‘Only Way to Serve Them’: Why More Senior Living Operators Are Opting to Affiliate

As the era of the single-site and small-system operator comes to a close, organizations are increasingly looking to scale by affiliating with one another.

While operators have long sought affiliations as a creative way to grow – particularly on the nonprofit side of the industry – the challenges of operations in recent years have pushed more to seek out growth in that manner.

According to a mid-year M&A report from Ziegler, there have been 846 nonprofit senior living that consolidated operations since 2015, around 17% of all communities.

Senior living operators that have recently affiliated include Garden Spot Communities and Frederick Living,Fellowship Life and Balfour and Kisco Senior Living.

Every organization has a different strategy and approach to affiliation, given that each deal is unique. Even at its quickest, the senior living affiliation process takes around six months to complete. It is not uncommon to see a longtime organization or community retire with an affiliation deal meant to cement their legacy.

At the end of the day, affiliations, while tricky, are the most viable strategies for some senior living nonprofits to grow and access the resources necessary for evolving for the future, according to Brian Lawrence, FellowshipLife President and CEO.

“We want to help service people as they age … and there’s more and more of them,” Lawrence told Senior Housing News. “The only way to serve them is for us to grow and to meet that need that’s out there.”

Anatomy of an affiliation

In Florida, one of the largest nonprofits in the state is the Orlando-based Westminster Communities of Florida. Over the years, Westminster has grown to 22 communities, with 19 of those gained through affiliations.

Terry Rogers, president and CEO, and Hank Keith, chief financial officer of Westminster Communities of Florida, said they typically begin the affiliation process by ensuring there is a cultural and mission fit, and that the organizations are set up for success with enough resources and support.

“We work hard to preserve any mission and culture of the organizations we affiliate with,” Rogers said. “But we have to ensure that we’re not taking current resources that were attained through current residents … and then put those at risk just because we’re affiliating.”

Westminster Communities of Florida’s most recent affiliation in September was with Florida Presbyterian Homes.

Stevel Lindsey, president and CEO of Garden Spot, is keen to seek out cultural and mission fits where he can. Lindsey said Garden Spot typically hears from communities in need of help or scale.

The “right” way to affiliate is going to depend on the organization, Lindsey said. Some opt to hand pick affiliation candidates to speed up the process, while others take the time to connect through prior networking.

Not every affiliation happens as planned, even when they seem like good ideas at the outset. For example, Garden Spot in 2022 sought to affiliate with two other faith-based nonprofits, an effort that ultimately fizzled.

New Jersey-based FellowshipLife, which has four communities, always conducts an in-depth analysis of communities or organizations it is seeking to absorb. The company typically opts for affiliation partners within three hours of their communities. Then comes a site visit and financial operation overview, followed by a letter of interest if there still is a viable plan to affiliate after the vetting process.

“There’s a very thoughtful process to really understand who they are as an organization, and what they’re looking for… and that we’re aligned with that, and that will be stronger together than separate,” Lawrence said.

Once the affiliation process is complete, resources can be shared between the organizations. FellowshipLife has been able to provide renovations and improvements for its recent affiliations, and is in the process of hiring new roles within the organization, such as a regional nurse. 

With more communities affiliating, Lindsey said he hopes there will be a greater collaboration between organizations and communities.

“​​We get the benefits of the expertise of a larger number of people. We have that opportunity to come together and really enhance all the great things about nonprofit senior living,” Lindsey said. “I think the nonprofit approach has always been the long game … increasingly, the way to do that is to join together and to combine forces in order to get the benefit of scale so that we can go long and far.”

Acquisition instead of affiliation

Affiliation is one way to grow. But it is not the only way.

Given that the runway for new affiliations can range from six months to 18 months, if not longer, some organizations opt for faster turnarounds via acquisitions.

Among those that have turned to acquisitions in combination with affiliation is the Frederick, Maryland-based Asbury Communities. According to CEO Doug Leidig, affiliation is always a viable way to grow, but certain flexibility is needed due to the financial climate in senior housing.

One of Asbury’s recent acquisitions was that of the Chandler Estate in 2021, which brought in middle-market offerings.

“During COVID-19, we started looking more closely at acquisitions as a way to achieve our growth strategy,” Leidig said. “When you are working on a deal like this, something that is moving through a broker, you can often get to ‘yes’ within 90 days. It might go a little longer, but it’s typically going to take much less time than an affiliation.”

Leidig noted Asbury still continues affiliating with organizations, such as Albright Care Services in 2020, but by going forward with acquisitions instead it sidesteps the lengthy cultural and governance process required. Affiliating with Albright took over a year, he said, and that was including a personal relationship with the former CEO.

“That’s not a negative, it just takes longer to work through some of the issues and bring all sides into alignment,” he said.

At times, asset purchases are also required for nonprofits to merge, though Keith noted they are a less common practice for nonprofits. An example, he said, was buying Westminster St. Augustine, which had to be bought out of double bankruptcy to pay off bondholders in the community.

Whether it’s through acquisition or affiliation, the number of single-site senior housing providers are decreasing, especially in the nonprofit sector. The benefits of becoming a multisite are apparent, Lawrence said.

According to Rogers, there has also been a rapid increase in the number of nonprofit CEOs retiring and those spots are not getting filled, which leads to additional consolidation.

Because of these factors, not-for-profit senior housing has been in the process of adapting for years, Leidig said.

“Today I am seeing much more collaboration and having two strong organizations come together to become stronger versus waiting until it is the last option,” he said. “This speaks to the forward-thinking boards and leadership who are recognizing that not-for-profits are much stronger together and can create efficiencies.”