Sunshine was at the forefront of partnering with a testing lab, Vikor Scientific. We purchased Respira-ID test kits. We [store] them in each of the communities, and in case of an outbreak, or if we have to test a resident or an employee, we have them available. We are self sufficient. We have doctors’ orders already ready to go. And thanks to that, I believe the families, the residents, every stakeholder that is involved in every community, are more at ease … knowing that we have this capability at our disposal.

We have a very strong purchasing group internally that has relationships with large logistical companies like Ecolab and Sysco. And they have done the best to keep us properly supplied during this very challenging time. We still experienced some shortages and delays, but the situation is getting progressively better. The thing that we struggle the most right now is with gowns, but we are doing the best we can to be fully supplied. I’m very proud of my team. They [have] been working overtime, crazy hours to make sure you know that our communities were properly supplied.

Whether plans to reopen states worry him:

Everything worries me. I haven’t gotten a good night’s sleep in a while.

I think everything we do in life has some risk. We just have to manage that risk as best as we can. It made sense to go into restricted mode to protect our seniors at the beginning of the pandemic. It afforded us some time to adapt our protocols to make sure that the hospitals will not be overrun or collapse, and to educate our seniors.

But we simply cannot sustain the lockdown for much longer. The lockdown has other medical implications that we can not ignore: isolation, depression, reduced access to medical care. That’s just on the medical side, forget about the financial side, which is also dramatic. Regardless of whether seniors are in a retirement community or they’re living at home alone, all those situations are happening right now.

We’re trying to balance freedom and going back to some sense of normalcy with safety. I believe now that we’re all aware of the situation, I think everybody’s washing hands and doing the basic things. And I’ve been doing a lot of research about how other countries are addressing the situation. In my mind, I have two models. One is Sweden, and one is South Korea.

South Korea has done a fantastic job at tracing contagious situations and testing, which is what we’re doing. We’re monitoring who comes in, we take temperatures, we ask if they’ve been in contact with anybody that has the coronavirus. I think that that’s proven effective. And like I said, we’ve only had one one outbreak out of 32 communities.

If you follow the basic procedures like washing your hands, wearing a mask when you’re next to somebody else and just keeping your distance, I believe that the virus can be contained for the most part.

On whether senior living providers will need to periodically test all residents and staff for Covid-19:

I don’t think so. I think prevention is the key. If you look at the death rate in Sweden versus other countries that completely locked down in some cases, it’s actually lower. So all they’re doing is is following basic hygiene protocols. Keep in mind, we were already dealing with the flu, we were dealing with noroviruses. That’s part of procedures that we just had to adapt a little bit to the specific situation with the coronavirus.

The way I approach it is, if you have somebody that has symptoms, then you test everybody around the unit and implement contact tracing for that person in the community, staff and residents alike and that is a more effective and reasonable way to do it versus a situation where you have to test everybody every week. And what if they don’t want to be tested? You can’t force residents or employees to get tested under current law. So, I don’t think it’s a viable option.

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