LCS is forging ahead in 2023 on several big initiatives, with a particular focus on improving visibility and performance in operations through data.
In recent years, the senior living industry has made headway on a number of initiatives from occupancy recovery to turnover. That is also what LCS has seen in recent quarters as the company’s leaders have looked to turn the page on the darkest days of the Covid-19 pandemic.
Like other industry executives, LCS CEO Joel Nelson is a firm believer that the industry must lead with informed decisions in its current and crucial period. Of particular importance is the dual need to continue to prepare for big trends on the horizon, such as value-based care, which looms large over the industry’s future and could present a disruption point down the road.
That is why data analysis is a top-of-mind issue for the company’s top leadership in 2023.
It’s also no secret that the industry’s challenges are numerous in 2023. Staffing difficulties, a rising floor for certain operational expenses and the potential for an economic downturn in 2023 all present hazards for senior living operators.
Even so, the long-term demographics in the form of the baby boomers offer a light at the end of a long tunnel, and Nelson sees the current period as a speed bump in the journey to the industry’s next evolution.
“I don’t think the industry is where we want it to be in the future,” Nelson told Senior Housing News. “But we have a pathway to get there and we are making forward progress.”
Need for data sophistication looms large
Margins, occupancy, resident satisfaction, market analysis — it all results data. Throughout the pandemic, more and more senior living operators have embraced that they will need sophisticated data analysis to track outcomes and improve operations.
To date, companies including Welltower (NYSE: WELL) have touted their data efforts as a key differentiator in operations.
While the industry has made great strides in that regard since 2020, Nelson believes that there is much farther to go from here. And next up on his list of priorities is data standardization.
During a keynote presentation at the annual Argentum conference earlier this year in New Orleans, Nelson, who currently chairs the industry association’s board, laid out what he sees as a core problem for senior living data collection. He noted that during the conference, he heard multiple opinions on how the industry should and shouldn’t use data — all representing different perspectives, with different metrics for success.
But the industry is engaged on multiple collective fronts that will all require some level of data standardization, including value-based care, consumers wanting more transparency and the need to form deeper relationships with payers and insurers.
That is why a big priority for LCS and its related companies is analyzing and standardizing data in a bigger and better way, and the company has a new analytics team led by a newly hired data scientist.
Nelson said a goal for LCS looking ahead is to optimize data to help residents better access care and to help the company’s leaders drive better outcomes overall. That is linked to the company’s strategy of partnering with other companies that will help propel it into the industry’s value-based care future.
“If all of those partners are not looking at the same information in the data, we will not achieve the outcomes that are desired,” Nelson said.
LCS President and CEO Joel NelsonLCS also is using data to power its staffing efforts. For example, LCS leadership is tracking application response rate in the same way they might look at speed-to-lead in sales and marketing.
As it has been in the past, LCS management also still closely studies metrics like RevPOR, resident and employee satisfaction and move-outs to gauge the performance of the company’s communities.
LCS management is also taking a hard look at moving to a system with as few data touchpoints as possible — for example, a standardized electronic health record that follows a resident through their aging journey, with common metrics and outcomes to measure it by.
Data analysis and standardization is also a big focus of other industry executives, including Belmont Village President Mercedes Kerr, who said during another Argentum panel she believes “the industry will have to come to terms with some level of standardization, whether it’s quality of care, whether it’s reporting or financial metrics.”
The bottom line is that as senior living operators scale up and seek new partnerships in preparation for the boomers, they must also add sophistication in the form of more robust data collection and standardization, according to Nelson.
“This is just the next evolution … and as an industry there’s no question we have to move in that direction,” he said.
Focus on improvement in 2023
In 2023, Nelson said LCS leadership is focused on making steady progress and hitting the fundamentals.
With margin compression and expenses still high in some areas, Nelson said there are still significant challenges ahead for the industry and for LCS. For now, the company’s top leaders are focusing on the basics, working to execute on initiatives and make further progress on goals in 2023.
At this point in 2023, the company is seeing “record” levels of inquiries and visits to its communities, and management expects that momentum to carry over into the summer, resulting in “big” occupancy gains.
LCS’ average occupancy is also on an upward trajectory, with a gain of 180 basis points of census in the company’s same-store portfolio over the last 12 months. The company has also seen an average occupancy gain of more than 10.5 percentage points at the communities it acquired and opened over the last two years.
One area of improvement in the last 12 months has been the company’s use of agency staffing, which Nelson said has declined at a sharp rate. Overall turnover has fallen 10% in the last year, and the senior living company has not seen close to the sometimes 40%, 50%, and 60% corporate turnover rates that others have in recent years, he noted.
That is a product of several efforts, including an overhaul of the company’s recruitment process to make it more centralized and wage adjustments to stay competitive, which LCS President Chris Bird outlined in a late-2022 SHN+ TALKS event.
All the while, LCS is growing, with four more rental communities and a continuing care retirement community (CCRC) slated to open this year. To Nelson, that is a testament to the fact that there are still many players in debt and equity that believe in the industry’s long-term future.
Earlier this year, the company linked up with an affiliate of Lone Star Funds to manage an additional 10 communities under brands including The Avalon and Havenwood. Today, the Des Moines Iowa- based company has 145 communities.
That said, certain challenges continue to complicate and cloud the company’s future. Staffing is a big one, but Nelson also is watching certain line items on the balance sheet with a careful eye. In particular, liability insurance costs are creeping up — costs that are ultimately passed on to senior living residents.
Even so, Nelson said he is optimistic about the industry’s long-term future despite its short-term challenges.
“There is more upside than downside for the industry,” Nelson said. “And I’m optimistic the downside is behind us.”
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