Pegasus Senior Living is stepping up to the plate in 2023 with plans to improve staffing through a data-driven “Moneyball” strategy while optimizing operations and growing in memory care.
This past winter was “brutal” for Pegasus and the wider industry, according to Pegasus CEO Chris Hollister. But looking ahead, he sees more rebounding in 2023, and he is “cautiously optimistic” that the company’s biggest challenges are in the rearview mirror, with progress being made on gaining occupancy and pushing ahead on new developments from the doldrums of the Covid-19 pandemic.
Adding to that optimism is the fact that Pegasus is closely working with real estate investment trust Welltower (NYSE: WELL) on data analytics and community improvements.
Already, the company’s strategy has led to positive results. The company has rebounded from its Covid low occupancy and now sits around 80%, with more growth on the way. And in February, the Dallas-based senior living operator logged its highest dollar margin in years, if not ever, Hollister said.
“I feel a lot of energy right now,” Hollister told Senior Housing News. “Typically, the second quarter is the biggest of the four quarters for senior living, and we anticipate a lot of really strong movement in April, May and June.”
‘Moneyball’ approach to staffing
On staffing — particularly as it relates to executive directors, Hollister said Pegasus is taking a “Moneyball” approach. He is referring to the 2003 nonfiction book — later turned into a movie in 2011 — chronicling the Oakland Athletics’ successful evidence-based approach to baseball.
Like the Athletics used patterns in data to reinvigorate its ball game in 2002, Pegasus will use data to find executive directors the company’s recruiters may have otherwise overlooked.
The company has linked up with a to-be-revealed academic who is using evidence-based methods to improve the hiring of EDs. In the past, the company has used personality-based tests to find proper leaders, “but they all have sort of a bit of inherent bias, because it’s based on self-reporting,” Hollister said.
“This particular professor thinks he can help peer deeply into it and find candidates that we wouldn’t ordinarily think would be a successful executive director,” Hollister said. “I think the industry needs to start looking outside the sector for balance in that regard.”
Executive director roles often carry high turnover, and it’s a competitive post to fill as operators seek well-experienced leaders for their communities.
“We need to hire them as an executive director because if you give them an [assisted ED] position, then all you’ve done is become a training program for someone else to poach,” Hollister said.
Hollister declined to give further details on the plan, citing the fact that it was still coming together.
“Once we get the data and embed it a little more, I can have more to say about it,” Hollister said. “But I think it can be a big idea.”
‘Digging deep’ in operations
In 2023, like other operators, Pegasus is pivoting away from the “crisis mode” of the last three years. He noted the operator is striving to “dig deep” in operations, particularly staffing, to drive results in the new year.
Heading into the spring and summer, the operator is aiming for 90% occupancy across its portfolio, while some buildings are already north of that figure, Hollister noted.
“Typically the second quarter is the biggest of the four quarters for senior living and we anticipate a lot of really strong movement here,” Hollister said. “It’s a journey and every building is different.”
Hollister is unsure whether pre-pandemic margins will return, but he is not a big stickler for tracking margins as a metric of success — instead, he is focused on net operating income per unit.
“Will the margin percentages get back to pre-Covid? … We have some that are doing that now,” Hollister said. “But there are going to be other buildings where they are making more money, but it’s a lower margin percentage.”
With Welltower’s pilot programs on analytics and data now underway, Pegasus is working closely with the Toledo, Ohio-based REIT on labor modeling and new scheduling processes for staff. By honing in on certain data metrics like quality assurance with clinical teams, Hollister believes the company’s leaders will glean best practices.
Already, Pegasus has improved its sales speed-to-lead with new senior living prospects from 20 hours to 10 hours. But Hollister sees room for even more improvement in that regard.
“Can we do better? Yes,” Hollister said.
To help bolster staffing and stay competitive, Pegasus has reviewed wages for positions and increased them accordingly. The company also is leaning on its existing employees for help with staffing.
“Everyone has a part-time job and it’s called recruiting,” Hollister said. “You have to have the leadership on-site go through our training modules because you can really improve that retention if you do that.”
Looking ahead, memory care will remain a large focus for Pegasus. The company is currently adding memory care services to communities that previously lacked them. Through the company’s Connections memory care program, which was developed by Dr. Sandi Petersen and is based around the concept “move, connect and learn,” the company sees real potential for bottom-line growth as residents arrive needing a higher level of care than in years past.
The company is currently working on four memory care communities being renovated and converted to memory care, two in California and Washington, with the four communities open later this year. All communities are reporting strong lease up figures and demand remains high, Hollister said.
Those renovations signal a wider industry shift that’s being driven by higher acuity and care needs, as residents enter communities later than ever before. The conversion projects mentioned by Hollister were 20 to 25-year-old buildings with studio units that were able to be converted.
“It’s going to be a real shot in the arm for those communities because they didn’t have memory care before,” Hollister added.