Covenant Living Communities and Services is not immune to the staffing pressures felt by the rest of the senior living industry — but President and CEO Terri Cunliffe sees signs they might not last long-term.
While the industry is grappling with attracting and retaining workers amid the period known as the “great resignation,” Cunliffe is hopeful that it is more like a “great sabbatical,” with workers leaving and then returning to the industry after a period of time.
“I think people are stepping away, doing kind of a reset of their values, and then hopefully coming back into the workforce,” she said during a recent appearance on the Senior Housing News Transform podcast.
The Skokie, Illinois-based senior living nonprofit also recently held a day of hiring in its 16 communities across the country, and even filled every single CNA position open at one of its communities.
“That was our third one, and it was by far the most productive of all of them,” Cunliffe said. “I do wonder if people are starting to come back into the workforce. It’s hard to tell quite yet.”
Outside of those efforts, Covenant is also focused on making workers’ lives easier by using technology that saves them time in the community, such as by piloting the use of robots in its culinary program.
Highlights of Cunliffe’s podcast interview are below, edited for length and clarity. Subscribe to Transform via Apple Podcasts and SoundCloud. The interview took place in early February.
On Covenant Living’s ongoing Covid recovery:
We certainly have been impacted by the surge in cases, and mostly among our employees. We continue to remain vigilant in our cleaning protocols. We have seen some Covid-positive residents in our communities, but much fewer than some of the past variants. We can see the benefit of the vaccines and boosters.
We have been impacted a little bit in some of our dining as we follow the local and state regulations. But we’re still keeping activities in place. Residents are somewhat hesitant to come out, but they’re getting out and staying in places where they’re comfortable.
We’ve seen some impact on the supply chain, and obviously, I think we’re all dealing with inflation. So, those are the new aspects to this pandemic that we didn’t see in 2020 or even early 2021. We have as a result had to do some small rate increases for some of our bistro food items, some of our nursing supplies. We do see a continued impact on our skilled census, and some in assisted living — although we don’t have the same lockdowns we did early on in the pandemic.
In residential living, we definitely are seeing an uptick in leads. We didn’t really see a big change in our move-ins over the pandemic, maybe they got a little bit slower. It was more on the lead side.
Sales looked at alternative ways to keep prospective residents engaged, and I think that really helped. We are a little bit behind in our move-in projections for this year, but not dramatically. And because people are continuing to express interest, we feel confident that we’ll see that uptick in our second and third quarters.
We definitely are still seeing the impact on health care occupancy. But yet again, we are seeing an uptick in our moves to assisted living. It’s still pretty low in skilled nursing, but I’m sure that is consistent with what the rest of the industry is feeling. I think people do see the benefit of living in one of our communities or in any senior living community because, more than ever since the pandemic began, people are starting to see the value of living in a community and the convenience of having services easily available. And obviously, the housing market still has remained strong, as opposed to what we went through in 2008. So that has definitely worked in all of our favors.
On staffing challenges:
If Covenant Living was the only organization struggling with staffing, I would be a lot more concerned. The fact is, every industry, just senior living, is struggling with this workforce challenge that we’re faced with.
We’re in nine states, in all four time zones. Some of our areas are more impacted than others. We see our highest turnover in skilled nursing. I think a lot of that is just burnout, and the complexities of people having to manage your personal life and your work life.
We also see it in dining, and that’s a lot of our younger people who may not want to be in a health care environment right now, or may be uncomfortable with the uncertainty of having Covid in our buildings. There have been some times when we’ve had to hold back on admissions in skilled nursing just to make sure that we can meet the quality for the residents. But it’s usually a day or two, it’s not long-term and we haven’t had to close units or anything like that.
What we see is the challenge of filling our application pipeline, where we don’t see nearly the same number of applications coming in. And that’s really where we’ve seen the biggest decline. At least before, we were seeing the applications and we had people that we could pull from those.
The other pressure is on the salaries. Just about every single business in the country has had to do modifications to base wages, and then that puts pressure on everybody else. We’ve definitely looked at some of our base wages in some of the areas of the country, and in some of the different positions. Labor expenses have been higher, but mostly due to overtime to fill some of those open positions. The downside of that is that it’s contributing to the burnout in our staff, too, because they just don’t get the break away from work that they really need to refresh. In the past, agency staff was more available. Now, it’s less available and pricing is higher. And while we’ve never been an organization that depends highly on agency staffing, that was always kind of a safety net to fall back on. They’re facing the same things we are.
We’re looking at some creative ways to address the wages and benefits. Some of it you can’t solve overnight, and as we look at how we address wages, how we address benefits, we ask — what is that employee looking for today that’s different from a year ago or two years ago? Because there’s been a dramatic change in that.
We have engaged our digital strategy team, which is in-house, where they were highly involved on the sales and marketing side for prospective residents. We have moved all of that marketing strategy to digital strategy. I really believe in this new world of accessing employees, that we need to find a way to go to them, versus waiting for them to come to us or us. That’s really a big change.
We just held a national day of hiring last week, as a matter of fact, and that took place in every one of our communities around the country. And it allowed us to bring potential applicants into our community, do a high-level screening and interview and provide on-the-spot offers to fill positions. We were able to make over 120 offers around the country. In fact, in one of our communities, we filled every single open CNA position. That was our third one, and it was by far the most productive of all of them. I do wonder if people are starting to come back into the workforce. It’s hard to tell quite yet.
One of our communities is also offering free CNA training programs, and they have graduated three classes so far. We put those staff members through the CNA training, and with a pledge … to work for one year after they graduate.
There isn’t a magic bullet. I keep telling our board this: we need to look at this from a lot of different angles and in a way that is different than we have before. It’s not just a money issue, it’s not just being a good employer issue, it is a lot of different tactics that we’re going to have to put in place.
On how long workforce challenges might last:
I don’t think this workforce challenge is going to end anytime soon. In fact, I always really looked at it as maybe a two or three year issue.
I think we’ve just got to do a lot of things, maybe as a country, to work through. The pandemic needs to run its course, and we hope this is it. But you know, it may not be, and it might last longer than what we have ever seen with staffing challenges in the past.
We really need to start looking at how we can put more technology into our operation. And in fact, in one of our communities, we are using a robot that is serving tables. So it’s kind of like the expediter from the kitchen to the table, it brings the plates out and the residents take the plates and put them on the table themselves. They think it’s kind of cute. It seems to be working, but it’s not filling a position, it is supplementing a broader task. I think we need to look at ways of how we can use technology in the places where we can to replace positions, and then we really need to be much better at re-educating and re-tasking our employees so that they can learn to do new things where we can’t use technology.
Integrated systems, we’re looking at that a lot more so that we are more efficient, and so we reduce the duplicity of the things that we do more than once. We really need to get to that one point of entry instead of multiple points, and that will make it more efficient for our staff. I think that what our staff are looking for is simplifying their work so they’re not doing the same thing two and three times, which they might be today.
I was reading an article about this “Great Resignation” morphing into more of a “Great Sabbatical,” that the pandemic is forcing people to really start thinking about what’s important to them. Life looks a little bit different, so how do they want to take care of themselves differently than they have in the past? I think people are stepping away, doing kind of a reset of their values, and then hopefully coming back into the workforce.
On making Covenant’s operations more efficient:
Let’s talk about the robot for a minute. This is a pilot, so we’re just learning about what it can do. The big, big focus is investing in our employees, and I think many of our colleagues are doing the same.
One of the things that we’re looking at is: Can it in fact replace a position as an expediter, so that your dining team might be taking orders and getting them into the kitchen, and then the robot can be that that employee, so to speak, that brings the meal from the kitchen to the table? We’ve not seen that yet. It still needs more work and customizing how it’s programmed. And maybe this isn’t the perfect robot. Maybe there’s something a little more sophisticated that we’ll have to go to. So, yes, we are looking at the return on investment. From my perspective, if it can’t replace a position, then it might not be the right answer. We are going to look at a second pilot area, I think a look maybe a little bit closer to our office. But I think we do have to do the due diligence on trying some different things.
We make optimization a big part of our organization — things like managing your accounts receivable, managing bad debt, making sure that we’re doing all the right things to collect third-party revenue. We centralize a lot of our functions. We are in the process now of centralizing recruiting and looking at the marketing of our open positions in a centralized way instead of it being deployed through all of our different communities. Seven years ago, we centralized third-party billing, which has dramatically improved not just the timing that we’re paid, but also the amount of bad debt or technical denials. We centralized finance, which allows us to get our finances done more timely.
We’re looking at, what are those things that we can centralize so we can be more efficient? I think one of the ways we need to look at our central office is how can the central office support the communities and run the business so that the communities can really focus on the resident and employee experience. I cannot impact that, but if we can help them to run the technical part of their business, it should relieve some of that pressure of having to do both. And that’s how I look at optimization: How can we be more efficient, doing it at a lesser cost or an equal cost, but also relieving some of that pressure from our community leaders?
I think the hardest part about the optimization period is that any change is change. And changing what we do or how people have done things is always hard and even then when they get to do something cooler, with their time, it still, but I’ve always done this. And that is always a hard change for people to accept. We update our tactics on an annual basis to make sure that what we have tackled has become part of our day-to-day. We’re shifting and looking at new things all the time.
On growing rates as a nonprofit:
We’re not restricted by the amount that we can increase resident rates, but I think we hold ourselves accountable to seek a variety of ways to meet those expenses.
For the past several years, we’ve been able to hold [rate increases] at 3%. That was one of our strategies, and how we looked at optimization is that there’s waste in every single organization, and it’s a commitment to identify that waste, address it, and then continue to reinvest it in your people, programs, physical plant — whatever it may be. We look at our operational efficiencies to make sure that we’re spending money on the right things at the right time, before we look at resident rate increases.
I will say, I don’t think that it will be possible to hold it at 3%. Amazingly enough, because we’ve been so consistent and so transparent about that philosophy and that commitment, our residents now are asking, ‘Can you really hold our rate increases at 3%?’ which, quite honestly, is almost a gift. Our residents are engaged, they understand our financials, we’re extremely transparent. And in our relationships with residents, they’re part of our board, so they hear about the challenges with inflation and the importance of investing in our employees.
I expect we’ll see a little bit higher resident rate increase in our next fiscal year. But simultaneous to that, we’re constantly looking at those potential optimizations.
On acquiring new communities, such as Hillside Village, a CCRC in New Hampshire:
Hillside Village was an interesting one, and it came right on the heels almost even before we closed on Three Crowns Park here in Evanston, Illinois. Those two were really close together. What was interesting about Keene, New Hampshire, is that the locations there are just good. It’s a good Covenant area. It is located in a place where Covenant people live and it’s far enough away from our Cromwell [Connecticut] community that it attracts a different group of people, so they’re not competitors.
Hillside unfortunately opened up in late 2019. They had no idea that the pandemic was on the horizon. And I have said to them more than once that I don’t think if the pandemic would have hit, they would have found themselves in the same situation. We’re excited about that and looking to close hopefully in February. It’s fully built out, it’s two years old. And that was really attractive to us, as well.
When we look at a new community or we bring them in as an acquisition — regardless of whether it’s an acquisition or an affiliation — there are really two focuses: occupancy, and financial management. Those are the two things that we look at first. You have to increase your revenue, and you have to understand your expenses. And generally, those are the two levers that are the quickest to move, and where we put the most effort. And then, we start to work through the rest of the systems. We’ll focus on marketing, we’ll get health care options up and running, financial shared services — that has been really unhelpful in stabilizing that financial profile more quickly. We also bring some of our centralized systems like sales, marketing, and the activities that go along with that. But I will tell you, I did not expect we would grow in the period of a pandemic. And yet, that’s when we came alive.
We really need to make sure that we don’t overextend ourselves on external growth, and then not continue to invest in our existing communities. We look at growth and the investments we make very carefully to make sure that we can do both and not hurt ourselves long-term financially.
We’re continuing to look at new opportunities. Mission compatibility is really important to us, and making sure that it fits who we are as an organization, our board and our management. We’re still really interested in the economic diversity that is spelled out in our strategic plan so that we can meet a broader group of seniors who want to live in community, and not just the entrance-fee model.
On what’s ahead in 2022:
I think that the staffing crisis will continue. I’m thankful that the housing market has continued to be strong, because I think that is the one piece that has propped up all of us along the way, at least the CCRCs. And, it has helped to offset the decline in skilled nursing and assisted living.
We need our people to become our main event, where maybe our residents in the past have been our main event. And I think employees now will be our main event for quite a long time. As an organization, as an industry … we have to look at everything we do. How do we build in flexibility? How do we build in what the employees expect of their workplace, because it’s very different today than it was two or three years ago?
I think that consumer preferences are definitely changing in terms of where they want to live, how they want to live. And so I think that we’ll be looking at that more in terms of the services and programs within our communities that match. What does health care look like, skilled nursing and assisted living? It’s going to be a medical model, but boy, it has to look a lot different and feel a lot different to the consumer.
Pacing, our growth, the challenge is taking advantage of the opportunities, but finding the right pace, because you don’t want to move so quickly that you are burning them out. And I think sometimes that is a very delicate balance.
I do think that this return on investment, we’re gonna have to be very good at that, because we will be trying a lot of new things in the future. And we’ve got to be able to figure out what is making it and what isn’t, and it’s going to be different for every single organization just by the nature of who we are. We’re going to have to get really good at saying yes — and in saying no. I think a lot of times we say yes, but then we don’t reverse that decision when it doesn’t pan out to operate. We’re not going to be able to waste money, I think, at least in these near-term years.
We’re taking advantage of the good times, but we’re planning for the tough times. We’re building our team to be one where they see what I don’t see. And they need to trust the path that I see, but that they don’t see. And that we’re all willing to push back when they think I’m wrong.
This is not a CEO-driven organization, it is a team-driven organization. And I think that’s going to be a really big change, because not one of us is going to be able to see everything, but hopefully many of us can see most of it coming at us.
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