Sometimes solving challenges in the memory care sector can feel like climbing Mount Everest—just ask Anthem Memory Care CEO Isaac Scott.
Like climbing the famous summit, memory care operators have quite a climb ahead of them, in several ways. One big one is the remainder of this year, which will be a test of operational resilience for the sector, Scott told Memory Care Business.
In February, Scott highlighted how Anthem was “going on the offensive” this year, taking on new management agreements of communities to grow the portfolio while also improving operations.
The company added two communities in Illinois and Wisconsin earlier this month. The recent additions of distressed communities highlight how capital partners are switching operating partners at a faster pace as owners seek pre-pandemic margins. That follows the addition of nine communities added in 2022 and five communities added last year.
“You need to be able to take on these communities and turn them around, and it’s testing our mettle for sure,” Scott said in an interview with MCB.
Success for Anthem’s recent growth and stabilization of communities can be attributed in part to the company’s focus on using data to inform operations while also solving staffing issues portfolio-wide, having removed agency staffing from all buildings.
In February, Scott said Anthem’s pivot to being on offense included seeking out new management opportunities. Near the midpoint of this year, Scott said he feels the “scoreboard is tied” for many operators balancing recent occupancy recovery with lingering staffing challenges.
“The capital headwinds are tough to overcome and costs remain elevated,” Scott said. “It’s a challenging environment, and I see that continuing through the end of the year.”
With over half of its portfolio coming from ground-up development, Anthem in recent years has tempered its development pace with a flurry of new management agreements of communities to continue growth in that challenging environment.
“My gut tells me that the market need for memory care is as strong, if not stronger, than the other parts of the continuum,” Scott told MCB.
‘Mindset shift’ on staffing to improve operations
Senior living operators have spent recent years trying to move away from relying on agency staffing to fill employee vacancies for myriad reasons.
Higher acuity senior living, including assisted living and memory care, has posed more staunch staffing challenges for operators in recent years that have contributed to staffing agency labor lingering within a community.
Early on this year, Scott said Anthem leadership came together and set a five-week deadline to be agency-free across all properties, having succeeded in doing so by making changes to operations and staff support.
“That was an offensive move for us, and our teams embraced it, and that was a big win for us,” Scott said.
Through launching a data platform to improve operations, coupled with a business intelligence system to inform strategic decision-making, Scott said a commitment to an operating model reliant on actionable data has a sizable financial impact on a company’s overall ability to grow.
“We’re trying to become a dashboard-focused company, and the biggest benefit of it all is going to be the transformational education across our company of what are the underlying fundamentals that are going to make the business work,” Scott added.
Scott doesn’t just have a metaphorical climb ahead of him, he also has a literal one.
Later this year in August, Scott and Anthem COO Lewis McCoy will climb the equivalent of the summit of Mount Everest, over 29,000 feet, by hiking Mount Ogden 13 times in a challenge known as “29,029 Everesting.” They are doing so to raise money for the company’s internal monetary relief fund for emergencies among staff.
“We want to create a vehicle that supports our staff in a more meaningful way,” Scott said. “So we are dreaming big.”
Resident care, marketing key to capturing demand
Many operators in the wake of the pandemic saw truncated margins and elevated expenses. To close the gap, operators have revamped levels of resident care to more adequately capture care revenue. That comes as residents enter communities later with higher acuity needs, even in independent living settings.
That’s been no different for Anthem, which, starting in January, added new levels of care. That’s resulted in the company being able to “more properly distribute revenue to care,” Scott said.
With six levels of care, Scott said revenue generation from care would increase in time, but he noted that the change helps staff more adequately characterize a resident’s care journey.
“It’s becoming more targeted, and we have acuity-specific data, and that’s helped us manage staffing in the buildings in a way that better matches up with the residents’ needs,” Scott added.
In the wake of recovering from the impacts of the COVID-19 pandemic, Scott said the company’s expense management control was “a little out of whack” but has been clawed back in the last two years. This resulted in an effort by Anthem leadership to standardize its contracts with third-party vendors to get a handle on spending.
“I’m trying to bring them under as much of a universal umbrella as possible and really understand those contracts, and we’re starting to reap those benefits,” Scott said. “Now it’s about how we become more efficient versus survival mode.”
Looking ahead, Scott said memory care providers must act now in capturing future demographic-driven demand for high-acuity senior living options, especially as construction starts remain limited due to high costs of capital and elevated interest rates.
As an industry, Scott said providers must focus on “developing better staffing” through management training and developing future leaders.
“It’s time that we expand our services,” Scott added.
