The Bottom Line: Presbyterian Senior Living Gains Financial Flexibility, Pursues Middle Market

Presbyterian Senior Living (PSL) CFO Dyan McAlister has experienced several challenging moments during her 22 years at the Dillsburg, Pennsylvania-based nonprofit operator. But none of those – not even the 2008 financial crisis – compares to the coronavirus pandemic.

But the financial team proved to be nimble during the pandemic, and made adjustments to its ledger to keep PSL on a firm financial footing to ride out the ongoing pressures, McAlister told Senior Housing News.

“Looking at what we could do and how we could get more funds, access capital and refinancing debt, allowed us to increase the debt service ratio to give us more room and flexibility,” she said.


McAlister, who was appointed CFO on October 13, is responsible for the financial health of a provider with a portfolio of 20 communities totaling 3,601 units, ranging from affordable senior housing to continuing care retirement communities (CCRC) and health centers, and ranks 15th on the 17th annual list of the top 200 nonprofit providers from financial services firm Ziegler and industry group LeadingAge.

In this installment of SHN’s Bottom Line series, McAlister also discussed how PSL is looking to grow its middle-market offerings, plans to diversify its service lines over the next five years, and how that growth may look.

This interview has been edited for length and clarity.


Senior living has become more operationally and financially complex over the last few years. How has that placed new demands on you, as you acclimate into your new role?

The regulatory world continues to change. It seems like a continual battle to keep up with the changes, especially over the last six months with CARES Act stimulus, Payroll Protection Program funding and all of that. It’s a time commitment to keep track of it all.

Going forward, having the right analytical tools is what will make or break us. Knowing how our lines of business are doing, what the outliers are, and tracking those projects with the right tools is going to be highly imperative.

What platforms does PSL have in place to do that?

We have CoPilot, which helps us track our clinical data. We’ve actually built our own budgeting tool that will allow us to track our occupancy to see where we thought we would be, where we think we’re going to be, and what that is going to look like by year-end, in order to track where we’re going financially.

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How has occupancy across PSL’s portfolio trended?

At the beginning of this year, we had awesome occupancy – we were actually running higher than we had budgeted. And then we purposefully put restrictions on letting people in from every level of care, even in our independent living units. We weren’t moving new people in and we had really put a band-aid on movements. We didn’t see a decrease in demand as we had anticipated.

Prior to the pandemic our occupancy in independent living was around 94%. At the height of the pandemic we only dipped to 90% and now we are back to 91%. Each week we are seeing a gradual increase. In our affordable [segment], we were at 96%, dipped to 90% and are now back to 95%. For the health center we were at 90% before pandemic, dipped to 71% and are now back at 76% as of 9/30. Our hardest hit area was personal care and assisted living, which was at 90% prior to the pandemic and has yet to rebound. We are confident that now that visitation has opened back up this will turn.

As we’ve reopened, we are trending back to where we thought we would be at when we originally budgeted [the year]. We had those months in between where we couldn’t let people in. But now we see that it’s coming back alive. We have not seen a problem at all in independent living. Our biggest hit area will be assisted living and personal care, and it’s because those are the areas in which our family members can hold back, especially with restrictions on visitation. Because of the CMS guidance, we’ve held back on visitation until just recently; we did just open back up completely for visitation. But that put a damper on people wanting to move their loved ones in because they couldn’t just come and visit as they wanted.

When you started with PSL, where was the company at and what were your main priorities?

We were much smaller and focused on our health center. We had two [affordable communities], seven CCRCs, and a couple freestanding locations. We’re now at 22 affordable housing and market rate rentals, 12 CCRCs. And we’ve changed our focus from the health center to more of an independent living, middle-market/affordable housing community [model].

Speaking of middle-market senior housing, how is Presbyterian looking to scale that segment?

We’re actually looking at several projects, both within where we already have a footprint, and we’re also looking at a few new [markets]. It’s really where we can capitalize on the biggest market and to be able to help in the middle-market [demand]. We are looking at projects that will probably come to fruition in the end of 2021 and beginning of 2022.

You mentioned that assisted living is your area hardest hit by Covid-19. Is Presbyterian exploring launching other service lines to mitigate the pressures there?

We are working on our strategic plan for the next three to five years, and we are looking at diversifying our product to meet the needs of the consumer. We see they’re not necessarily going to want to move from home, so how do we meet them where they’re at? What kind of services can we provide in their home, or what services can we provide in our campuses that they may want to come to, but not necessarily live on campus? And how do we integrate that into what we already have? So we will be looking at that in the future as well.

Are there facets of this strategic plan that are farther along than others?

The strategic plan is supposed to be completed by the end of this month. Once that’s done, there will be timelines put on certain parts of it, so that we can keep the board informed as to how quickly things are happening. Some of it has already been discussed, and is already starting to be implemented. Those changes will come much quicker.

We’re looking at joint ventures where we can be cost-effective, like pharmacy or therapy, even dietary. Can we do that internally? Can we move that in-house and do our own services?

Were there challenging moments earlierin your career at Presbyterian, and how did you work through them?

The most challenging time has obviously been during these past six months. We’ve never been through a pandemic before. It’s been amazing to experience the company-wide work of the senior leadership team and the management team. I’ve seen us all come together to keep our residents and our staff safe.

The interesting thing with the pandemic was the finance department stepped up behind the scenes to make minute-to-minute adjustments to help the company not just survive, but thrive.

I’ve actually found it fun to learn all of these new ways to keep things going on the back end. The other crisis that has played in my memory is the [2008] financial crisis. That was different than the pandemic because back then, it affected the financial resources of potential residents who were going to move in. We had to get more creative in how we meet the needs of these people who need to move in and might not necessarily have the financial means that they had in the past, while maintaining our integrity and our balance sheet and our [profit and loss statement].

Where are Presbyterian’s major cost and expense pressures right now?

Labor is one of our biggest issues. We had people who were in nursing who, because of Covid-19, don’t want to be in nursing anymore. With enhanced unemployment benefits, we noticed there were some staff members who just didn’t want to come back because they were able to just stay at home.

Getting the proper staffing within our communities has been an issue, especially when you’re talking about a five-star rating and what they expect for you in order to obtain a five-star rating. We were lucky, because we’re so large that we were able to get the equipment we needed, and then be able to distribute it out to the communities that needed it. Not all of our communities needed PPE at the same time, or the same amount. If one community could find it, they were able to buy it and then spread it out among all of the communities. We have some [PPE] inventory on our balance sheet to provide into the future because we don’t know what the fall holds or even what next spring holds, at this point.

How did Presbyterian approach enhanced benefits for staff?

We did overtime and hero pay. For workers in our Covid-19 “red zones,” we provided extra pay, as well. In some markets, as well as in our health centers, we relied on agency staffing in order to keep [operations] moving.

How is PSL’s financial position at the moment?

We did great efforts to refinance our debt while interest rates are low. Money is available for refinancing projects. What [lenders] are not really open to right now – at least from what we’ve seen – is new buildings where you’re in a fill-up mode. Not knowing the future, they’re a little more hesitant. We actually have our Fitch Ratings interview coming up. We’ve told Fitch, “We are really not looking at this point to borrow a lot of money to build.” We’re more focused on what we can do internally. If there’s an opportunity, we would then go out, but we’re not purposefully looking at this point.

How is PSL looking at mergers and acquisitions as part of its middle-market expansion?

When it comes to acquisitions, we believe in purposeful growth, but it has to fit. We don’t just do a deal to do a deal. It needs to be something that’s going to meet our mission as well as being cost effective. What does it leverage for us? Maybe [an acquisition] has a pool of staff who would help us in another area where we’re not as strong. Looking for those cost-effective ways that we can build a technology infrastructure. We’re definitely more into that than building from scratch at this point, because it costs so much to build from scratch.

Is PSL looking at Medicare Advantage plans?

We have a group together called the value-based group and we’re weighing our options. We are looking at all available plans, especially when you talk about people in the affordable market who can’t necessarily afford the best insurance or the highest plans. What can we do from our standpoint? We’re looking at joint ventures right now. We started to look at all of the different plans that are out there, to come up with either our own plan or to work jointly with another group that could provide a plan for PSL.

How do you define a healthy balance between mission and margin?

We can’t perform a mission without any kind of a margin, at least as I see it. A CFO is not only for the residents that are in our care, but also the staff. Their margin for me is not necessarily tied in how much we make, but how much we’re then able to give back to our residents, through charity care, maintenance and capital improvements, and how much of that I can spend to help our employees to give them better benefits, to give them the extra pay.

We all work together in the mission versus margin. [PSL COO] Dan Davis and I work very closely a lot. He knows the value of the margin as much as the mission. We all understand the conflict, and we all work together to try to ensure that there is a balance there.

Did you ever envision yourself in the senior living industry back at the start of your career?

My first few jobs were all with not for profit organizations. I came for the job interview and I always say it was neat, because the things that sold me on [PSL] were the people – even the front desk receptionist at that time. She was just so friendly and caring, that I really felt like I belonged there.

While I never envisioned myself in senior living if you had asked me back when I was in college, I feel like this is where I was meant to be. I’ve always gotten along with the older generation, I love listening to their stories. I love being a part of their life and learning from them. And so being able to help them now, it just seems fitting for me.

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