Aegis CEO: Next 100 Days Will Be Hard, Then Senior Living Will Start Turnaround

Going into 2021, Aegis Living is preparing for a potentially bumpy rollout of a Covid-19 vaccine, and the organization is primed for another 90 to 100 days of intense pandemic activity — but CEO Dwayne Clark predicts recovery to take hold next spring.

By that point, significant herd immunity could be reached, and strong providers could experience a surge in move-ins, Clark told Senior Housing News.

Weaker operators also might be buoyed for a time as consumer demand strengthens, but these organizations face a much tougher road, in his estimation. 

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Meanwhile, 2021 will see the continued evolution of Aegis and other providers toward a health and wellness focus with stronger clinical capabilities. Bellevue, Washington-based Aegis operates 32 communities across Washington, California and Nevada.

Vaccine expectations, preparations

From early in the pandemic, Aegis has been working in close concert with medical professionals across the continuum of care, including by forming a coronavirus council of physicians and other clinical experts. The council and the company’s executive leaders are continuing to collaborate with other health care organizations on plans for a Covid-19 vaccine which appears to be imminently available.

In particular, Clark has been banging the drum for senior housing and care settings to receive top priority for vaccine distribution and administration. He argues that giving older adults the vaccine will help unclog the hospital systems and protect hospital workers who are contracting the virus from these patients.

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“So, dramatically, you’ve taken your biggest cohort that’s affecting our health care chain out of the equation,” he said. “That’s a critical point.”

The vaccine will be a “game changer,” he said, but he does expect a rocky process as the vaccine becomes available.

Compounding existing distribution issues, such as the need to keep the Pfizer vaccine at incredibly cold temperatures, other problems that will crop up, possibly even including interference by organized crime groups seeking to sell the vaccine on the black market, Clark said, citing a recent Wall Street Journal article

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Furthermore, he’s concerned by the fact that the Pfizer and Moderna vaccines require multiple doses.

“I think people may be confused about, ‘I got one dose, that’s good enough,’” he said. “It’s not really good enough.”

Planning for the vaccine is difficult given all the unknowns, but Aegis is taking steps, including holding an all-company call to discuss it and registering with pharmacy provider CVS. The expectation is that everyone at the company will receive the vaccine, unless they have a precluding medical or religious reason. And Clark plans to distribute a video of him receiving the vaccine.

“I can tell my staff, I’m not going to ask you to do anything that I’m not doing,” he said.

There are questions about whether people working in administrative roles should receive the vaccine, as well as frontline caregivers. Because field staff sometimes interact with team members in departments such as accounting, Clark’s position is clear.

“My opinion is that you’ve got to have 100% of your people get it,” he said.

A swift recovery — for some

A federal panel has recommended that residents and staff in assisted living receive access to the first wave of the vaccine, and although the ultimate decision will rest at the state level, senior living communities almost certainly will be among the first locations where the people are vaccinated. 

Still, masking and social distancing are likely to be broadly in place across the country until “well into 2021,” Clark noted. That’s because “the death of Covid” will not occur until the number of people who have been vaccinated and the number of people with natural immunity due to having been infected by the coronavirus reach a critical mass.

But with widespread vaccination within health care settings, coupled with a decline of the disease that coincides with warmer weather, Clark believes spring should bring a recovery in the senior living sector.

And that recovery could be swift as pent-up demand hits the market. Pre-leasing is “through the roof” at six developments that Aegis has underway. One building that will not open for over a year is already 25% pre-leased, Clark said.

“We’ve never seen things like that before,” he said.

Still, it’s hard to generalize about what the pace of recovery will look like across the industry. Aegis’ portfolio was 93% occupied at the start of the pandemic, and the company has seen an erosion in census. But Aegis’ occupancy today — 86.5% — is about what the industry average occupancy was at the start of the pandemic, while the industry-wide occupancy rate has fallen to historically low levels, sitting at 78.8% for assisted living at the end of October.

In other words, there are a lot of providers out there who are in rougher shape than Aegis from an occupancy perspective and from a capital perspective, Clark observed. As demand comes back, these weaker operators could be propped up for a period of time, but their problems with cash flow and meeting debt covenants could catch up with many of them.

“I’ve been quoted many times … it’s the old expression: The strong will get stronger, the marginal will get weak and the weak will die,” he said.

Clearly, he classifies Aegis among the “strong” group, and he described several ways that he believes the company will become stronger in 2021 and further in the future. One notable area of focus is building on the health care-related efforts and partnerships of this pandemic year.

To that end, the company is seeking a chief medical officer, who will be Aegis’ “conduit” to its hospital, health system and other partners, Clark said.

Because Aegis serves an affluent clientele, he also believes that the organization is in the “catbird seat” in being able to work with best-in-class health care providers, which want to work with this demographic. But the pandemic has shown that providers across the board must be thinking about how to better serve their residents from a health and wellness perspective.

“I think one of the things the pandemic taught us is you better do a pretty darn good job of servicing these people in your own communities — I’m not saying give them hospital care, but you better have the intelligence to make some good decisions about what they need,” Clark said. “I don’t think all assisted living providers have that.”

Like some other senior living providers, Aegis is now exploring ways to bring more care into their buildings, including by creating on-site clinics. Aegis is in discussions now to create clinics at two sites, which could be a few thousand square feet and would be staffed by health care partners. And, although Aegis will not “bet the farm” on Medicare Advantage, Clark is interested in adding MA revenue to the mix.

Having these strong health care capabilities should reassure consumers who might have doubts about the safety of senior living, given some bad headlines during the pandemic, when media coverage sometimes conflated assisted living with nursing homes. Collecting and sharing data is another key to reassuring consumers about the safety of senior living and driving a strong recovery, Clark emphasized. At Aegis, about 230 people out of roughly 6,000 residents and staff members have been infected with Covid-19 thus far, and the death rate is only about eight-tenths of one percent.

On the whole, he is optimistic about the resiliency of the sector and in particular the ability of the strongest operators to recover and pivot toward growth and innovation as the pandemic wanes.

“If you have a great brand, if you have great [capital] reserves, if you have great leadership, you’re going to be fine,” he said.

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