Wave of Operator Switches Points to Evolving Playbook for Senior Living in Smaller Markets

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Operator transitions have been making headlines over the last few weeks, with many of the handovers involving properties serving middle-market consumers in secondary markets.

The recently announced transitions include:

  • 26 Holiday by Atria communities in the Ventas (NYSE: VTR) portfolio going to Discovery Senior Living, Priority Life Care and Sodalis Senior Living
  • Discovery launched a new management company, LakeHouse Senior Living, with a portfolio of 36 communities in Midwestern secondary markets — including some recently transitioned former Enlivant properties
  • Tutera Senior Living and Health Care taking on 10 former Enlivant buildings in Kansas, Iowa and Nebraska
  • Gardant assuming operations of 25 communities
  • Foundry Commercial adding 16 communities to its Spring Arbor management arm

The backstories behind these transitions vary, but many of the communities involved are serving a similar consumer demographic outside the country’s largest primary markets. The Holiday by Atria properties are part of the decades-long legacy of middle-market independent living pioneered by Holiday Retirement. Similarly, Enlivant has been carrying on the model of more affordable assisted living created by Assisted Living Concepts. And many of the communities in the Gardant transaction offer Medicaid-waiver assisted living.


I believe this wave of operator transitions, and the game plans of the incoming management teams, reveal some ways the senior living industry is evolving to serve more middle-market consumers who live outside of the nation’s largest primary markets.

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

  • New, more efficient staffing models are necessary
  • More creative and data-driven revenue generation is imperative
  • Operators increasingly need to specialize in the types of senior living communities that they manage

New staffing models

“Over time, the personnel business model on site, I believe, will change. I think that’ll be a recognition that a lot of companies have.”


These are the words of Discovery Senior Living CEO Richard Hutchinson, who spoke to me this week about some of the key elements of Discovery’s playbook with regard to the recently added properties.

He’s not the only operator executive with a focus on creating a more efficient on-site staffing model, with Priority Life Care CEO Sevy Petras and Sodalis President Traci Taylor-Roberts sharing similar perspectives.

Hutchinson zeroed in on the business office manager as the most obvious role to reconsider. Since the dawn of senior living in the early 1990s, on-site business managers have done “all the administrative stuff” related to billing, hiring, human resources, payroll, and other areas, Hutchinson noted.

“Most of the industry still has that position, doing those exact same functions, 30 years later,” he said. “We don’t need that.”

Instead, these functions can and should be handled by a national or regional business administrator, he believes. This is especially important because administrative demands have increased in the last three decades and are taking more time away from other on-site leaders, including executive directors. Discovery surveyed EDs a few years ago and found that 30% of their time was spent on administrative activities such as doing reports or gathering data.

This perspective on the business office manager is shared by all three of the operators that Ventas tapped to take on the legacy Holiday communities. Sodalis has centralized the function and does not have any business office managers at the community level, President Traci Taylor-Roberts told me last May. And Priority Life Care’s Petras told me this week that particularly for more modestly-sized communities, “In many instances, it does make sense to have the business office manager at a central location.”

Petras highlighted another issue that arises with on-site business office managers, which is that “it’s hard to have boundaries.” That is, everyone in a building is there to serve the residents and “it’s all hands on deck,” so business office managers can find themselves taxed — and unable to focus on bigger-picture work — as they constantly address issues or questions that residents or their families are bringing forward at any given moment.

Sales is another area to reconsider with regard to on-site staffing. Compared to the past, many more leads are originating via digital channels, making it easier to have a centralized sales office conduct initial conversations, Petras said.

“A call center can field the beginning of leads and take them to the tour, and then have the person on site do that,” she said.

Discovery launched a centralized sales center in 2021. The company’s inquiry-to-tour performance almost “immediately” improved from the low-to-mid 40% range to the low 60% range, SVP of Sales Lou Maranto told SHN last year.

Other roles at the community also can be rethought and reconfigured by being more strategic about centralizing tasks. Sodalis does not have dedicated schedulers at the community, with recruiters handling that. Meanwhile, Sodalis also added two staff recruitment roles at the corporate level to identify promising applicants and alleviate administrative burdens — such as running background checks — previously shouldered by workers in the communities.

More broadly, freeing up on-site leadership by alleviating administrative burden, coupled with the introduction of more powerful data analytics tools, should arguably also lead to more efficient staffing of communities.

“Recruiting, retention, labor analytics, prescriptive modeling of perfect staffing levels, you now have time to look at these things and actually run your business,” Hutchinson said, referring to executive directors.

Maximizing revenue

While operators recently have been able to increase rates aggressively to help offset intense expense pressures, providers serving a less affluent clientele are somewhat limited in how steeply they can raise rents and other charges before they price out consumers.

This situation has given rise to fears of a “death spiral” for some communities in less wealthy markets, with revenue unable to keep pace with expenses as inflation and rising interest rates continue to take a toll.

Unsurprisingly, the operators involved in recent transitions are focused on expanding the top line. As Tutera President and COO Randy Bloom told SHN: “This is about increasing revenue.”

Operators’ methods for achieving this goal again underscores the industry’s evolution in becoming more technologically adept and data driven, with the REITs accelerating this push. For example, one key focus for Priority Life Care will be making sure each unit is priced correctly for its market, with Petras saying “right price, right market” is her focus. This is an echo of Ventas’ “Right Market, Right Asset, Right Operator” strategy, which relies on the data analytics capabilities of the REIT’s Ventas OI platform.

But beyond rate-setting, I believe that opening up new revenue streams will be an increasingly important part of operators’ playbooks as they take on communities serving a more middle-market consumer. Hutchinson thinks the industry is overdue, saying he has “not heard about new revenue streams — not real new revenue streams — percolating up in a long time.”

Fostering more creativity in this arena is part of Discovery’s strategy, and ties back to the new staffing model in place at communities. With more administrative tasks being done off-site, Hutchinson believes an ED can “truly act as a CEO of a business unit.”

“Here’s my trade with my executive directors that I talk about — I say, ‘I’m going to give you back this time. And what I challenge you guys to do is find a different way to do some business on site, and then find a different revenue stream,’” he said.

Opening up the senior living community to “bring the public in” for events that have some revenue component is one area ripe for further experimentation, in his view.

“It’s not only revenue, it’s lead generation, it’s customer connection, it’s local community involvement, all of those types of things,” he said.

And then there’s what he describes as “hidden margin,” which he believes can be unlocked as EDs have more time to devote to their own professional development, such as by taking advanced business classes that Discovery offers. In turn, they should be able to lead their teams more effectively, providing more robust training and mentorship, which should improve retention and performance across the board.

“I think of all of that as revenue-generating activities, certainly NOI-generating activities, that they have more time to focus on,” he said.

Operator specialization

Operating portfolios that include a mix of product types, sizes, acuity levels, and geographies has never been easy — and, in fact, the days when any company attempts such a feat could be swiftly coming to an end.

“Many operators … just tried to have a one-size-fits-all management team and some regional people and say, ‘Hey, we can do 36-unit memory care in tertiary market North Carolina, and then drive over to Charlotte and run a great big rental CCRC at the high end. Just doesn’t work,” Hutchinson told me.

Increasingly, I believe operators will increasingly identify their main skillsets and focus on that niche, or they will restructure to create specialized groups that handle different products, including mid-market communities outside primary metro areas. 

Gardant is an example of an organization that has long had a particular focus, being a big player in the Medicaid waiver space in Illinois. This specialization is paying off now, as the company is an obvious go-to for communities of this type; with the recently announced transitions, Gardant manages more than 80 properties across Illinois, Indiana, Maryland, Ohio and West Virginia.

Discovery, meanwhile, is a company that has restructured to enable specialization, standing up  management companies — such as LakeHouse — focused on secondary market properties in particular regions, with each of these entities having its own leadership and portfolios capped at 35 properties. Larger Discovery communities in primary markets are operated more on a national basis, although there is segmentation among these communities as well.

Despite all these moves meant to create teams and structures tailored to particular types of products and markets, even more specialization was required to manage legacy Holiday Retirement communities that National Health Investors (NYSE: NHI) moved to Discovery last year. Discovery now has a team dedicated entirely to those properties.

“That was my first curveball,” Hutchinson told me. “I thought I had this all figured out, but that product specifically and that consumer specifically were different than what I had seen and solved for previously, so we had to come up with something different for that.”

Add the Integral Senior Living platform, which became a “sister company” to Discovery through a deal involving Lee Equity and Coastwood earlier this year, and the sheer complexity of the entire undertaking becomes more than evident — and perhaps is the greatest challenge for a large company seeking to balance scale and specialization.

It’s a point that Hutchinson concedes.

“This is not a non-complex business model,” he said. “But it’s the one we think is necessary to push forward.”

And he believes that it’s necessary in large part because the industry faces an imperative, in terms of figuring out how to sustainably and profitably operate senior living communities that serve secondary markets at a reasonably affordable rate.

I believe some senior living communities in these markets are obsolete and are experiencing something like a death spiral, which will lead to closures in the near future. But Hutchinson is worried that talk about obsolescence in secondary market product has become too dire and commonplace, and that the sector must refocus on these markets, where he says 80% of older adults reside.

“Are we just simply saying we’re not going to take care of 80% of our seniors? We only want the people who live in urban and in primary market areas to be served? No, of course not,” he said. “We have to figure this out, and necessity is the mother of invention, so we’re pushing forward with some big changes, and we’ll see how that plays out. But right now, I’m really happy with the results we have and not afraid to break the template as necessary.”

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