More Senior Living CEOs to Pass the Baton — But Handoffs May Not Be Smooth

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Senior living leaders often talk about the generational tailwinds ahead in the form of an aging demographic of baby boomers. What they don’t talk about as much is how those trends will affect their companies in potentially negative ways.

As the boomers age, so too will the leaders of the companies that serve them. While I hear leaders talk about the challenge and opportunity in the generational shifts ahead, I don’t often hear them talk about succession planning.

The issue is a recognized pain point for the senior living industry (and other sectors), and it will only become more pressing. Consider that in the last three months, we’ve reported on the planned retirements of Covenant Living CEO Terri Cunliffe, Presbyterian Homes and Services CEO Dan Lindh and Ebenezer Senior Living CEO Jon Lundberg (and on the industry association side, AHCA/NCAL CEO Mark Parkinson).

You’ll notice that all three of those planned CEO retirements are taking place on the nonprofit side of the sector; 2018 data from Ziegler revealed that 70% of CEOs at senior living nonprofits were expected to retire by 2028.

But for-profits also are poised for CEO handoffs. Succession planning is very much on the mind of Aegis Living CEO Dwayne Clark. Clark told me recently he’s been talking to other similarly aged CEOs in the industry and asking them about their future in the business.

“I started asking CEOs, what are you going to do with your company? You’re 65 or 70 – are you going to work until you’re 80 years old?” he told me. “And there weren’t a lot of good answers, to be honest with you.”

No doubt, the industry is facing a massive demand wave as the boomer generation ages. But under the surface, that is also leading to a generational changing-of-the-guard for operators. Clark wonders what comes next.

“I would say half those people are going to want out of the industry in the next three years,” he told me. “Who are the ‘young Turks’ of the industry that are going to take this over and take advantage of the baby boomers turning 80?”

Looking across the senior living industry today, I see more than a few leaders capable of picking up the baton as the boomers age into senior living.

On the other hand, I see Clark’s point about the generational crosswinds, and believe the industry is going to lose a lot of expertise in the form of retirements in the coming years just when expertise is needed. Mindful succession planning is needed now, to help ensure that their knowledge gets passed as the C-suite guard changes.

In this week’s exclusive, members-only SHN+ Update, I take stock the ongoing leadership transitions in senior living and share key takeaways, including:

• How a generational crosswind is affecting senior living leadership and operations
• Why Clark is afraid of “artificial” demand for senior living in the years to come
• How the future outlook is potentially better than it seems, despite these trends

Crosscurrent of demographics, demand

Talk to almost any senior living leader in 2024 and they will likely mention their excitement over the prospect of demand in the years ahead as the baby boomers age. They often speak of how the current landscape of low new supply will favor existing senior living communities.

No doubt, operators do have an opportunity in front of them, and Clark believes that demand will be “great” in the few years ahead. But he also worries about the quality of the communities that residents and their families will ultimately choose.

Many of the companies with sizable regional footprints also have CEOs in their 60s and 70s who are likely to head for the exits in the coming years. A lot of them came up during the 1980s during the savings and loan crisis, and over the years built an incredible array of real estate knowledge.

Clark believes that, as leaders head for the exits in the coming years, that could lead to some ill-advised mergers as they attempt to solidify their legacies. He also noted that many of the companies he surveyed don’t outright own some or most of their communities, and instead either co-own or manage them.

CEOs could take their knowledge with them as they leave, and potentially strike deals that lead to a worse experience overall for their customers in the process, Clark fears.

In the 1980s, when many of today’s leaders were starting out in senior living, competition was much less fierce, and markets were far less saturated than they are today. Financing is also more difficult to obtain than it used to be, and equity requirements are higher, Clark pointed out. That could make it more difficult for the “young bucks” of the industry to get established if they’re trying to start their own companies or expand smaller enterprises, he said.

And although new supply is low today, the industry is also saddled with a large supply of older and aging communities. Although financial conditions are thawing in 2024, banks are still choosy about who they lend to.

All of that could lead to what he called an “artificial” rate of demand, as new customers enter communities, have sub-par experiences and then look to move out soon after.

“People will pick aging buildings because they have no other alternative,” Clark said. “That issue alone will make the industry vulnerable, because as soon as money flows back into the industry, or you have some colossal merger and the banks start lending again, then those aging products are going to have a very, very short shelf life.”

Generational shift underway

I do think that the senior living industry is going to have a monumental challenge ahead of it catering to the boomers, and that challenge will be complicated by CEO retirements. But looking across the senior living industry, I see no shortage of CEOs or C-suite executives in their 30s, 40s and 50s. And I do see opportunities for young executives to cut their teeth.

Take, for example, the case of Justin Dickinson, who took the reins at Pathway to Living in 2022. Though Dickinson had a short tenure leading Pathway – and later, Anthology Senior Living – he is at the helm of a new company, Evolve Senior Living, along with former Anthology leader Andrew Agins.

When I caught up with Dickinson and Agins last year, they said it was their mission to fix what they see as a “fundamentally broken industry” by better aligning ownership with operations.

“We named our company Evolve because we want to be a part of the evolution that … is occurring within the sector,” Dickinson told me then. “It’s a nod toward our focus on the future, and our focus on the change which is inevitable within the sector.”

In the end, I think the industry will encounter some turbulence as the old guard makes way for the new. But like Dickinson and Agins, I believe that younger leaders will naturally emerge with new ideas and they will pick up the torch.

With that in mind, it will be interesting to see who ends up in the CEO role at Covenant, Ebenezer and Presbyterian Homes. All of those organizations are currently considering candidates, as is AHCA, while their current CEOs continue to serve until their exit; perhaps there are internal candidates that have been waiting in the wings and ultimately will be selected, or perhaps the boards will look to bring in an outside perspective. I hope that at these and other senior living organizations, the new class of CEOs reflects the demographic diversity of the rising group of boomer consumers.

And I hope that current CEOs and boards also share my viewpoint that there are strong candidates – whether internal or external – across the sector ready to take on the biggest executive jobs, and don’t wait too long to pass them the baton. These current leaders might take a cue from some of the most recent retirement announcements, including that of AHCA’s Parkinson, who said: “I want to leave when I’m still pretty close to peak performance. I don’t want to stay on too long.”