Anthem Memory Care has a clear path forward for future expansion by acquisition as the operator that doubled in size this year continues to grow, according to CEO Isaac Scott.
Anthem reached the 20-community mark earlier this year, having not expanded any new communities between 2017 and 2022, and that was by design, Scott recently told Senior Housing News. But now the company is ready to grow again.
For the year ahead, Scott sees Anthem growing via acquisition when the right opportunities emerge, while also focusing on creating efficiencies on staffing to improve operations.
In July, Anthem was nearing pre-pandemic levels on occupancy and other recovery metrics, with Scott noting that the company is now past pre-pandemic occupancy in its stabilized communities. The bounce back on occupancy was so successful that Scott had originally charted the recovery that would bleed into 2024.
“We’re going to be just fine compared to last year’s past,” Scott said. “Margins aren’t as strong as a story, and if we can get our revenue right we’re going to start chipping away at that.”
Charting growth, managing growing pains
Prior to the Covid-19 pandemic, Scott said the Lake Oswego, Oregon-based operator was ready to grow but in light of the industry’s myriad challenges, Anthem focused on internal systems and shoring up staffing to create a strong operating model.
By doubling in size in 2022, Scott said the transformation was “an eye-opener” due to growing pains that come with scaling rapidly. Recently, Anthem acquired four additional communities.
“We went into that with great planning and that period of non-growth and focusing internally on operations,” Scott said.
In the course of the next 18 to 24 months, Scott added that Anthem’s portfolio would undergo change as some owners that Anthem operates communities for look to exit the space after stabilization.
But on the flip side, turmoil on the development side of the coin will see Anthem pivot to fielding inquiries from struggling communities seeking an acquisition transaction.
“We won’t be at 20 for too much longer and we’re going to grow over the course of the next 12 to 18 months and we’re really excited about it,” Scott said. “For our staff it was once a bit daunting to add a community and now it feels like second nature.”
Anthem’s past growth, for its first 12 communities, came in the form of ground-up developments. Fast-forward to today and growth is largely done by acquisition to what Scott calls the company’s “bread and butter” through “grassroots opportunities and growing staff” in the journey of stabilizing struggling communities.
“That’s become what we have focused on and it’s where our growth is going to happen and we have a track record of being able to step in and demonstrate what measurable success looks like,” Scott said.
Building back margin, capitalizing on demand
Operators across the senior living industry have taken different paths toward the same goal: recouping and stabilizing margins eroded over the last three years. That journey has led some to discount rates to increase census to operators reevaluating care levels to optimize revenue streams.
For Anthem, Scott said the company will focus on reducing expense pressures while finding ways to optimize revenue. While many operators are licking their chops at the prospect of looming demand as baby boomers enter senior living, Scott said Anthem’s demand curve is a bit longer than traditional continuum of care communities since the company’s residents join communities on the higher acuity end of the spectrum.
“We have seen the pool get bigger because I see the real pinch happening within the next couple of years,” Scott said. “I think that we’ve gained a lot of confidence from folks through the pandemic.”
Within its existing markets, Scott said consumer trust in senior living as a viable option later in life has remained strong, allowing the company to recoup occupancy figures. He also said that the Pacific Northwest’s concentration of senior living has older adults primed and familiar with the product compared to other areas of the country.
“They see that we have implemented all the safety procedures that one would need,” Scott said. “We create socialization, opportunity and the environment that they don’t get at home, and it’s showing in our numbers.”
To accompany the strong demand, Scott said innovation in the memory care sector in the last two years is “better and at a faster pace than the previous 10 years,” with great strides made on fall management and prevention technologies.
“It’s only going to get better,” Scott added.
But capturing demand isn’t easy, with higher acuity operators needing to reach families sooner to help residents before the prospective resident and their family becomes a “broken state,” Scott noted. That juncture is where communication and outreach with Anthem team members can bridge the gap to make the jump to senior living.
Shifting to next year, Anthem made some changes to its executive team with the addition of new positions, including a vice president of programs.
“Our big focus in 2024 is going to be on the engagement side of our business,” Scott said. “He’s going to be taking on all elements from dining to our engagement programs and activities and we feel like that’s our secret sauce.”
Going forward, Anthem will also address clinical operational needs, with Scott calling clinical expertise something that is “going to have to become table stakes in our business,” coupled with the addition of a fall technology-based system to improve care and responsiveness.
In regard to rates, Scott said Anthem would evaluate its rate structures in the new year and shift from a structure emphasizing rents and not balancing care. That means shifting more towards “the service side of the business” with rental rates returning to typical numbers seen on any similar rental property.
On the employee side, Scott noted that Anthem would enhance employment packages and compensation packages to better retain staff, with operators nationwide moving from the defensive to being on offense against staffing challenges.
“We’re going to continue to grow wisely and we’re seeing more opportunities than we can manage so we’re really being selective,” Scott said.