Jonathan Cook is the President and CEO of LifeSpire Virginia, which operates five nonprofit senior living communities in the Commonwealth of Virginia. Jonathan joined the team in 2014. He has more than 27 years of experience in the senior living/eldercare field, including experience in multisite continuing care retirement communities.
No one is more cognizant of the challenges facing Life Plan communities for 2023 than those of us who are leading communities. The ability to think and act strategically in the face of operating challenges is a test in and of itself. At LifeSpire of Virginia, we know full well that we don’t have the luxury of focusing on just one priority. Instead, we have had to identify many strategies that will carry us forward through 2023.
While we emerged from the pandemic in pretty healthy shape, it is clear that the aftereffects of COVID-19 are introducing new problems. In many respects, the new environment is even more concerning because of the number and diversity and interconnectedness of these issues, many of which are being faced by vulnerable organizations with exhausted leadership from the board level through all of the management ranks.
Here are some actions we are taking to address current challenges:
- Inevitable rate increases. New residents are seeing higher entrance fees and current residents are experiencing larger increases in monthly service fees resulting from higher inflationary pressures, mainly dominated by wages, salaries and benefits.
- The necessity of a proactive review of pricing. In this uncertain economic environment we must look at pricing for both new products as well as comprehensive repricing strategies for each campus.
- Construction. We made the hard choice of putting some projects on hold completely, and for others, shifting to a cottage and hybrid homes program. This lets us move forward without financing as we’ll build them one at a time, likely covering about 80% of the construction costs through entrance fees.
- Acquiring struggling communities. Rough economic cycles do create opportunities for acquisitions. Recently LifeSpire of Virginia has been receiving two to three potential opportunities monthly to consider. From a strategic perspective, we have decided to hold off developing a greenfield project as the start-up costs, pre-sales program and enterprise risk of a project outweighs other opportunities to deploy capital.
- Identify partnerships for ancillary revenue streams. For example, we are partnering with Pinnacle Living to allow both organizations to formally collaborate and expand our mission-focused growth to serve those who currently do not reside in a retirement community. The home health company will operate as Affirmation Home Health. We expect it will eventually grow to include pharmacy and other services. Potential new revenue streams deserve a look – and it may take many smaller ideas rather than one or two big ones to move the needle.
- Recruitment and retention initiatives. For us, recruitment is improving from where it was six months to one year ago. We implemented improvements such as a real-time dashboard for team member satisfaction. We monitor new employees’ experience through surveys every 5 days, 14 days and ongoing. This gives us real-time feedback and helps us identify opportunities to improve as an employer of choice. Tactics such as an Applicant Tracking System and bot technology help us engage applicants throughout the hiring process. We are seeing two to three times greater applicant flow. However, retention is the biggest priority of all right now. We must close the back door. That leads me to culture.
- Culture. Think about what is happening to the culture in our communities when employees are leaving the good jobs they love and the communities and residents they find so rewarding. They don’t have the energy; feel exhausted from government regulations, reimbursement strategies and the knowledge that other team members are on the job market. Leaders spend more time putting out fires instead of leading. Managers can’t manage because they are doing the same thing. Think about a dining room manager who ends up working the floor every night, serving and busing. They are not training, not growing, not managing. Every manager is taking on parts of their understaffed operations.
This corrosive effect on culture is also a huge factor in whether we can drive the innovation that the next generation of residents expects. There is a vacuum created that could paralyze our industry moving forward. Our “parking lot” of potentially great ideas and projects is filling up because we can’t ask any more of our leaders as they fill in gaps.
So, of all our priorities, which one is top? Culture. It is woven into everything. What is the value of a manager who can be more present on the floor? Checking in with employees – how do you want to grow? Is this job what you thought it would be? How can we help you? As leaders, we must find our way back to pre-pandemic norms.
Our second priority is fighting revenue shortfalls. Certainly, our margin has eroded due to wage increases. Residents don’t like to see the big increases and we are looking at every potential new revenue source to minimize the need to increase service fees.
Our third most important action is to review the rest of the priorities by revitalizing our strategic plan. We can’t do everything and be everything, so we must reevaluate what we will work on first. For example, our board members put large, bond-financed developments on hold as they analyzed the current interest rate environment. Our organization then seized the opportunity to focus on lower-cost types of construction that we can manage out of cash without having to finance at the higher rates. These were big steps we took to immediately pivot in this new, unpredictable environment. Other strategies may not be as obvious and will have to be explored.
My advice to others? First, be proactive, not reactive. Second, we must remind ourselves of our mission. We have an obligation to serve people who have invested hundreds of thousands of dollars in our communities. Margins will be tight and the work will be harder, but we owe it to them. In return, we have an obligation to make sure services are available 10 or 15 or 20 years from now. We have an obligation to make sure our mission goes on. Somebody somewhere has to make the hard decisions for tomorrow, even though they may not align with everyone’s wishes today. And that requires courage—and sometimes bold action—that we all must bring to our work.
