New senior living operator Evolve Senior Living is launching with an ambitious mission, according to its co-founders: Helping to fix a “fundamentally broken industry” and in the process alleviate friction between owners and operators.
Declining community revenue and a higher floor for expenses are putting pressure on margins in 2023, which in turn is forcing senior living operators to get more creative and efficient with their bottom lines. At the same time, some larger community owners are becoming savvier about the business, and have an ever-growing list of boxes for operators to check. The two groups do not always see eye to eye.
Evolve Senior Living was created with the intention of finding a better way for owners and operators to work together. Led by industry veterans and former Anthology Senior Living leaders Justin Dickinson and Andrew Agins, the company is betting that taking a keen focus on expenses and margins will be a key differentiating factor when working with community owners.
And they are equipping it with the tools and methods to help all stakeholders in the industry maintain and build value in their senior living communities. The company will have a triple-aim as an operating platform, an asset management platform and as a technology platform, each representing a distinct part of the business.
At the heart of Evolve’s operating model is data, which the company is collecting through a proprietary platform called Evolve Intelligence. Though it has yet to ink its first management contract, the company already has a plan to use every tool at its disposal to maximize revenue, including exploring value-based care and other payment structures.
“We named the company evolved, because we want to be a part of the evolution that … is occurring within the sector,” Dickinson told Senior Housing News. “It’s a nod toward our focus on the future, and our focus on the change which is inevitable within the sector.”
Lifting the ‘veil’ between owners, operators
Both Agins and Dickinson are co-founding Evolve with a wealth of industry experience behind them, both on the ownership and operations side. They both recently worked for Anthology Senior Living, the operating arm of Chicago developer CA Ventures, in various leadership roles.
Dickinson rejoined Anthology as president last year months before real estate company Waterton effectively shut down Pathway to Living by moving its management contracts to other operators. Agins was previously executive vice president of investments at Anthology.
At its core, Evolve is meant to help solve an issue that has come to a head this year: Owners and operators don’t always work in tandem, and community values are declining in part as a result.
“We’re in the process of collectively as a sector, figuring out realizing all the bits and pieces of where the model is broken,” Dickinson said.
Although it was commonplace in recent years for owners to leave the nitty-gritty details to operators, the need to fine-tune margins has prompted many to take a much closer look at their communities’ budgets. But there is still a “veil” between owners and operators, Agins said.
“I know a lot of time owners don’t have access to real time information, they don’t have access to the details behind the financials, they don’t have access to clinical data or HR data — and these are major parts of what makes a community successful,” he added.
Evolve hopes to differentiate on this model by building a centralized data hub with all of the metrics an owner would need to manage their investment more effectively.
“We want to help identify the KPIs, early indicators, what trends should look like, and then map that out for our owners and explain why they’re important,” Agins said.
The company is currently working on a new data tool called Evolve Intelligence to achieve those aims. Though it is still coming together, Evolve Intelligence will employ the use of a large language model — a category that also includes tools like ChatGPT — to analyze and extract key pieces of operational data and in theory more efficiently manage a community.
For example, with the use of Evolve Intelligence, a community might be able to fine-tune staffing to schedule only as many caregivers are needed for any given shift. Or it could more accurately predict resident demand based on acuity profiles.
Staffing has been a particular pain point for many communities, and it is not uncommon for operators to report turnover more than 100% for certain positions. But Agins and Dickinson believe that even a moderate improvement alone, such as reducing turnover to 80%, would significantly reduce expenses and result in big annual savings. That is why the company is focused on creating better training and onboarding for staffers.
Another area where they believe they can move the needle is in length of stay, which many operators report has decreased during the pandemic.
“You have fewer months to amortize all of those upfront customer acquisition costs … it’s very expensive,” Agins said. “You can build a great culture in your community with consistent residents, and it becomes less expensive in the long run.”
Growth and what comes next
Agins and Dickinson will initially focus on managing newer vintage communities built in 2010 or later in Midwestern primary and secondary markets, as the duo believes they will be best positioned to increase margins, cover debt service and stay solvent as a business in the years to come.
“There’s been kind of a technical failure to launch that product, and that’s where we can come in and help to rightsize the investment and manage it appropriately moving forward,” Dickinson said.
The company is currently focused on finding its first clients, with an initial client pipeline of larger institutional groups, mid-market private equity firms, banks and other companies. And Evolve plans to grow steadily after that.
“We think everyone in the industry — owners, vendors, technology managers — are going to have to come together in a collaborative way in order to figure out a really strong model for senior housing going forward,” Agins said.
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