12 Oaks Senior Living has made major changes to its senior living strategy with a renewed emphasis on revenue, growth and solving labor issues.
The first step in shifting its strategy came on the staffing front as the company boosted wage rates to stay competitive in its markets, while also focusing on recruitment, training and retention, according to President Greg Puklicz.
“It’s the baseline that we needed to establish in our budget with ownership groups,” Puklicz told Senior Housing News. “It’s our job to ensure we’re doing everything we can to recruit, train and retain quality employees.”
That new baseline comes in the form of an internal work culture that empowers leadership in the field and is meant to reinvigorate staff after a tiring year plagued with burnout and pandemic fatigue, Puklicz said.
“We knew how important it was to build back the employment base and stabilize that for our ownership groups,” Puklicz said.
Dallas, Texas-based 12 Oaks has 21 communities in six states.
Emphasis on staffing, bottom line accountability
In recent years, the pandemic has hit the industry with a “one-two punch” in the form of labor and occupancy challenges. Operators in 2023 must be able to roll with those punches, Puklicz said.
To deal with some of those challenges, 12 Oaks is centralizing recruitment for new hires across its portfolio. In both January and February, the operator reported over 100 new hires each month, marking nine months of positive growth of its employee base, Puklicz said.
“We are filling positions, changing the payroll system and moving to an active scheduling plan and we’re going to be able to fill positions and have better monitoring of overtime,” Puklicz said.
New hires on the company’s leadership team include a vice president of its consulting business 12 Oaks Solutions consultant, multiple sales consultants and a solutions consultant role.
With staffing pressures easing thanks to its push on hiring, Puklicz said frontline staff will have more time to focus on their daily tasks rather than constantly chasing new problems, as was common during the early days of the pandemic.
With fewer fires to put out on the regular and staffing starting to normalize, 12 Oaks can better focus on holding its community teams more accountable for budgets and staffing. In fact, that is the key to making the company’s operating model work.
“There’s got to be more attention to staffing to appropriate budget levels and staffing,” Puklicz said. “It’s going to be about accountability and better control, visibility and transparency and with all that it’s going to help stabilize labor.”
Using that approach, the company has been able to reduce overtime costs and effectively eliminate the use of agency staffing.
With new budget requirements in place, 12 Oaks is able to more closely track overtime rates and get creative in staffing its communities without needing agency labor. Puklicz said the new budget requirements and systems to address staffing issues as the biggest priorities ahead in the rest of the year.
Through enhancing employee training and new sales techniques, 12 Oaks has been able to increase census across its portfolio.
12 Oaks in January and February saw occupancy levels “well in excess of our budget,” Puklicz said. He added the company is hitting its demand targets along the way.
The emphasis on training and new selling stems from working with Sherpa, which led 12 Oaks’ team of executive directors in sales workshop training sessions.
“There’s a real focus on re-energizing the marketing staff, the ED’s and using relational selling techniques,” Puklicz said. “We’ve seen that come to fruition in the last two months by beating our budget targets and I’m optimistic that’s going to continue.
Puklicz said that solving staffing challenges will drive much of the company’s margin expansion ahead. And he sees the wider industry capable of returning to 30% margins — but not much higher.
“For margin to come you have to stabilize staffing and we’re watching all these key performance indicators come back and then impact margin,” Puklicz said.
New growth plans for 2023
As it gains ground on several goals this year, 12 Oaks is also expanding.
Puklicz said the goal in 2023 was to reach “upwards of 30 communities” with the majority of the growth coming from managing distressed properties that will ultimately be transitioned to other operators and sold. A portfolio in that range both has advantages of scale, but also is not too unwieldy for a small company to manage.
The company is already managing some distressed and foreclosed-on communities thanks to its status as a Fannie Mae-approved property manager. Regionally, 12 Oaks has communities in Texas and Oklahoma, but its new growth is focused in Arizona, Massachusetts, Nebraska and Wisconsin.
“We believe there’s going to be more of those kinds of opportunities,” Puklicz said. “It’s part of a business plan to bring these troubled communities in, stabilize them and put a plan on where they need to be to be sold in the next two years or so.”
Recent growth also includes the addition of 166 IL and AL units as part of the management of The Inn at Los Patios, a community in San Antonio, Texas.
When the company hits 30 communities, Puklicz estimated that about a third of the portfolio will consist of those kinds of turnaround properties. That is due in part to a currently tepid market for stabilized assets.
The ability to turnaround communities stems from its operations team and solutions consulting team, which is deployed at new assets 12 Oaks is tasked with managing “like a SWAT team” to begin the turnaround process.
“That’s where the opportunities are for us in the short term,” Puklicz said.
Puklicz said future long-term growth would stem from equity partners buying properties, and 12 Oaks stepping in to manage communities as the transactions market stabilizes and operations improve.
“We have to hold the line and implement the programs to continue our growth and improvement,” Puklicz said. “We need to attack financial performance and the entire team coming together.”