Eclipse CEO: Senior Living Must Recalibrate for Extended Pandemic, Expect Lasting Changes

Five months after Covid-19 reached U.S. shores, reality is sinking in about how long senior living communities will have to remain on a pandemic footing.

For Lake Oswego, Oregon-based Eclipse Senior Living, one of the key areas of focus right now is “pushing a recalibration,” to help associates shift from the “sprint” of immediate crisis response to a “marathon” mindset, CEO Kai Hsiao told Senior Housing News. With a workforce of about 5,500 people across a portfolio of more than 100 properties, Eclipse is one of the largest operators in the United States.

“There are folks who were hoping, when this all started back in March, that this was going to be a 90- to 120-day hurdle to jump over,” he said. “Here we are at that mark, and I think people will realize this is going to be with us for a much longer time than they originally expected.”

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At the same time that providers must address the immediate challenge of maintaining workforce morale, they need to be thinking about and preparing for lasting changes that the pandemic will create in the industry.

Flat or lower penetration rates, greater need for scale, and a mentality of providing “health care for the masses” are all on Hsiao’s mind — as well as an even sharper focus on the need for greater diversity and racial equity in the industry.

New workforce dynamics

Hsiao has long argued that the senior living industry could benefit from drawing on hospitality industry practices and talent. When Covid-19 struck the United States, he and other senior living executives saw an opportunity to hire from the massive number of suddenly unemployed hospitality workers.

Eclipse has seen job applications increase, with former hospitality workers represented among the larger applicant pool, Hsiao said. But, he acknowledged that results appear to be mixed across the industry; some providers have touted their success in recruiting hospitality talent and others say that an anticipated hiring wave has not materialized.

Hsiao is watching what is happening in Washington, D.C., where lawmakers have been locked in a stalemate over another package to extend Covid-19 relief, including higher unemployment benefits.

“All signs point to payments amounts going to get reduced, and I think that’ll have a pretty big impact on getting even more applications and more folks in the hospitality side,” Hsiao said.

He has also been speaking with federal and state lawmakers and policymakers about his idea to use schools that remain closed as locations where people — including former hospitality workers — can be retrained for jobs in new fields. The idea has been well received, but Hsiao perceives that the government workers feel they have “bigger fires going on” that must be put out first.

“I can appreciate that, but just wish they would move a little bit faster on their side,” Hsiao said.

That sentiment extends to the lack of government financial support for senior living providers. While smaller providers have been able to access Payroll Protection Program loans to help meet higher labor costs, larger companies have been essentially overlooked by federal relief programs.

“We are the forgotten ones,” Hsiao said, noting that other health care providers such as hospitals and skilled nursing facilities have received support, as well as other hard-hit private sector industries such as airlines.

And, the lack of rigorous and clear public policy is also fueling community spread of Covid-19, adding further complications to the efforts of senior living providers in keeping their staff and residents safe.

“We try to create a bubble right around our communities,” Hsiao said. “It would certainly be helpful if the greater community would create that bubble as well. But, that’s not necessarily what’s going on right now.”

Maintaining workforce morale in the face of these challenges, and the increasingly obvious fact that the pandemic will drag on for the foreseeable future, is not easy. But senior living workers by and large are highly motivated to do their jobs well, Hsiao emphasized. So, providers cannot overlook how important and effective it is to communicate with associates about what the mission of the organization is, and the long-term importance of the work they are doing each day.

“People in this industry were born with the care gene in their DNA,” he said.

At the same time that Covid-19 is continuing to shift workforce dynamics, Black Lives Matter is also having an effect. For Hsiao, increasing diversity and racial equity within senior living is a top priority; he points out that he is a child of immigrant parents, who came to the United States to live the American Dream.

“They felt racism along the way; at the time, they thought it was part of the price to pay,” he said. “We’re able to say that shouldn’t be a price to pay.”

He is proud of the diversity of Eclipse’s leadership team, including a COO and general counsel who are female and Asian, and women in roles such as chief administration officer, head of clinical, head of dining and head of human resources. Given that senior living frontline workers are dramatically more diverse than leadership teams, Hsiao believes that the industry must do a better job of highlighting success stories and building up its diverse talent pool.

“I think people need to see that we can get people positions of power and how to get there in terms of mentoring … so that they know this isn’t something that is just a fairy tale,” he said.

Looking to the future

Going into 2020, Hsiao anticipated a “reset” year for senior living. He did not anticipate a global pandemic, but Covid-19 has made him more certain that lasting changes are coming to the senior living sector.

“I do think there is going to be an impact to the industry long term,” he said. “Senior housing penetration I think is either going to be stalled at where it’s at or going to go down a little bit.”

The good news is that the overall population of older adults is set to boom, which will lead to overall industry growth. And, the pandemic should help resolve recent oversupply issues by suppressing new construction for a period of time. But, fear over communal living will likely dampen demand, as will reputational damage that senior living has sustained from media reports conflating private-pay communities with nursing homes, in Hsiao’s view.

As other executives have also said, he thinks that the pandemic has settled an ongoing debate over whether senior living communities are a hospitality or health care product.

“We’re definitely leaning more toward health care now than ever before,” he said.

Going forward, providers and other stakeholders will be faced with the challenge of offering a more robust health care platform at a middle-market price point, given the size and needs of this demographic. Senior living of the future may in fact have to deliver “health care for the masses,” in Hsiao’s opinion.

To achieve this, scale will be more important than ever, in order to achieve operational and cost efficiencies. The industry has grown largely through small companies that are real estate developers first and operators second. With development stalled and operational expenses rising, these companies may not be able to survive.

“If you talk to brokers, they’ll tell you that they’ve had more requests for BOVs [broker’s opinion of value] than ever before, because I think everyone is starting to realize this is going to be long term,” Hsiao said.

Adding to the concern of smaller providers or those companies that are not well capitalized is the fact that federal financial support remains in question. And, federal liability protection related to Covid-19 care is also still up in the air; Hsiao believes this is now a more pressing issue than access to personal protective equipment (PPE).

On these and other issues, he thinks that the various senior living trade associations have coordinated their messages better than ever before. But, he also questions whether the industry would benefit from changes in this arena as well.

“I do think that having multiple trade associations versus just one has probably clouded things a little bit, at some times,” he said. “ … I still think sometimes people get confused in terms of who speaks for the industry, when you have so many voices out there.”

Ultimately, only time will show how Covid-19 permanently alters senior living. But Hsiao is optimistic about the industry’s ability to adapt. Already, owners, operators and other stakeholders have shown their creativity and nimbleness in responding to Covid-19, developing and implementing protocols “from scratch” when faced with unprecedented situations.

“[Providers] are blazing new trails that weren’t there before and had to solve for problems they’d never had to think of before,” he said.

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