With more than 140 communities in its portfolio, Frontier Management is putting new construction on the back burner and focusing on controlling expenses in 2022.
That’s not to say the company doesn’t have some new communities on the way, and CEO Greg Roderick told Senior Housing News that Frontier expects to break ground on five projects this year, with two others currently under construction. At the same time, the company has not had difficulty accessing capital for new projects.
But Roderick is older now than when he founded the company in 2000. And with age, he said has become more deliberate about taking on new communities — and therefore new risks.
“We’re slowing our development down,” Roderick told Senior Housing News during the recent 2022 NIC Spring Conference in Dallas last month. “I want to be much more mindful about the where, when and the why.”
With the slowdown in growth, Frontier’s leaders are turning their attention to operational improvement and census growth. And to that end, the company has made progress on several initiatives that are bearing fruit during the pandemic recovery period.
For example, Roderick touted how the company was able to implement a new staffing model that has substantially eliminated its use of agency staffing, which has been a major contributor to the explosive growth of administrative costs in the past year.
The company also has joined a brand-new group purchasing organization which has resulted in further savings and is now collaborating with a staffing agency it invests in.
Inward focus
Frontier has built a reputation over the years for being a company that is willing to grow quickly. But that focus changed in recent months as the company shifted to internal improvement and recovery from the Covid-19 pandemic.
“We’re really being very careful about where we place our attention,” Roderick said. “We are hyper-focused on hitting our budgets, moving the needle on occupancy and stabilizing staffing.”
Perhaps the company’s biggest achievement has been in cutting down on the use of agency staffing, the use of which has vexed operators in 2022. In fact, three-quarters of the senior living executives who responded to a recent NIC insights survey reported tapping agency or temp staff to backfill staff shortages.
Frontier was previously in that boat, and was “literally spending millions a year” on agency staffing, Roderick said. He recalled an instance last year where a single Frontier community spent $100,000 in one month.
Now, the company is only using agency staffing in about 10 buildings, with a spend for the first quarter registering only around $100,000 total for all of its communities.
To help tamp down on agency staffing usage, the company implemented a new staffing model this year.
Earlier in the pandemic, the operator began working with a consultant that specializes in staffing to address labor pressures at its communities. That process culminated in the realization that workers desired more control in scheduling, and since then, the operator has experimented with offering more flexible schedules and staffing levels that change during peak hours.
Frontier uses a business intelligence tool to track labor trends within its communities. The company also models and analyzes acuity trends to monitor and predict staffing needs and adjust employee hours as needed.
The operator also increased wages by 15% to 25% — with employees now earning between $16 and $22 — and invested more than $8.5 million in other benefits for employees.
“We are really taking it up a notch, which is building huge momentum on the culture side,” Roderick said. “We’re seeing turnover down [by 40%], we’re seeing overtime and agency nearly go away.”
Frontier is also working with a newly launched staffing company called Fast Nurse Staffing to fill executive director, nurse and medical technician positions. Though the operator doesn’t own the staffing company outright, it is an investor, Roderick said. In addition, some former regional Frontier employees now work for Fast Nurse Staffing.
On the purchasing front, Frontier joined a GPO called Pure Solutions to source food, supplies and services such as pest control, landscaping and even staff training. The company had previously worked over the last 22 years with a handful of GPOs that had not offered as many services.
“They have brought … solutions that we normally don’t see in the GPO world,” Roderick said. “Plus, they’ve given us significantly more rebates and credits for groceries, so we’re saving substantial money for our buildings.”
2022 outlook
Looking ahead to the rest of 2022, Roderick feels as though Frontier is on the right track. The company enacted a resident rate increase of 10% this year, and as a result the company is seeing revenue “substantially higher than it used to be,” he added.
The company’s current occupancy rate is 70%, with Frontier’s stabilized communities emerging as “winners” in the recovery. Census growth has been slower for some of the operator’s communities, such as in memory care, where the company was hit hardest. But even there, Roderick said the operator is not losing ground, and has stemmed the tide of move-outs in that segment this year.
“[Independent living] is strong; assisted living is moving up strongly,” Roderick said. “Memory care is just going to be slow and steady.”
Frontier also tripled the number of incoming leads its communities were seeing between July of 2021 and March of this year. That has driven down the company’s conversion rate slightly, from about 35% to 40% to something closer to 30%.
“I do anticipate occupancy continuing to grow really nicely in the second half of this year,” Roderick said, adding that the operator is currently adding about 20 basis points of census per week.
Overall, Roderick believes the industry is becoming healthier over time as the year goes on, and that demand will continue to build during typically strong months for move-ins later this year.
He also has a deeper understanding now of what senior living residents and their families go through. Roderick recently moved his stepfather into a Frontier community, but due to restrictions in the state of Oregon related to the Covid-19 pandemic, he has only been allowed to visit him a handful of times this year.
“I’m one of the family members out there going through this, and it was tough,” Roderick said. “I can see that holding people back from moving someone in.”
Last year was a big year for rate increases in the senior living industry, and Roderick believes that will continue in 2022 as operators set their 2023 budgets. The rising cost of doing business is a big reason why.
“Everything is way up … and this is on the shoulders of what we just went through,” he said.
That said, he does believe that rate growth will be slightly lower in 2022 — for example, Frontier’s next rate hike will likely be closer to 8% instead of 10%.
As for the hurdles he sees on the horizon, Roderick — like nearly everyone else in the industry right now — sees staffing and occupancy growth as the big two challenges. But both are also opportunities in his eyes.
“Our business acumen is on … really making our existing residents and staff very happy,” Roderick said. “Keeping those people where they’re at is a great foundation to build upon.”
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