Last week, we learned that Canyon Ranch CEO Jeff Kuster had joined the Sunrise board.
When I saw the news, I immediately wondered what this would mean for the McLean, Virginia-based operator. Although Sunrise has been tight-lipped about its plans following the hiring of industry veteran Jack Callison as CEO in 2021, I believe the new board appointment gives an intriguing glimpse into what the company’s future might hold.
For one, the move links Sunrise — one of the largest senior living operators in the U.S. — with a well-known luxury wellness and lifestyle brand as the industry stands on the precipice of a new “wellness era.”
The move is also notable for Canyon Ranch, given its interest in the senior living industry over the years. And it is also notable for Sunrise, as the resort hospitality company has held appeal with other wellness-focused industry players such as Watermark Retirement Communities.
I have over the past few years wondered how and when Canyon Ranch would finally enter the senior living industry in a big way, and I see this move as a potential opportunity to do so. I also see this as perhaps an early chess move in a larger strategy that puts a bigger emphasis on wellness and lifestyle choices.
In this week’s exclusive, members-only SHN+ Update, I analyze the recent Sunrise board appointment and offer key takeaways for the rest of the industry, including:
- How the move could provide a glimpse into Callison’s strategy, and some of his early successes
- Why I believe the time is right for Canyon Ranch to make senior living inroads
- The intriguing possibilities of a deeper relationship between Canyon Ranch and Sunrise
A glimpse into the Callison playbook
When Callison came aboard as Sunrise CEO last year, the industry was abuzz regarding the direction he would take the company and the more than 270 communities it today manages — and for good reason.
Callison is an industry veteran, and the former CEO of senior living operators Enlivant and Holiday Retirement. He is well-known throughout the industry, and has mentored many of its current leaders over the years.
Since his hiring in 2021, Sunrise has not revealed much of his grand vision for the company’s future, likely because it’s still coming together. But the Canyon Ranch board appointment, coupled with other moves, provide some idea of his playbook.
Starting with the obvious, Sunrise’s move to appoint Canyon Ranch’s CEO to its board tells me the company is at least thinking about wellness in a much bigger way. And Callison said as much in his remarks about Kuster’s board appointment.
Specifically, he said the wellness expert will help Sunrise “foster positive aging and proactive well-being” as the company looks to “inspire a new, preferred way of life that celebrates ongoing purposeful living, proactive wellness, and a sense of community.”
There are other indications that Callison is taking the company further in that direction, too. Last year, the company hired Paula Adams from Brookdale Senior Living (NYSE: BKD), as chief clinical officer. In addition to leading the company’s clinical programs, Sunrise also tasked Adams with managing “holistic health and wellness” among its resident population.
Candidly, I was surprised to see Sunrise snag a Canyon Ranch board appointment given all of the interest in the resort company from other wellness-focused companies, such as Watermark — which has hired former Canyon Ranch leaders and, like Canyon Ranch, is based in Tucson.
Furthermore, when Canyon Ranch in 2019 first announced its intentions to enter the senior living arena, the plans pointed to a different type of provider than Sunrise.
“For us, the best model would be one where the units are predominantly independent living, with a smaller bunch of assisted living units and then a smaller yet component of memory care,” then-Executive Vice President Gary Milner said. “We would like to target active people and at the same time provide them with the security that their needs will be met as they arise.”
Sunrise, by contrast, is weighted more toward assisted living and memory care than independent living, with a little more than 14,500 AL and memory care units as of 2021 versus about 3,250 IL units, according to the 2021 Largest Providers Report from Argentum.
And although Sunrise is among the largest senior living operators in the U.S., it has not made a name for itself in wellness-forward operations in the same way Watermark has, with Chairman David Freshwater articulating a plan for “precision wellness” that is tailored to residents.
Of course, Kuster serving on Sunrise’s board does not prevent Canyon Ranch from working with other senior living providers as well. But his appointment tells me that Callison has a clear vision for the company’s wellness future, and one that is appealing and exciting enough to attract veterans of the wellness and hospitality world such as Kuster.
And Callison generally has succeeded in attracting talent from other spheres, including a CFO who came from the world of retail, and a COO who previously led operations for home health care giant Kindred at Home.
Some of the company’s recent moves, such as exiting the U.K. market and forging a new management agreement with Ventas (NYSE: VTR), also indicate that the Callison era at Sunrise will bring new strategies and ideas.
While I was initially surprised to see Kuster join Sunrise’s board, it’s not hard to imagine what a deeper collaboration between Sunrise and Canyon Ranch would yield, given what the wellness resort company has stated in the past.
“What we see is the need for a wellness-focused product that also feels like a hospitality product,” Milner said. “Food, service, concierge, atmosphere, the decor, all of that in combination with a real, authentic, robust wellness [program].”
As of 2019, Canyon Ranch owned about 100 homes surrounding its original resort in Tucson, Arizona, where residents have access to health, wellness and spa facilities.
I could see a collaboration between Sunrise and Canyon Ranch playing out in a similar way, with Canyon Ranch branded facilities and services located within larger Sunrise communities or campuses.
“I like the idea of having a building that is Canyon Ranch-branded, yet in the same building is another high-quality brand that addresses high-acuity care levels,” Milner said in 2019.
Also consider that many big industry thinkers like Mather’s Mary Leary, Juniper’s Lynne Katzmann and senior living visionary Bill Thomas believe the industry stands on the cusp of a new era of wellness and preventive health care amid the arrival of the baby boomers and the ongoing shift to value-based services.
The tie-in with value-based services could be especially pertinent to Sunrise, given that the company offers “Sunrise Advantage” Medicare Advantage plans. If deepening wellness offerings can result in residents staying healthier longer, that will support MA success. I think there’s even the possibility that Sunrise’s MA plans could include wellness-oriented benefits.
And while these are not new trends in senior living, Kuster’s appointment is yet another signal that the industry has reached an inflection point with regard to wellness. Whereas wellness may have been a selling point or a perk before, it is now part of the table stakes for the senior living residents of today and tomorrow, especially those on the younger end.
Canyon Ranch has in recent years taken note of these trends. In 2019, Canyon Ranch Executive Vice President Gary Milner told me the company viewed entering the senior living industry as an “obvious” choice, particularly because of ongoing demographic shifts.
“Our primary target is going to be baby boomers,” he said during the SHN BUILD conference three years ago.
During the BUILD event in 2019, Milner said the company was looking to work with senior living operators, particularly those that focused on multiple steps along the care continuum.
Sunrise also seems aligned with this vision, and signs seem to be pointing toward an increasing focus on the whole continuum, including more independent consumers. In addition to Kuster’s insights on the board, the appointment of Nick Stengle as COO adds someone with notable home health expertise, which could be leveraged if Sunrise wants to serve people even outside the walls of Sunrise communities, or leverage home care to support active adult or IL residents.
At the end of the day, I believe companies such as Sunrise will help define what wellness means in senior living in the years to come, and provide a blueprint that others in the industry can follow. And given that the wellness trend is only accelerating, other operators would be wise to take note of their trials and tribulations.