Mid-Size Operators Scale Up by Striking New Balance of High-Tech, High-Touch

Earlier this year, the prospect of new senior living growth looked bleak, due to capital market turmoil and ongoing operational difficulties.

Whereas scaling up had been the name of the game in previous years in anticipation of incoming demand, it seemed operators were focusing less on scaling fast and more on improving certain operational fundamentals to get ahead and stand out from their competitors. That hasn’t changed much in 2023.

But in recent weeks, we’ve reported on several senior living operators that have been growing quickly — sometimes even more quickly than they had planned — and are bullish on further expansion.


These companies are growing in part thanks to their reputations built up over the last few years, and I believe that their approach to operations and expansion showcases what owners and investors increasingly are seeking in operating partners.

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

  • How mid-size and regional operators are seeking a new balance of “high-tech” and “high-touch”
  • How operators are countering high staffing costs with a new approach for workers
  • The importance of balancing industry experience and a willingness to innovate

High-touch growth and operations

Last week, I spoke with Sonata Senior Living President and CEO Shelley Esden, who noted that “the pendulum has swung” in favor of recovery and new growth. Now, the Orlando, Florida-based operator is building up its portfolio of managed communities all while maintaining an occupancy rate at 85% and climbing.


Last year, Sonata “reorganized” with the intention of embarking on more “purposeful” growth in 2023, Esden told me during an appearance on SHN+ TALKS. In the coming six months, the company is looking to add as many as 500 additional units to its portfolio — but not haphazardly.

Esden is a self-professed proponent of data and analytics in senior living operations. She has seen an “explosion” of new technology applications that are helping the company track minute details. And I believe having those kinds of capabilities will draw the line between operators that are growing in 2023 and beyond and those that are still catching up.

In recent years, Sonata has begun separating expenses into the categories of controllable and uncontrollable. The company also has started tracking in real-time the status of its rates and discounts.

“We came up with a tool that allows us, in real-time, to evaluate the actual rates that are being charged as it compares to the market rate,” Esden said. “And it integrates what the future potential rate would be, should the vacant units be rented at market rate.”

Now, Esden said she believes the company can achieve an occupancy rate upwards of 93% in the not-too-distant future.

Another company with a similar focus on sophistication in operations is 12 Oaks Senior Living. The company’s president, Greg Puklicz, is also its former CFO. And he brought an eye for detail to the leadership position when he ascended to the role in 2022.

For example, when 12 Oaks assumes management of a new community, the company has an operations “SWAT team” that helps lead the turnaround. Using that “high-touch” management model and growth strategy, 12 Oaks has made operational improvements and grown to nearly 40 communities this year, a pace that Puklicz said was faster than he previously expected.

This approach is in line with the well-known advantages that mid-size and regional operators have, of having more visibility into each community and firmer control over how every building in a portfolio is managed. But Puklicz in the past also has been outspoken about the need for more data-driven operations.

“We’ve set up some dashboard reporting for all of our properties,” he told SHN in 2019. “We data farm all of our operational KPIs [key performance indicators], and compare those to like properties. For example, we have three standalone memory care properties with about 60 units each. That becomes a database for that particular type of operation — we can look at performance, where the numbers are and where we think they should be.”

I sense there is more churn on the way as large senior housing REITs look to fully optimize their portfolios to be in fighting shape for the crucial demand years to come. And the bottom line is that they will seek out operating partners that share their vision for efficiency and organization. Welltower (NYSE: WELL) CEO Shankh Mitra is passionate on the subject of harnessing data to drive improved operations. Leaders with Ventas (NYSE: VTR) likewise have been extolling their operational insights platform.

At the same time, the REITs have historically valued regional operators. The REITs helped fuel the rapid expansion of many regional and “super-regional” providers in the 2020 to 2021 time period, with REIT executives speaking out about their continued preference to expand these relationships. That appears to now be playing out, including through Welltower’s growing portfolio with regionals such as Oakmont Senior Living in California.

So the takeaway is that mid-sized and regional operators no longer can rely solely on their close proximity to their communities and the close involvement of their top leaders — their “high-touch” advantage — in order to stand out and grow partnerships with REITs and other owners. Rather, the regionals must maintain that high-touch approach while also integrating more data analytics and otherwise becoming “high-tech.”

Staffing for a new era of growth

In 2023, staffing is a tightrope walk, and an area where the mix of high-touch and high-tech is on particular display.

It’s never been more critical to have up-to-date data, as higher staffing costs simply seem to be part of the cost of doing business in the senior living industry in 2023. While costs for frontline workers have stabilized this year, managerial and C-suite positions are still priced at a premium.

“It’s becoming increasingly challenging to minimize our turnover in these positions with such strong competition — and wage competition — taking place with department managers and higher,” Esden said.

Harnessing technology to evaluate labor market dynamics and help source, hire and retain workers is therefore critical, and is an effort that Welltower has touted. Agency-related labor costs declined more than 50% year-over-year for Welltower’s senior housing operating portfolio.

“That asset management initiative that John [Burkart] has with his team … you are seeing the impact on the agency labor and replacing that agency labor with permanent employees,” Welltower CEO Shankh Mitra said on the company’s Q1 2021 earnings call.

But one message that has come through very clearly in talking to operator executives is that high-touch approach still is essential in attracting and retaining workers.

Esden said the company got away from its roots during the pandemic as the world sequestered, and that its culture suffered temporarily as a result. She countered that by listening more to the wants, needs and concerns of the company’s workers, and by being more present in the company’s 14 communities.

“Our success is not going to come from the home office, it is not going to come from me,” she said. “Our success is going to be through collaboration from the line staff … on up through management.”

Sodalis Senior Living President Traci Taylor-Roberts is taking a similar approach to building the San Marcos, Texas-based company’s workforce as it has grown to operating 31 communities, including more than a dozen with Ventas (NYSE: VTR).

All employees have Taylor-Roberts’ personal cell phone number should they want to contact her directly — it’s hard to be more high-touch than this, and she did receive calls from workers who said they were contemplating leaving Sodalis because other employers were offering higher wages. In some instances, this prompted Sodalis to raise its own wages.

Taylor-Roberts also has taken the approach that operators should go beyond simply showing appreciation and show they truly care. For example, instead of sticking to “transactional” actions like picking up a shift or handing out a gift card, Sodalis went above and beyond by doing things like buying Christmas gifts for employees’ kids, providing gas stipends when the cost of fuel rose and offering piecemeal childcare in the form of intergenerational programming inside the communities.

Outside of those efforts, Sodalis has also worked to reconfigure its community staffing model, including by adding in-house recruiters.

And Taylor-Roberts also is quick to bring up the importance of diversity, equity and inclusion efforts. As Sodalis has grown, the company has promoted a diverse slate of internal candidates to leadership positions, including executive director, even if they did not have the traditional background or credentials. Taylor-Roberts believes this has strengthened the company’s culture and retention numbers, as these leaders have in turn provided support and mentorship to others within Sodalis.

Looking ahead, Taylor-Roberts believes these efforts will scale as the company grows and help propel it into its next chapter, and I think other operators can look to the success of companies like Sodalis and Sonata with their own corporate cultures.

Finally, I’d point out that Sodalis and Sonata also have another element in common: their top executives all are veterans of the senior living sector, and are balancing their knowledge of the industry with a willingness — even eagerness — to find new ways of doing business.

I wasn’t that surprised to learn that 12 Oaks’ Puklicz is bringing new ideas and practices to the table, as he came to 12 Oaks five years ago from the larger world of real estate development and investment. But even before Esden joined Sonata 14 years ago, she had been with Summerville Senior Living, Legacy Senior Living and Elle Senior Living. And Taylor-Roberts’ resume includes Emeritus, American House and Pegasus Senior Living.

I’ve heard some consternation within the industry about the shift to more high-tech operations, given that to some extent, these are practices that already are more common in the multifamily world. Certainly, Burkart is bringing his extensive multifamily experience to his work with Welltower.

I think the success of Sodalis and Sonata highlight the value of deep industry experience, particularly in the ability to deliver high-touch management that connects with the workforce. At the same time, these companies highlight the need for operators to evolve and embrace a more data-driven future, with capital partners that are bringing new expectations, tools and asset management approaches.

The most successful operators might just be the ones that strike the right balance not just between high-tech and high-touch but between old-school and new-school ways of doing business.

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