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Not every senior living operator has a data scientist on staff – LCS has four.
On Jan. 1, the Des Moines, Iowa-based senior living company furthered its investments in data analysis and standardization by bringing a new reporting tool online.
Also in January, LCS promoted Dan Lahey as the company’s CFO and chief investment officer. To Lahey, the new data capabilities are an “important win” as the company seeks to continue growing and evolving in 2024, including by using new tools such as artificial intelligence to accelerate sales functions.
“It’s a new discipline for us, … actually having data scientists on staff is just a different animal,” Lahey recently told Senior Housing News.. “Sometimes, that means they’re challenging preconceived assumptions; they’re also painting the picture of what the next opportunities [are] that we can unlock.”
LCS’ investment in data coincides with progress in operations. The company in 2022 rebounded to pre-pandemic occupancy, and in 2023 it saw a record number of sales close in its entry-fee continuing care retirement community (CCRC) business line.
Although 2024 may represent a “return to normalcy” in some respects, Lahey said the company is also reflecting on lessons learned in the last four years and taking them into the future.
“Hopefully it’s made us battle- and cycle-tested,” Lahey said. “We’re definitely focused on growth, but we’re going to remain very selective and stick to the things that we know are uniquely qualified in.”
Data platform comes online
With a senior living portfolio spanning 143 communities nationwide, the company has always had loads of data to sift through. But until recently, analyzing it was a deliberate task that required time and attention, and often was a backward-looking exercise.
At the start of 2024, the company’s data capabilities leveled up as the new reporting tool came online. The tool gives LCS leaders a window into a number of metrics the industry sees as important, including occupied units, available entry-fee dollars and how many days a unit has been on the market.
LCS leaders can see those stats in real time without having to create a report – an important step in furthering data literacy at the company to make better decisions, according to Lahey. And by investing in IT systems and data today, the company will be able to unlock new opportunities down the road, he said.
“Some of the first things we’re digging into with our data science program are better predictive analytics on the right markets to invest in,” Lahey said.
Another big area of focus will be the scoring of new sales leads. As senior living operators have gone big on digital approaches, many have seen an influx of new leads in their databases. But a longstanding challenge in senior living sales is qualifying sales leads to determine which ones should be acted on first – that’s where artificial intelligence can play a role, according to LCS President Chris Bird.
“The AI … will tell the sales counselor, you should be focused on this person this week because of ‘X’,” Bird said. “While we have a big funnel, they will tell you where you’re at with all your leads in the funnel. It should help us significantly to get an advantage in the marketplace.”
Sometimes, data analysis has led LCS to look at operations in a new light.
LCS has long studied 10 different data points to determine how well a community is doing. Then the company’s data science team started “poking holes” in that analysis and challenging conventional wisdom.
For example, it’s conventional wisdom that operators should not chase markets with high penetration rates, as they are likely to be saturated with well-established competitors. But using its data analysis sophistication, LCS has found that there is actually a “bell curve” in penetration rates where operators can be successful in certain markets.
“That’s why we’re pretty excited about the investment we’ve made with our data science group and the insight analytics group, which are driving us to make data-driven decisions,” Bird said. “Not that we didn’t before, it’s just now more refined than it ever was.”
Case in point: LCS now studies a list of 14 different data points to determine operational quality where it once studied 10, according to Bird.
And it’s also in service of becoming a leaner organization at the end of the day. As he looks into the future, Bird sees a world where operators must do less with more, and be more nimble and efficient in operations.
“We know that if it takes 100 FTEs to run a building today, you’re going have to be able to do with 90 tomorrow, because there are going to be fewer [people],” Bird said.
Growth in 2024 and beyond
In the year ahead, LCS will continue to grow in what it sees as its strengths: Full-continuum rental communities with independent living, assisted living and memory care; and CCRCs.
On the CCRC front, Lahey said LCS leadership sees more opportunities to acquire and turn around distressed communities. One recent such opportunity was Harborside, a community that LCS is acquiring for $63 million following a bankruptcy auction.
Lahey said that LCS can turn the community around to more solid financial footing with “the right focus, energy, effort and patience.”
“It’s not a broken community, it’s a broken capital stack,” he added. “We can fix broken capital stacks … so, if we see other opportunities like that, that would be very appealing to us.”
As he looks across the market, Lahey said he sees many transactions that did not close in the previous three years, and that lenders are in the driver’s seat. A big question in his mind is what it will take to push them over the finish line.
That said, he sees market dynamics playing out in 2024 in a way that he believes will incentivize sales, and therefore potential opportunities for LCS.
“If you have a community that’s not cash flowing, people are running out of patience to feed it,” he said. “I think we’ll see more of those opportunities.”
Another growth avenue for LCS over the years has been in new development and construction – something that is much harder to do in 2024 than just five years earlier. To that end, LCS believes long-term that development is still a good prospect for growth, even as it remains challenged in the short- and mid-term.
“This year, it’s more about lining up the sights, and then, in ‘25 and ‘26, hopefully putting the debt and equity together that lets us move those forward,” Lahey said.