After a turbulent few years, Five Star Senior Living (Nasdaq: FVE) has gained more financial stability — and CEO Katie Potter is now moving the company toward its next evolution, as a provider of “life services” that extend beyond the four walls of senior living communities.
With a portfolio of more than 250 communities, Five Star is one of the largest senior housing providers in the United States, and the company is by no means abandoning its core line of business; however, Potter is leading the organization in new directions, informed by a changing consumer base, new technologies, Covid-19 and other disruptive forces altering the market. The work of the AgeLab at the Massachusetts Institute of Technology (MIT) has been an important source of resources and ideas for Potter, and Five Star has forged a partnership with the AgeLab that is inspiring and supporting some of the changes at the company, she said Tuesday during a presentation with AgeLab Founder and Director Joseph Coughlin, and in a followup interview with Senior Housing News.
“This generation is living much longer and essentially will have an entirely new stage of life for experiences, for working, for whatever it may be that they wish to pursue, but they’ll need support to empower that lifestyle,” Potter said during the presentation, which was part of the SAGE/2020 virtual conference hosted by home care company Honor.
Newton, Massachusetts-based Five Star has already taken a step beyond traditional senior living with its Ageility brand of fitness and rehabilitation services, which in some instances are provided in communities operated by other senior living providers.
“As we grow and develop that business, we’re learning a lot and building the infrastructure that can serve as a platform to launch into other areas,” Potter told SHN.
Diversifying beyond the operation of traditional senior living communities may seem like a bold and risky step for providers, but Coughlin believes that future success is dependent on anticipating how the business will be reshaped in the coming years.
“Companies like Five Star and others that succeed will be the ones who see the writing on the wall,” he told SHN.
Tech blurs lines
The fact that Potter and Coughlin were presenting at a virtual conference hosted by a home care company is indicative of a larger trend, which they described as a “blurring of the lines” between senior living, home care and other previously distinct businesses, organizations and institutions.
Various factors are causing this phenomenon, with technology being a particularly powerful driver, as it is changing the nature of people’s homes, Coughlin argued. Homes are becoming platforms in which people leverage branded services that provide connection and care, he said.
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In this regard, technology can be seen as a threat to traditional senior living, insofar as it supports the ability of people to age in their single-family homes for longer periods of time, but it also opens up new possibilities for integration between senior living providers and other organizations and partners.
For instance, Coughlin pointed out that his cousin is receiving treatment for Parkinson’s disease from John Hopkins via telehealth, through a senior housing community where she lives in upstate New York.
This is just one small example of how technology supports integration across the housing and care spectrum. Going forward, senior living providers should strategically consider both how they can harness technology to bring new services into their communities and also how to harness their technology to extend their reach outward.
“Technology is now making these walls permeable,” Coughlin told SHN.
These changes have been a long time coming and the pandemic has accelerated them, he and Potter said. Covid-19 has created tremendous momentum for telehealth, but Coughlin pointed out that as early as 1895, an article in medical journal The Lancet proposed using the newly invented telephone to monitor heart patients.
“It took a freaking pandemic for people to wake up and smell the internet,” he said. “There is no excuse now not to bring in the best and brightest knowledge base for health care, anywhere on the planet.”
Five Star has invested in devices such as iPads and technology to facilitate social interactions during Covid-19, Potter said. And, she agrees that tech is blurring boundaries that previously existed between senior living companies and other parts of the health care continuum. But, she thinks that the real value proposition that senior living providers can offer to consumers is helping them harness technology to holistically meet their lifestyle-related goals and desires.
“Otherwise, this boomer generation goes running in the other direction,” she said.
“Hey, you’re an old man, you need this,” is not an effective message to encourage tech adoption, Coughlin acknowledged. However, he thinks that the Covid-19 pandemic has drastically accelerated the acceptance and adoption of technology among older adults.
“The pandemic has actually done amazingly wonderful things — you heard me correctly,” he told SHN. “It really has thrust telemedicine, home delivery, new ways of communicating with mom and dad at a distance, trying to find creative ways to cut through isolation and loneliness … it has, I would say, pushed technology at least 5 to 10 years faster into people’s lives.”
Given these pandemic-related technology tailwinds, senior living providers must adapt by being less tied to location and more focused on service provision, he said. Companies that are excellent at providing care and services within a senior living building may need to learn how to deliver those services in new settings with the help of technology, or they may need to rely on technology to forge partnerships with other organizations to expand their capabilities.
“Every other industry has to do it, it’s time for senior housing and care to think the same way,” he said.
However, well-regarded senior living provider companies have stumbled in the past when trying to go beyond their core skillset of managing buildings, abandoning diversification efforts into areas such as home care. But Five Star has had success with its Ageility offering, and Potter plans to take a similar approach as the company considers other areas for expansion. And, the company has a small home care component due to an acquisition in Texas, as well as a small concierge service providing residents with dog walking, household cleaning and the like. These lines of business are sources of further information and insight into potential new avenues of growth.
“We’re going to be thoughtful and methodical about how we pursue [opportunities] — that was how we pursued Ageility,” Potter said. “We learn along the way, to determine whether they’re viable avenues of revenue diversification and things we want to pursue, or perhaps they’re not a right fit for Five Star, and we move on.”
The overall goal is for Five Star to empower older adults with an array of holistic “life services” across physical, emotional, intellectual, social, experiential and other domains.
“I think this concept of life services that empower a lifestyle … is going to be really important in how we approach securing the business of this demographic,” Potter said.
New vision for senior living communities
Even as Five Star is looking beyond traditional senior housing services, the company is committed to this core part of the business and considering how to create communities that will appeal to future consumers.
Baby boomers tend to view spaces as opportunities for self-expression, and future building designs and aesthetics must take this into account, Potter said. That means thinking about how residents see their identities reflected not only in their apartments but in a community’s common areas.
Furthermore, Covid-19 has led to a reconsideration of certain elements of senior living architecture and design, focusing attention on components such as outdoor spaces, common areas that enable socially distanced activities and programming, touchless doors and powerful air filtration systems.
Five Star is considering features such as outdoor decks with dining or other activities, as well as more robust spaces dedicated to fitness — a natural, given the Ageility offering. But the company is conducting market research to gauge what current and prospective residents want and need, and will make decisions informed by these results, Potter told SHN.
As with their decisions around technology, boomers will be drawn to senior housing communities that support the lifestyle that they desire, she believes. So, Five Star’s future designs and programs must harmonize to achieve this goal.
The pandemic has slowed capital expenditures, due primarily to limitations on having construction workers in buildings, Potter noted. However, some exterior projects have continued, and Five Star is evaluating which projects can move forward as communities begin to reopen and visitation guidelines and rules change.
Coughlin believes that Covid-19 is leading to a fundamental reconsideration of density, and he foresees a shift away from monolithic buildings with large common spaces. Future senior living communities may become “fragmented,” with smaller buildings separated by green space, he told SHN.
The traditional model of senior living may remain profitable at the moment, and reducing the amount of revenue-generating space is not an easy proposition for developers. But, Coughlin thinks that boomers and their adult children have “profoundly different” expectations than previous generations, and their expectations are being shaped by the pandemic. And like Potter, he emphasized the importance of supporting their desired lifestyles.
“The folks who have traditionally been behind senior housing have been the real estate community,” he said. “They now need to think more creatively about a lifestyle choice and not simply a care choice.”