The pent-up demand wave has crested for MBK Senior Living, and now the operator is looking forward to a period of significant growth wherein the company could triple in size in the coming years.
The Irvine, California-based operator currently manages 32 communities, totaling about 3,500 units in six states. But MBK President Jeff Fischer has his sights set on an even bigger goal in the years ahead.
“We want that to be at about 10,000 units,” Fischer told Senior Housing News. “[We are] about tripling the size of our company in the next several years, primarily through acquisitions.”
Though the company still has yet to reveal many of its plans on the acquisition side, Senior Vice President of Operations Michael Bardelmeier said MBK’s executives are encouraged by the number of acquisition targets on the market today. The operator’s “sweet spot” lies in independent living, assisted living, memory care or any combination thereof under one roof.
At the same time, MBK is careful to maintain its company culture as it grows — not an easy feat amid a historic staffing crisis that is pressuring operators across the industry. The company is under the ownership umbrella of Tokyo-based global conglomerate Mitsui & Co., and follows a culture rooted in yoi shigoto, a Japanese phrase that translates to “good quality work.”
“My belief and ultimately the company’s belief is that if you do right by your customer, do right by our residents and team members … the business will take care of itself,” Fischer said.
Riding the wave
MBK in 2021 has notched some big gains in occupancy, culminating in the operator seeing some of its highest-ever move-in totals in the spring and summer. By mid-September, while demand had tapered off somewhat, the operator was still seeing “solid growth,” according to Bardelmeier.
“My educated take is that the pent-up demand has crested, and now we are back to blocking and tackling,” he told SHN.
Today, MBK’s move-in numbers “are still above pre-covid levels.”
MBK’s leaders credit its occupancy gains to a shift in the way the operator engages with clients, including by using personalized video platforms such as OneDay, and by collecting more robust data on prospects and their loved ones. That helped the operator more quickly move in residents while keeping a handle on messaging and image with clients during some of the pandemic’s tougher months.
Fast forward to the present day, and Fischer believes that MBK has worked its way through most of the available pent-up demand. Now, the operator is focusing more on the basics of its sales and marketing strategies.
“Barring any major changes from the government or crashes — and interest rates are still low — the market is still strong,” Fischer said. “I still think our customers are really seeking us out, we just have to make sure we’re there at the forefront.”
MBK did not see widespread disruptions in occupancy or demand despite the rise of the delta variant, which spread across the country over the summer. The operator has since February recovered much of the occupancy loss it saw during the pandemic, putting it within reach of pre-pandemic levels.
“We lost a lot in a year and we wanted to do our best to recover what we lost,” Fischer said. “And right now we’re ahead of pace to do that.”
One challenge as the company moved in more residents was maintaining its rates — and that is a challenge for many other operators. Amid a competitive landscape for senior living, the company has wielded some short-running concessions or loss-leaders in certain markets in order to drive occupancy growth. This strategy helped some of MBK’s communities hit the 100% mark.
MBK is not the only senior living operator that saw higher levels of demand earlier this year. Average occupancy for the senior living industry gained 1.4% and hit 80.1% in the third quarter of 2021, according to the latest occupancy report from NIC MAP Vision.
“I think that speaks to pent-up demand that we’ve seen in the sector … and it portends a good future,” NIC Chief Economist Beth Mace told Senior Housing News in October.
And while the road ahead is sure to be paved in more challenges, Fischer likes the path the company is taking at the tail end of 2021.
“We still have a lot of road ahead of us to get down, but we’re happy with where things are heading,” he said.
Staffing, technology remain a focus
With U.S. Covid case counts receding again after a sharp increase over the summer, many senior living providers are again turning their primary focus to age-old industry issues: staffing and technology.
Regarding staffing, MBK is seeing a mixed bag of results. At some communities, turnover is below 40% and labor expenses are not growing out of control. At others, the operator is encountering stiff challenges, and has had to rely on overtime and staffing agencies to bridge the gap.
To help overcome these challenges, the company has set higher wages for workers in the order of $1 or $2 more an hour in many markets.
“We’re certainly not above-market in any location, and some markets still are very challenged, even with those increases,” Bardelmeier said. “But that has helped turn on the spigot of applicants.”
In June, MBK mandated getting the Covid-19 vaccine as a condition for employment. Although the operator’s leaders had some trepidation about employees leaving, in the end, only a handful of workers did so. Today, the operator’s vaccination rates for staff are above 85% and climbing upward.
“We feel good that we’re way out ahead of the curve,” Fischer said.
Technology is another big focus for MBK. During the pandemic, the operator overhauled Wi-Fi infrastructure at a little fewer than a quarter of its communities to meet an increase in demand for telehealth and other remote services. Fast forward to present day, and the company is overhauling its electronic health records with efficiency in mind.
“If you can’t find as many employees, we have to find ways of getting the job done more efficiently using technology,” Bardelmeier said.
MBK is also putting to use what it learned early on in the pandemic, and quietly building in more functionality for things like Amazon Alexa to help weather any future shutdown requiring residents to sequester in their communities or rooms.
Beyond that, MBK is setting itself up to act as an incubator for new and promising technologies. The company is talking with industry partners to pilot tech in its communities with an overall goal of finding what works and what doesn’t.
“For small- and mid-sized operators like ourselves, we can at least narrow that field down to ‘what-to-look-at’ rather than … ‘where-do-we-start,’” Fischer said.
In terms of how the operator budgets for technology, Fischer said that can be a challenge.
“Technology is expensive. We don’t have the money to invest in every platform or the time to test them,” he said. “So we are really looking for some guidance and some partnerships in the industry to figure out what works, what doesn’t work and where to save time.”
The operator is not exploring raising resident rates to pay for technology as some others have explored. Fischer compared this practice to a question he asks when renovating a community: “Are you doing this to capitalize on market rates, or are you doing that just to keep up?”
“In many cases, I think the technologies that are coming now are to … keep up with the industry,” Fischer said. “So, I don’t think these are costs that we’re going to be able to turn around and pass to residents.”
Another challenge for MBK — and for the wider industry — is maintaining culture while scaling up. And if you do it wrong, Fischer believes that can be a “recipe for disaster.” That is why the company is focused on retaining its “culture keepers” as it looks to grow in the future with Mitsui & Co. and a small number of other partners.
“It’s back to yoi shigoto,” Fischer said. “It’s not that we’re not going to make mistakes — everybody does. But it’s that, by and large, we have our residents and our team members at the forefront of all of our decisions.”
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