Trustwell Living has added 24 new communities to the company’s portfolio in a move that accelerates its already fast pace of growth this year.
The New York City-based company on Thursday announced the addition of the two-dozen new communities, which are located in eight states across the country. Trustwell assumed management of a dozen of the communities in August, six in September and another six this past week.
The operator is rebranding the communities to fly the Trustwell banner. With the scale-up, Trustwell also has welcomed those communities’ employees into its “extended family” by hiring them and providing them a new slate of benefits and support.
Now, the company’s portfolio stands at 45 communities and counting, making it among the fastest-growing senior living operators this year after its addition of 16 communities in June. The company’s growth strategy centers on turning around communities for a middle-market resident base using new processes to improve their bottom lines.
Although growing to 45 communities in such a short amount of time wasn’t easy, Trustwell Founder and CEO Larry Cohen said he and his company’s executive team prepared for this eventuality for over a year. Enabling the company’s growth were key hires in certain areas and a long-term strategy centered on financial and operational discipline.
“We feel that we have the right systems — but more importantly the right people — to lead our growth,” Cohen told Senior Housing News.
Building a senior living ‘A-Team’
Among the reasons that Trustwell has been able to grow so quickly is that most of its major players previously worked together at Capital Senior Living, which is now called Sonida Senior Living (NYSE: SNDA).
Former Capital leaders that have joined Trustwell include Greg Boemer, senior vice president of operations; Colleen Honnors; quality and clinical director; Joseph Solari, senior vice president of business development; and SVP and Chief Marketing Officer Gary Fernandez.
“I was able to put the band back together and bring together the leadership teams that I operated with at Capital,” Cohen said. “We continue to really put together what I would call an ‘A-Team’ — really exceptional professionals that have probably 15 to 20-plus years of experience in senior living.”
The company also has staffed up by hiring regional leaders to support communities with operations, sales and marketing and clinical functions.
Cohen said his team at Capital transitioned over 100 communities during his tenure there, and he is bringing a similar approach to Trustwell’s plans to scale up. As the company takes on new communities, it is retraining leaders to become more financially independent and accountable. Cohen said that, often, executive directors became used to taking orders from a corporate office instead of thinking for themselves.
That is why the company focuses on training fundamental skills like understanding overtime and contract labor costs, the difference between “financial” and “physical” occupancy, RevPOR and setting rates at an appropriate level.
On the sales and marketing side, Trustwell teaches lessons including how to build a sales funnel for senior living lead generation, how to create marketing plans and how to use professional referrals to their advantage.
“They start to understand that decisions they’re making have consequences,” Cohen said. “And so they’re thoughtful about those decisions, and how they impact the … bottom line.”
Using that approach, Trustwell has managed to add about 15 percentage points of occupancy to the first four communities it took over in 2022, with a 50% improvement in that portfolio’s bottom line and a mere 7% turnover rate, Cohen said. And at the 16 communities Trustwell took over in June, the operator was able to reduce the use of contract labor by 75% and trim overtime by 80% in the community’s first 90 days under Trustwell’s management.
Doing so has also improved employee morale, Cohen said, as executive directors become proud of the results they’ve managed to achieve.
“They say, ‘Thank you, I finally feel like I’m a true ED,’” he added.
‘Interesting year’ ahead
Looking ahead to 2024, Cohen foresees a mixed bag of challenges and opportunities.
On the one hand, high interest rates are disrupting normal community valuations and complicating companies’ ability to pay back debt. On the other hand, a low rate of new supply is helping to drive faster occupancy gains, with the prospect of an industry-wide full recovery to pre-pandemic average occupancy next year.
“It’s going to be an interesting year,” Cohen said. Supply is down, we’ve got growing demand, absorption is up — that’s all positive.”
One “wild card” for the year ahead is expenses and general cost inflation of certain line items, including insurance. Cohen also has observed that the industry is walking a delicate balance between resident rate growth and maintaining occupancy gains.
“A lot depends upon who’s operating the building, and what the local market is like,” Cohen said.
Cohen grew Capital Senior Living from 24 to 129 communities during his 20 years leading it. With Trustwell, he is so far taking a similar upward growth trajectory. As the company has grown, it has done so in regional clusters so as to take advantage of local scale.
Although Cohen said he is more focused on resident satisfaction scores than the company’s total community count, the company’s leaders are keeping their eyes peeled for new management opportunities in the year ahead.
“We now have a very nice presence in the Pacific Northwest, a very nice presence in the central Southwest, a very big presence in the Midwest and Southeast, and great regional oversight in operations, sales and marketing and clinical,” Cohen said. “We are making sure that we are disciplined and selective in how we grow to be able to leverage the infrastructure that we have built.”
He added: “We have the infrastructure in place, we have the ability to expand it, and we also have a good bench.”