A New Senior Living Operating Model Comes Into View After 2 Years of Disruption

Senior living operators have been enacting changes in operations since the Covid-19 pandemic began, but some adaptations have been fleeting while others have proven longer-lasting. 

Recent conversations with several executives — including with large providers such as Brookdale, Frontier and Senior Lifestyle — highlight that operators now have committed to new practices across essentially every major area of operations and are moving forward with these changes in place.

This new operating model began to take shape as a response to the clinical demands of Covid-19. It has solidified in recent months and weeks as providers have confronted other pandemic-related disruptions, notably labor market upheaval and inflation, all while trying to anticipate and adapt to the expectations of a new generation of consumers.

In this week’s exclusive, members-only SHN+ Update, I analyze these changes and offer key takeaways, including:

• Sales and marketing is achieving greater ‘spend efficiency,’ while key metrics of success are shifting
• Health care is more visible and virtual, with more partnerships across the continuum
• Staffing remains a pain point but new recruitment, retention strategies lay groundwork for the future
• Dining changes exemplify a more personalized, revenue-centric approach to resident engagement and amenities

Sales and marketing

Covid-19 immediately forced a shift to digital sales and marketing practices as tours and other in-person events and meetings became impossible. All signs point to this shift being enduring, as senior living providers are now seeing their investments in digital pay off in an inflationary environment where expense control is paramount.

“The need to continually work on spend efficiency has become even more intensive,” Janine Witte, senior vice president of sales and marketing with Senior Lifestyle, recently told SHN.

Since the company rolled out a refreshed website in early 2021:

• Costs per lead dropped 15.9%
• Overall lead generation increased 31.6%
• Form fills on the website increased 10.8%
• Average session duration increased 25%
• eBook requests increased 57%

Belmont Village is another provider that is touting strong results from investments in digital sales and marketing, including a TV and video campaign that drove results such as:

• 250,000 new visitors to the campaign’s landing pages between May 2021 and Dec. 2021
• 66% increase in overall web traffic to company’s website
• 13% increase in form submissions
• 40.5% increase in form submissions converting to tours, versus previous seven months

However, the shift to digital is just one of the ways that senior living sales and marketing has been transformed. Large providers including Brookdale and Discovery Senior Living have overhauled their sales processes in the last two years.

As I’ve written about in the past, Brookdale CEO Cindy Baier identified a “sales transformation” as one of three pillars of the company’s pandemic recovery. The new approach is more streamlined and locally-focused. And Discovery launched a centralized call center last year and almost immediately saw its inquiry-to-tour percentage jump from the low-to-mid 40% range to the low 60% range.

One characteristic of this new, more digital sales paradigm is that senior living providers are gaining more control over their sales pipelines — but this does not mean that third-party referral platforms are fading. A Place for Mom secured $175 million in growth capital earlier this year, and plans to super-charge its brand recognition among consumers while continuing to undertake a “reinvention,” CEO Larry Kutscher said on the most recent SHN Transform podcast.

I was particularly struck by one comment Kutscher made in that interview: “Our goal is to give you more move-ins, and I think we’ve really successfully demonstrated that we’re not focused just on growing leads.”

He is not the only person to hammer away at the message that the industry historically has been too fixated on lead volume.

Currently, about 10% to 15% of leads convert to move-ins — providers would be well-served to focus more on working those other 85% to 90% of prospects rather than filling the funnel with more leads, according to Julie Podewitz, the former chief sales officer at Vitality Living and current founder and CEO of senior living consulting firm Grow Your Occupancy. Discovery Senior Living Senior VP of Sales Lou Maranto agrees that sales teams should focus more on conversion ratios rather than new leads.

This is a message that the leaders of Sherpa have been proclaiming for years, most recently in the 2021 Best Sales Performers report, released during the NIC conference. Sherpa’s best performers worked fewer leads than the median, driving up conversion ratios by spending more time on planning how to connect with existing leads and on high-value sales activities — notably home visits.

Finally, faced with the need to offset skyrocketing expenses by aggressively raising rates, senior living providers have shifted in the last few months to a new sales approach that focuses on selling the value of senior living, rather than relying so much on concessions and other price-related incentives.

In just two examples, Discovery held a two-hour training on “selling value” in January 2022, and Meridian Senior Living is leveraging the fact that older adults now see greater value in senior living’s value proposition after being isolated during the pandemic.

To sum up, I believe the new senior living operating model is:

• Fully invested in digital sales and marketing
• More strategic in working with third-party referral platforms
• More focused on conversion ratios than lead volume
• More focused on selling value than competing on price

Health care

As the pandemic first gripped the United States in 2020, senior living providers’ health care capabilities came to the forefront, with providers pivoting to strengthen and publicize this aspect of operations.

Now, providers such as Meridian report that consumers are seeking engagement and a sense of community — but they also are savvier about the importance of strong care capabilities. So, the care component of senior living has become more visible than in the past.

David Eskenazy, CEO of Cogir USA, made this point during a recent appearance on SHN+ TALKS. Previously, providers had a tendency to “sweep health care under the rug,” he said.

“I think now we don’t have to do that,” he said. “I think we can celebrate both a great social environment and also the fact that we have assistance for our residents when they need it in the area of their health.”

This idea was echoed by Rachel Wonderlin, who owns Dementia by Day and helped create a new memory care model for English Meadows.

“[We are] constantly encouraging clients to talk about dementia care on their websites, because that’s what families are looking for now; the days of avoiding the word ‘dementia’ are over,” she told SHN.

As providers have sought to strengthen their clinical capabilities, memory care has been one area of focus. Like English Meadows, Cogir USA is in the process of upgrading and standardizing its memory care model. Discovery and Sonida Senior Living are among other providers to recently roll out new memory care programs. And Brookdale is pursuing a strategy focused on serving residents with “complex medical conditions,” including in memory care as well as assisted living.

Brookdale’s strategy for serving this higher-acuity cohort includes partnerships with some of the largest health care payers and providers in the United States, notably through the sale of 80% of its home health and hospice business to hospital giant HCA. Some of those home health locations were subsequently sold to LHC Group (Nasdaq: LHCG), which was just acquired by UnitedHealth’s Optum unit.

While she has been tight-lipped about specifics, Brookdale CEO Cindy Baier has said on several occasions that she believes closer integration across the continuum is inevitable and will offer senior living providers opportunities.

“There’s a real opportunity to get upstream and increase [residents’] healthspan by giving them proper nutrition, proper purpose, exercise, all those things,” Baier said. “By partnering with payers, hospital systems, with other members of the health care ecosystem, we think we can actually improve penetration [rates].”

Brookdale is not the only provider to integrate more closely with providers across the continuum during the pandemic. Phoenix Senior Living is another example; the provider took on hospital overflow patients to help alleviate pressure on Atlanta’s health systems, which made a “big, lasting impression” that resulted in “very real” conversations about partnership, CEO Jesse Marinko said.

Other providers have forged ahead with Medicare Advantage initiatives, including the Perennial Consortium, and the pandemic period also saw a landmark deal in which value-based care company Lifespark — now owned in part by insurer UCare — acquired a senior living operating company.

And closer alliances with health systems also have supported more structured and widespread use of telehealth in senior living. Earlier in the pandemic, telehealth was essential in connecting residents with clinicians outside the walls of the senior living community, and some providers created telehealth programs in concert with health systems — for instance, Atria and Northwell Health.

Going forward, telehealth will remain a go-to option within senior living. Atria and other providers are creating dedicated telehealth spaces in communities, and companies such as Belmont Village, Maplewood and Trilogy have expanded their use of telehealth and made investments in related infrastructure and equipment.

Of course, tech has also helped senior living providers raise their infection control standards, including through new air purification systems and “touchless” systems to prevent the spread of surface-borne pathogens via everything from doorknobs to elevator buttons. LCS’ Eversafe 360° is one prime example of how senior living providers have adopted new practices in this aspect of operations.

To sum up, I believe the new senior living operating model:

• Puts care front-and-center rather than “sweeping it under the rug”
• Relies on more health care partnerships to elevate services for higher acuity residents
• Is increasingly integrated with payers and health systems
• Leverages technology to increase care access and create safer environments

Staffing

Senior living has not been spared the challenges stemming from a massively disrupted U.S. labor market — what Brookdale’s Baier recently described as the “worst labor market in my entire life.”

Amid the so-called “Great Resignation,” senior living providers in the last few months have taken a hard look at how to improve recruitment and retention, and made changes that some leaders — including Brandywine CEO Brenda Bacon — describe as overdue.

Brandywine has streamlined hiring to make it easier for people to apply and move through the interview process. And just as the sales process is shifting toward a greater focus on working existing leads, Brandywine and other providers have focused on keeping prospective employees engaged once they have started the application process.

Indeed, many senior living providers — including Juniper Communities and The Springs Living — have changed their employee recruiting practices to more closely mirror the sales process for prospective residents.

“We’ve learned that, really, recruitment is about sales,” Juniper CEO Lynne Katzmann said during the Senior Housing News Sales Summit earlier this year. “And some of the best recruiters are salespeople.”

Both Juniper and The Springs shifted some salespeople into recruiting roles when the pandemic was constraining move-ins, and both companies now have put more permanent structures in place based on lessons learned.

And just as with sales, “data is king” when it comes to recruiting, The Springs Living COO Brenda Connelly said. Leveraging data such as total number of open positions and the size of the applicant pool at particular communities, the company has created targeted ads and digital campaigns that have increased job site traffic about 50%.

Frontier Management likewise has implemented a new staffing model across its portfolio of about 140 communities, CEO Greg Roderick recently told SHN.

The provider invested in and is working with a company called Fast Nurse Staffing to fill key positions such as executive director, and is harnessing business intelligence to monitor and predict staffing needs to have more dynamic scheduling while meeting workers’ desires for greater flexibility. Frontier has gone from spending “millions a year” on agency staffing to just about $100,000 in Q1 2022, Roderick said.

Brookdale also is focused on greater flexibility, rolling out an electronic scheduling tool early this year that enables associates to more easily swap shifts and choose work hours.

Better career pathing is another practice that Brookdale and many senior living providers are focused on, and some have gotten creative in how to approach this goal.

Merrill Gardens, for example, introduced a position called Resident Experience Partner (REP). The REP starts in one job role but then rotates into others, sometimes even in the course of a single shift — for instance, starting with four hours in the dining room, and then doing four hours working maintenance.

The position helps with cost savings by creating a more skilled labor pool, with workers who have the skills to help in various areas as needs arise. And the position offers a way for workers to expand their skillsets, knowledge of community operations, gain better pay and advance their careers, Merrill Gardens President Tana Gall told me this week.

Senior living providers were struggling with sky-high turnover and were facing a looming caregiver shortage even before the Covid-19 pandemic; only time will tell, but operators might at last be implementing workforce practices that will lead to greater stability in the long term.

To sum up, I think the new senior living staffing model is:

• More worker-friendly, including easier applications and more flexible schedules
• Mirroring the senior living sales process, in terms of closely working to get applicants through the process and harnessing data to improve hiring
• More creative about identifying workers’ strengths and interests and putting them on a career path
• Achieving cost savings through smarter scheduling, diversifying worker skillsets and driving down agency usage

Resident engagement and amenities

As operators come out of Covid protocols, they now are focusing anew on upgrading resident engagement and amenities to meet the rising generation of baby boomers.

I believe that dining provides a useful window into several trends and practices that are reshaping this aspect of senior living operations.

Dining in senior living is increasingly personalized, with scratch cooking and multiple dining venues enabling residents to order what they want, when they want.

And that diversity in options has increased coming out of the Covid-19 pandemic, with providers such as Wake Robin supplementing traditional options with innovations such as meal kits or meal boxes that are delivered to resident rooms. Companies including Integral Senior Living and Sinceri are also offering more global flavors, even introducing more pickled and fermented foods in response to evolving resident tastes.

Wellness also has become a watchword for senior living dining programs, with residents wanting to “eat cleaner,” according to Integral’s National Director of Culinary Services Amy Robinson. This includes more non-animal sources of protein and more sustainable foods.

At the same time that dining options are expanding, the economics of dining programs are changing.

Watermark Retirement, for instance, is implementing a spend-down approach that gives residents more options and control over how they allocate their money — and transforms food from a cost center into a revenue center by enabling the provider to make a margin on purchases. This shift is not easy, demanding that Watermark adopt merchandising practices, but so far the approach has been beneficial from a bottom-line and resident satisfaction perspective, Chairman David Freshwater told me.

And amid supply chain disruptions and rampant inflation, providers also are shifting how they source and purchase food and other products.

Frontier recently switched to a new group purchasing organization, replacing a patchwork of GPOs with an entity that provides more services and better pricing, Roderick said. And Kendal Corp. launched a GPO called Quantum, enabling simplified ordering and cost savings, according to VP of Culinary Services & Procurement Ben Butler.

These themes in dining — wellness and personalization, supported by new operating approaches and financial models — extend to other facets of resident engagement.

For instance, Mather has rolled out a new wellness model that focuses more on individualization, while Holiday Retirement is utilizing technology to offer more personalized programming at each community, while connecting residents with similar interests. And Discovery is drawing on business intelligence systems to offer a more a la carte resident experience by charging individually for services or amenities that in the past would have been bundled.

To sum up, I believe the new resident engagement model:

• Prioritizes resident wellness
• Demands a greater diversity of options to support a more personalized lifestyle
• Is supported by new ways of charging for services and obtaining goods

Finally, providers face a difficult proposition with regard to dining: with operating budgets already strained and staff stretched thinly, operators need to move toward more diverse menus with more expensive ingredients and adopt more scratch cooking.

In fact, this is the dilemma that providers face across the board, as they need to invest time and resources into new systems and practices while navigating extremely trying market conditions and financial pressures.

The new senior living operating model does not resolve all these difficulties, but is emerging as providers bite the bullet on some changes that have been long needed while also getting creative in devising solutions and innovations across all areas of the business.