CLC CEO: Middle-Market Strategy, Medicare Advantage Growth Drive Innovation In Tough Operating Environment

Senior living providers are facing intense operational and financial challenges — but they must not let these pressures distract them from innovating for the future.

That’s according to Jill Vitale-Aussem, president and CEO of Christian Living Communities (CLC) and Cappella Management.

“We’re concerned about staffing, we’re concerned about wage escalation, we’re concerned about inflation,” she said during an appearance on Senior Housing News’ Transform podcast. “It could be easy sometimes to get bogged down in that; just keep your head down and never look up to the horizon and what’s coming. But there’s a lot to be excited about.”

The labor pressures are real — as evidenced by about $3 million in wage adjustments CLC is making for 2022. But the provider is pushing ahead with a number of future-focused initiatives.

Vitale-Aussem is excited about a number of initiatives, including efforts to create a middle-market model supported by smart design and operational efficiencies. She’s excited about progress that the Perennial Consortium is making on bringing Medicare Advantage benefits to residents and driving quality outcomes, including lower hospitalization rates.

A new ad campaign that challenges conventional messaging about senior living; diversity, equity and inclusion efforts; and a slimmed-down portfolio with less emphasis on managing for-profit communities and greater focus on expanding through nonprofit affiliation are also reasons she is optimistic about the future.

And all this comes as CLC is about to mark 50 years since the organization’s founding. Today, the Englewood, Colorado-based organization owns and operates two life plan communities and one continuing care retirement community (CCRC) in the Denver metro area, three assisted living operations in Colorado, while managing a variety of communities across the United States under the Cappella banner.

Highlights of Vitale-Aussem’s podcast interview are below, edited for length and clarity. Subscribe to Transform via Apple Podcasts and SoundCloud

On occupancy progress:

We actually made some good progress during 2021 that sets us up for a stronger start to 2022.

We grew occupancy by almost 15% during 2021. So that’s amazing. Like with most organizations that have life plan communities, our residential living stayed strong … in our established residential living in life plan communities, our occupancies were between 90% and 96% throughout the whole pandemic, which is pretty, pretty amazing.

We’re starting to see some growth in skilled nursing. There were some points last year where occupancy in skilled nursing had dropped to just over 70%. And we’ve gradually increased and we were at around 85%. And then omicron — just when you think you’re getting somewhere, that’s impacted it and created a little bit of a dip.

And then we’re really seeing assisted living increasing steadily.

So things are moving. We’ve had an incredible amount of new leads recently, which is very promising, right? … So we’re feeling very optimistic about what’s out there.

On Christian Living Communities’ interest in utilizing Minka small homes:

I still think that it’s a very appealing concept … With a change in CEO, with a pandemic happening, there was a pause put on that. But I’ll tell you that we still are looking at that as an opportunity in the future, potentially. We actually are redeveloping a campus that we own here in the Denver area, and we looked briefly at doing Minka or some other type of small homes on that project, and we weren’t able to get the density there.

So it really is a great concept. But we’re very focused right now on the redevelopment of this campus, and getting ourselves back to a really strong baseline before we would do a new development. But we’re definitely looking long-term, on the horizon, at a lot of different options.

It depends on the site. It’s just the site that we have, we weren’t able to make it work in terms of density … The other thing is that it’s not just about having a bunch of these small modular homes on a site. Because you could end up with a neighborhood, like where I live in the suburbs, where there’s no sense of community right? And I think the original intent of all this is people have their privacy in a very well designed home with the right technology, but it’s also a larger community that’s designed, so that you can have that feeling of small groups along with a larger community to be part of. So it’s not just about the homes, it’s about the design of the whole campus. And then it’s about the culture. Because you really want to create these communities of interdependence, where people really are citizens in their community and working together to make things happen, kind of like a cohousing sort of model.

Then it’s also what amenities and services do you need to rethink if you run a large building with a bunch of apartment homes in it? How do you create services, amenities and have them be efficient in homes where people are kind of more spread out? So I think there’s great promise in this. But I think there’s still things to be figured out … There are organizations that are doing this right now. So that’s exciting.

On creating a middle-market model:

We already offer middle market options at our Clermont Park campus. We have very moderate rentals for folks that are part of that campus, along with HUD, along with life plans, which is kind of a very different concept where you have people of all these different socioeconomic backgrounds living together in one campus. And it’s really a pretty amazing culture that you get with that.

And then we manage a community that’s a 55-plus active adult community that is very much middle market. And with our campus redevelopment, we are really wanting to focus on the middle market at that community as well. It’s very close to one of our upscale communities, our life plan, more expensive communities. So this is another option for people who maybe really want to live in that community, but they can’t. And here’s what we’re learning.

We actually hired Senior Housing Partners, which is part of Presbyterian Homes out of Minneapolis, to help us refine our thinking and our design around this. What we are working through with them is, it’s about how you design the building, it’s about the building materials that you use, so that you’re not overspending on construction, which makes it impossible then to have a middle market option.

It’s about the amenities. Some of our communities [have] three, four or five dining venues, and you can’t make that work with staffing and keep your rates low. So there’s the staffing component, there’s the amenity component, there’s a whole construction component. And we’ll still end up with an amazing community with an amazing culture. And there’s a lot that makes a place an appealing place to live with what’s happening in the community, right, what’s happening inside the walls. So when you bring all those things together, I think that’s the solution.

I think overall, we all need to be looking more at efficiencies, because with inflation and wage escalation, we don’t want to continue to shrink the population that we serve, which is a concern that I have, that [what] may end up happening is eventually you can only serve very wealthy people as our expenses go up.

So we’re undertaking a lot of analysis this year on how we can create more efficiencies in our communities and price things the lowest that we can for people.

On providing middle-market price points as care needs escalate:

I will be honest with you. It does make it much harder. And one of the other things we’re doing at that campus redevelopment is, we have a fairly large skilled nursing community at that campus. And we’re shrinking that down and we’re creating households. So we’re creating a household model of care for folks. And that is exactly where we’re having to do the harder work and the deeper dives into what exactly does staffing look like? How do we use technology? How can we use technology to be more efficient with things? So I don’t think we have it all figured out yet. But we are definitely working on that. And that’s part of this project that we’re working on.

On where CLC is feeling operating pain in the current environment:

Well, we’re feeling pain all around, like most organizations are. But you know, the wage escalation has been a big challenge for us. During 2021, we were having to hire people and pay hiring bonuses that were higher than what our current team members were making. So we did a huge analysis … and we’re doing almost $3 million in wage adjustments for 2022, which then makes your budgeting a lot more challenging. We’ve had to increase resident rates higher than the normal. And we’ve got some communities that we own that are Medicaid, mostly Medicaid assisted living, we’re not getting that increase from the state to provide this care. So that’s challenging.

I would say our biggest pain areas are with direct care. It’s a lot harder, as you said, to adjust services in that area … But we do have some really bright spots. One of our communities that had been having challenges is now fully staffed. And we celebrate that … I think we’re doing well, I think our benefits are great, we’ve got great scholarship programs, we’ve got really great cultures for people to work in. So I think we’re better off than some organizations might be … We have one of our communities in particular, that we manage, is in a remote area here in Colorado. And it’s also a resort town. Housing is impossible for people to afford. And it’s not like you can pull from surrounding towns for staffing. So you know, those are the things that also are causing challenges, is what’s happening with inflation, what’s happening with housing in the area.

On creating workforce housing as a solution:

Yes, we’re actually looking, we’ve been looking at those options for quite a while. And we continue to evaluate what the options might be. Because there really isn’t affordable housing available there. And it’s really tough. And I think it’s the same thing in most of those kinds of tourist areas, you end up with those same challenges, unfortunately.

On expectations about the duration of staffing challenges:

We’re planning for it to continue, but we’re hoping that things start to ease up a little bit. I’m hoping that wage escalation starts to level out. That’s a big worry, and with inflation as well, because everything has gone up so much in cost, and then that impacts what we can pay our team members. And it also creates a situation where they might be searching out another career because they can’t afford costs anymore because of inflation. So I don’t have an answer to that. I’m hoping we start to see some stabilization in 2022.

Some of the things that we’re doing to prepare for the worst/hope for the best is more creativity and recruiting. So casting a wider net than where we normally would cast that net, go to where people are versus waiting for them to come to us. We’re starting to see some good traction on social media for recruiting, and then really telling that story of why work in senior living. It’s a pretty amazing work opportunity for people, but they don’t know. So how do we do those kinds of things?

And then the other thing I would say is, we have launched a focus on diversity, equity and inclusion. And that to us is absolutely critical as we move forward to not only create a situation where people want to come work with our communities, because they feel like they belong and that they’re seen, but that they want to stay.

On engaging residents to alleviate staffing needs:

We haven’t actually implemented [that] and … that’s a bigger-picture kind of evaluation of where do we go with this. Like, could we create a community where it is significantly lower rates to live there, because we have less staff, because residents make that commitment to work there? But I’ll tell you, it’s happening in bits and pieces everywhere.

I believe that this can work when it is tied to meaningful purpose for people. Right? So if somebody said, well, Jill, do you want to cook here, I would say I absolutely don’t, because I don’t like to cook. But if you said, hey, do you want to do art and gardening and things like that, I’d be all over it.

For example, our CFO, his parents live in one of our communities. And this past spring, his dad did all of the planting on the campus of all the bulbs. I mean, he ordered hundreds of bulbs, I think he ordered them from Holland, and planted all of them. Now, that is normally something that we would pay an outside contractor to do. He wanted to do it, we paid for the supplies for him to do it, and it has brought him such joy and such pride. “This is my community and I’m part of making it special.” There’s a resident at one of our communities that during the staffing challenges, she’s the host in the dining room every night. She loves it. It’s her identity, it’s her way of helping the team members, it’s a way of giving back to our community. We are still looking at how do you create a structure around something like that, but I’ll tell you, it’s happening everywhere in communities that promote and support having that meaningful purpose.

On what she learned as CEO of Eden Alternative:

When I was there, it really sunk in for me what the whole process needs to be to operationalize culture change. And that is hard work. If you’re an organization that wants to create a culture of person directed care, if you’re an organization that wants to really dig into ageism and ableism, and create a real age-positive and ability-inclusive community … and I think especially when you’re in health care, we want check the box, quick solutions. If I do this, then this will happen. And this is messy work, and it’s hard work.

But what I learned from being at the Eden Alternative is that when there is strong leadership commitment to this, and you’re in it for the long haul, you can accomplish amazing things. And anything that is worth doing is hard.

[Eden Alternative] is in multiple countries around the world. And that is because multiple countries around the world have done the same things we’ve done in the U.S., right? Creating institutions to take care of people. And it’s just really interesting how prevalent that is, and how careful we all have to be to make sure we don’t slide back into that, especially with — hopefully — coming out of COVID. Because that has really dragged a lot of us back into the institutional framework of thinking.

On CLC’s involvement in the Perennial Consortium to provide Medicare Advantage plans to residents:

Our plan started January 1 of 2021. We’re now entering our 14th month of the plan. And with the whole consortium, we have around almost 500 enrollees in the plan. COVID did have an impact. Because, you know, we weren’t able to have our Medicare experts who worked for the plan out meeting with people directly in the communities, which is, you know, this is a relationship based business that we’re all in. And so that had some impacts, and then also our team members just being completely focused on COVID mitigation, and rightly so.

So we’re making good progress, I would say. We continue to increase membership, and here’s what’s really exciting, is our quality outcomes are really strong. So we’ve got really pretty incredible outcomes with hospital admissions. And that’s so important, not just for the financial health of the plan, but that means people are staying well and staying out of the hospital. So I’m really excited that we’re introducing a provider agreement for non-owner/operators to be part of the plan. So that would be in Colorado and Ohio. What this does is it gives operators, providers a seat at the table, rather than providing all this good care, reducing medical costs, and then having the insurance companies get the benefit of that. And this is really giving us all a seat at the table.

On promising technology for senior living:

One of the things that I’m excited about is we are rolling out integrated vitals and weight machines in our assisted living and skilled nursing communities. If you’re a resident in our community, and I was one of the team members, I would [normally] go and do your vital signs, get your weight, and then I’d have to go in and turn it. This automatically sends everything directly to the EMR. Our team did a study of how this could potentially impact efficiencies and actually quality of time with residents. And what they found is it’s about 48 hours of saved time per resident per year, which is pretty big. So we’re really excited about that.

Again, it provides the opportunity for people to be more face to face with residents and use technology to make us more efficient.

We’ve always been very focused on mobile tech device technology. We’re making some switches with that … with the staffing challenges that we have, and how important it is to have our team members feel they’re valued. It’s really important that the equipment that they have and the systems that they have don’t frustrate them, at the very least, and hopefully, make them feel like wow, this makes my job a lot better. So we’re very, very focused on that.

We think we’re going to pilot some robotics in one of our dining rooms. I was actually at a resident meeting yesterday at one of our communities, and we were talking about that, and our COO said, who’s up for this? And some people are like, yeah, let’s try and others are like, no way. I don’t want a robot delivering food.

But when we explained that if we were to pilot this, if we were to do this, what it does is it gives the team members more time on the floor, so they’re not running back and forth to the kitchen. So we’re really looking at how we use technology, not looking for the shiny new penny, right? Because I think sometimes we get caught up in that, oh, that’s really cool. Let’s do this. But does the technology improve efficiency? Does it increase it? Does it improve decision making? Does it improve quality of life? If not, then we really should be looking closely at whether we should be doing this. So I’m really excited about that.

The other big focus area for our IT team is cybersecurity. That is getting more and more challenging, and the requirements for a cybersecurity policy or policies are ever increasing. So it’s kind of that balance. That’s not the fun stuff. But we still need to do it.

I think one struggle we’ve had is finding the right solution for data reporting. So we’re still on the lookout for the right solution for that.

On what the future holds and Christian Living Communities’ growth strategy:

Christian Living Communities will be 50 years old in May of this year. So that’s something we’re all very excited about.

We’re concerned about staffing, we’re concerned about wage escalation, we’re concerned about inflation. It could be easy sometimes to get bogged down in that; just keep your head down and never look up to the horizon and what’s coming. But there’s a lot, there’s a lot to be excited about. I’m really excited about the Someren Glen, that’s the community that we’re redeveloping, with creating that household model of care that will have a huge impact on quality of life for people. I’m excited about the diversity, equity and inclusion work, because that goes beyond what you would normally think of, because in our communities, it’s not just about workforce, right? It’s how do we drive more diversity among the resident population? How do we make sure we’re digging into ageism and ableism as part of that work as well.

One of the really cool things is we just launched a new ad campaign, which I’m personally really excited about because it really pushes back against the way we usually talk about senior living, which is, here’s all the things we will do for you. If you come here, put your feet up and have a life of leisure. Our internal team came up with this, and they’re calling it the “I’ll Bring It” campaign. It really focuses on what gifts, what passions will you bring to this community to make it stronger and better? And what excites me about that is hopefully it’s going to inspire some people. That’s why we do ad campaigns. But also, seeing a different view of aging starts to create ripple effects in people’s minds, like, oh, I could bring something to this community. Oh, I can still grow and learn. So I’m very excited about that, as well. So we’ve got a lot coming that I’m very excited about.

The other thing is how we’re thinking about growth in the future … Our organization has had really amazing growth. And we’ve done a lot of third party management over the years. And we work with for profit and nonprofit organizations. As we move forward, we are recommitting to our nonprofit roots.

As of February 1, we have less communities than we did in the past. We really took a hard look at third party management. And we’ve made some changes with some partners. We still do have some for profits that we manage, and we remain fully committed to them. But our future growth is all about affiliations with other nonprofits and potentially third party management with not for profit organizations. So I’m again really excited about recommitting to who the organization is, especially as we move into this 50th year.

We really looked at a lot of things and did a three-month deep dive into things. We looked at financial outcomes of third party management, and we looked at culture impact. And we really decided that we are a not for profit organization. That doesn’t mean we aren’t good business people. But it’s different. There are great for profits out there, and our partners are great for profits. But we’re different, and that’s okay. And so, we just believe that this is where we need to go in the future to thrive. Just being who we are and moving forward in that direction.

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