Inside Benchmark’s Branches Middle Market Strategy

Four years ago, Waltham, Massachusetts-based senior living provider Benchmark launched The Branches. The assisted living and memory care-focused brand targets the middle market, promising communities that offer a more affordable price point without sacrificing their attractiveness or approach to activities and socialization.

Founded in 1997, Benchmark brings in about $500 million in annual revenue and operates a portfolio of 63 senior living communities in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont providing independent living, assisted living, memory care, skilled nursing and respite care. The communities emphasize a physically and socially active lifestyle.

Carving a Niche in the Challenging Middle Market

Generally, the middle market includes seniors with too many financial resources to qualify for Medicaid and other government programs, but who are not able to afford typical, market-rate senior living. For seniors between the ages of 75-84, the National Investment Center for Seniors Housing & Care (NIC) has defined this group as those in the 41st to 80th percentile (individual income and annuitized assets) with $25,001 to $74,298 in annual income and assets.

As of 2014, the middle market included about 8 million older adults in the United States, according to NIC. But, as the massive baby boomer generation ages, the middle market will expand to 14.4 million older adults in 2029.

This growth in the market represents a huge opportunity for senior living providers, but also a tough challenge. Typical operating models today make it difficult to set rates at a middle-market price point, particularly given high and relatively fixed labor and care costs for assisted living.

This is the challenge that Benchmark is taking on in the three Branches locations that are operating, in the Massachusetts communities of North Attleboro, Framingham and Marlborough.

North Attleboro, the largest of the three properties with 104 units, opened in 2017. The Branches of Marlboro* (67 units) and Framingham (58 units) opened in November 2019 and February 2020, respectively.

Aiming to serve the middle-income sector without sacrificing quality, Benchmark decided to build smaller.

Grape’s Vision Includes Smaller Apts, More Socialization

Branches communities provide small private suites but work to compensate residents with roomy indoor and outdoor communal spaces that are comparable to Benchmark’s higher-priced properties, and a long menu of activities.

“(In North Attleboro) we reduced the size by about 35% from a normal, traditional assisted living building. And we chose to do that by not substantially changing the common areas, but by reducing the size of the apartments,” said Benchmark Founder and CEO Tom Grape in a 2018 interview with the University of Massachusetts’ Gerontology Institute Blog.

Grape also emphasized that Benchmark chose to build in “moderate-income communities” and use stick-built construction to help contain costs. With “companion units” that feature shared bathrooms and entryways, he also stressed that “the move-in process is all about the buddying up process.”

Choosing appealing locations in communities outside of central Boston is a key component of the Branches’ model.

“I’m not going to tell you Branches are located in true middle-market communities; they’re a tick below the top-tier communities,” then-Benchmark senior development director Kristopher Yetman told SHN in 2020.

The fact that all three properties were new construction, rather than repurposing existing buildings, sets The Branches apart from some other middle-market senior living plays.

The most common approach to meeting the middle-market challenge is to bring fresh operating models to older construction. This is a strategy being pursued by operators such as Seattle-based Merrill Gardens.

What do you think will be the most popular strategy to meet the middle-market senior living shortage?

Source: 2021 Senior Housing Outlook Report from SHN and Lument; 600 subscribers polled in Nov-Dec 2020.

But, Benchmark saw an opportunity in ground-up development, as new supply flooded the Boston area in the years before the pandemic.

“It felt like we were all fighting over the A-plus markets,” Yetman told SHN. “At Benchmark, we took a step back and really wanted to look at how to make that second-tier opportunity pencil for ourselves and our investors.”

Benchmark paid $1.5 million for the Framingham site and $2.1 for the Marlboro location and both projects were budgeted at $29 million each while under construction, according to reporting in the Worcester Business Journal.

New Hampshire-based Udelsman Associates designed the Framingham and Marlborough-based properties, the WBJ states.

SHN reached out to Benchmark management to learn more about The Branches, but they declined our request. As part of mystery shops, we spoke with customer representatives to get a better idea of the services and amenities they offer.

While we were unable to get occupancy data, each of the properties has some units available which isn’t all that surprising considering the current state of senior living.

Overall, the range of services, amenities, and activities, both on-site and in the community seems robust, though COVID has curtailed outside activity, as well as some onsite entertainment and activities that could spread the virus.

How Branches Pricing Compares to Industry Median Rates

Though the Branches also offer memory care apartments, this report focuses on Benchmark’s efforts to contain costs in assisted living, where costs have risen by almost 4% yearly since 2004. Memory care presents even thornier challenges with regard to middle-market access, given its more intensive care and staffing requirements.

With meals, utilities, cleaning, transportation, and activities included, the approximately $3,000-to-$5,000 charged for Branches’ assisted living residents falls below median rate projections for the Central Massachusetts market, from Genworth Financial’s 2020 Cost of Care Survey.

It’s important to note that all pricing listed is based on information provided to SHN during February 2021.

A Closer Look at North Attleboro

Benchmark’s first Branches property, in North Attleboro, offers both assisted living and memory care. For assisted living, the apartments range from 250 to 500 square feet for a studio, with other options for memory care, according to a call center representative.

North Attleboro apartments are priced by the day, with an escalating ‘assistance fee’ for assisted living residents based on care level, beginning at $25 a day ($750 for 30 days) and increasing to $173 a day ($5,190 for 30 days). Basic unit pricing is as follows:

Maple Suite

  • $98 a day/$2,950 for 30 days
  • These units are adjacent to other units and share a bath

Spruce Suite:

  • $123 a day/$3,690 for 30 days
  • These have private baths but share an entryway with another unit

Pine Suite:

  • $130 a day/$3,900 for 30 days
  • These have private baths but share an entryway with another unit

From this interaction, it was clear that assisted living and memory care are clearly delineated services rather than a more fluid continuum of care. Services like physical therapy, meetings with social workers, and other types of medical specialists are out-sourced on an “as-needed” or scheduled basis depending on need.

“Arrangements can always be made for an outside provider to come in,” the rep said.

Hiking, Bird-Watching, Gardening, and Outdoor Grilling Continue

As at the other communities, activities at North Attleboro have been adjusted due to COVID-19. The community offered “a lot of outings” pre-COVID, according to the representative.

Onsite options include:

  • A large outdoor patio with a fire pit and a grill
  • Bird watching and a nature trail
  • Raised gardening beds
  • Game nights, BINGO, and a full range of activities

“We do transportation for doctor’s appointments as well as personal errands. Residents also use Lyft or take local buses,” the rep added.

The early performance of the North Attleboro community was encouraging to Benchmark.

“We’re well ahead of our projections,” Grape said in July 2018, adding that Benchmark intended to build more Branches communities.

A Closer Look at Framingham

The Branches of Framingham offers three models of suites for assisted living, with floor plans available on their website.

Maple Suite:

  • $2,950 a month
  • These units are adjacent to other units and share a bath

Spruce Suite:

  • $3,850 a month
  • These have private baths but share an entryway with another unit

Birch Suite:

  • $4,800 a month
  • This a private suite with a private bath and private entrance

While residents can shop area markets and order from DoorDash and other meal delivery services, dining at all three Branches locations is all-inclusive, covering three daily meals, beverages, and snacks.

“It’s more of a restaurant-type space; the kitchen is separate. For breakfast, for example, they’ll have the option of waffles or cereal and something else. Sometimes, the chef comes up with something fancy. It’s not like everybody has to have waffles today,” said a call center rep.

Additional fees begin when residents need higher levels of care, help with dressing, bathing, and other daily activities. The staff assesses new residents on a scale of 1-5 to “find out where they are,” she said.

Activities Onsite While Church, Concerts, Shopping Are on Hold

The Branches of Framingham offers a mix of activities onsite, most of which have continued during COVID. Outside activities have been largely curtailed.

Pre-COVID, the property brought speakers and performers to perform in-house, and provided free transportation to local churches and synagogues, outings to galleries, museums and other events, the rep said.

The following activities have continued over the past year:

  • Opportunities to work in an onsite garden
  • Crocheting and knitting
  • Drawing, painting, sculpting in clay
  • Games and cards/game nights and Bingo
  • Book discussions

These activities will return once it’s safe:

  • Visits to galleries and museums
  • Concerts on the lawn and “anything from the outside coming in.”
  • Transportation to churches, synagogues, etc.
  • Onsite presentations for widows and veterans
  • Other speakers brought in from outside

In addition, The Framingham fitness center remains open, with staff-member-led classes that include physical and occupational therapy.

Socialization is a major component of the services the community offers. Staff not only make sure Framingham residents are integrated into their new home, but they also focus on keeping long-term residents active.

“We come and check-in to make sure that they’re brought to the dining hall and introduce them to other independent residents, but even with older (long-term) residents, someone will stop by their room and say, ‘Hey, it’s BINGO time, want to come down?’” the rep said.

A Closer Look at Marlboro

The Branches community in Marlboro offers independent living, assisted living and memory care, according to a call center rep.

“The design of this community was well thought out. A one-bedroom is about 680 square feet, but without a kitchen, all the space is living space. For residents coming in the only things you need are a bed, nightstand, and a chair,” said a representative at the community.

Mirroring Framingham, assisted living suites are grouped by Maple, Spruce and Birch plans, priced at $2,950, $3,850, and $4,800 a month, respectively.

Marlboro amenities include a beauty/barber shop, garden and patio, fitness center and a social hour in the community’s pub. An onsite library also serves as a computer lab where email, internet and social media classes are offered.

A Strong New Approach to Assisted Living in Its Early Stages

The Branches won’t be affordable for everyone who falls within NIC’s very wide middle market spectrum, but many in this sector should certainly be able to afford the smaller units.

They represent an effort by Benchmark to contain costs by opting for smaller apartments, affordable ZIP codes, wood-frame construction and other cost containment methods without sacrificing the emphasis on communal spaces, quality dining and range of activities essential to their brand.

There is more work to be done to create an even more widely accessible middle-market product, Grape has acknowledged.

“The fundamental challenge is that the building will do part of it, and that’s what we’ve addressed at The Branches,” he told the UMB Gerontology Institute blog. “But it doesn’t address the real need, which is some form of [financial] help on the service side.”

Still, with the booming demand for middle-market housing options, The Branches model could be a platform to build upon for the future.

Written by Andrew Smith with contributions and edits from Tim Mullaney.

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