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The need to improve operations is driving all that senior living operators do as they pivot to the offensive.
One big pressure point is the need to do more with less. In 2024, operators are living that mantra in a variety of ways, from maintaining staffing expenditures while growing their portfolios to creating new ancillary revenue sources.
Data and technology are typically central to those efforts, given the need for more fine-tuned operations. Slow adopters in that regard could be left behind in the race to attract the baby boomers. Take it from Bickford Senior Living President Andy Eby during a panel at last week’s Argentum conference.
“It starts with getting in the arena,” Eby said of improving operations through relying on technology and data analysis. “Get in the arena…pick a vendor and start navigating this complex system.”
At last week’s Argentum conference, I had multiple conversations with operators of varying sizes and I noticed I was hearing the same thing described in different ways: Amid operating challenges, senior living providers are deploying technology, usually in tandem with new data capabilities, to drive profitability, improve operations and support resident health.
Operators in 2024 are now more willing to take risks and are blazing trails by implementing new software platforms or branching out to integrate aspects of artificial intelligence (AI) and other automatic processes..
In this week’s exclusive, members only SHN+ Update, I share my analysis of key ideas that came from the Argentum conference and offer these key takeaways:
– How well-capitalized operators are driving growth with the help of technology in 2024
– The evolution of senior living operations and care will rely on technology and data analysis
– Why data is becoming a differentiator for successful senior living operators
Pivoting from defense to offense with technology
While the cost of capital and interest rates remain elevated, many operators have taken the last four years to revamp internal systems, from reworking care structures to capture more revenue to relying on business intelligence data models in hiring new leaders and using AI-supported systems in improving resident care.
Eby described the need for a “fundamental shift” for the industry with regard to technology and the use of AI in particular.
“We’re reactive as an industry, but AI allows us to shift from defense to offense and do things for the customer before things happen,” Eby said during an Argentum panel.
In 2023, Des Moines, Iowa-based Life Care Services (LCS) launched a new company-wide data platform to measure operating performance across its portfolio of roughly 140 communities. Fast-forward to today and the company has identified key metrics used in charting future growth, or alternatively helping a community in its recovery.
“Our biggest focus today is lead scoring, so it’s about how we can give an AI-driven aspect to our sales teams that help track what’s next,” LCS President Chris Bird told me on the sidelines of the conference. “We’ve read about data being the most valuable resource on Earth right now and we’re just trying to keep it all and get it all into our system.”
Valuable resource or not, operators must pick up the proverbial pickaxe and start data mining in search of profitability.
Last week also saw New Perspective Senior Living, a Minnetonka, Minnesota-based regional operator, announce a $200 million capital investment from multiple partners in creating a future, $500 million pipeline of acquisitions and new senior living development. In discussing the company’s 14 communities operated on behalf of Welltower (NYSE: WELL), Hyatt told me during the conference just how impactful the REIT’s data insights have been in charting growth.
“They are much more open to going down a path of different ways of operating and they’ve got a roomful of data scientists that are helping us out, and they have people helping with capital deployment,” Hyatt told me.
With REITs offering operators resources via scale, data analysis and business intelligence is also being aimed at improving resident care. After assuming management of over two dozen Ventas (NYSE: VTR) communities in 2023, Priority Life Care CEO Sevy Petras told SHN data was the pathway to making sure residents were “happier and healthier in the future.”
She reiterated her point during the conference, telling attendees during a C-suite insights panel how collecting personalized information of residents has improved resident experience.
“If we can have that information, input it and start incorporating those things, we’re just beginning to see how that’s impacting our residents’ experience and we’re trying to set that from the very beginning and we use technology to do that,” Petras told attendees.
Transitioning to a data-driven future
Operators like LCS and Priority Life Care are not alone in touting the benefits of data, noting the accelerating pace at which companies are embracing a data-driven future but also warning of some pitfalls..
Over the course of the last decade, the Seattle, Washington-based Merrill Gardens has spent time refining data from operations in charting improvements, according to Merrill Gardens President Tana Gall. She told me that she sees the pace at which operators are using data to make sound business decisions is quickening.
“What’s happening now is that more of that is getting automated and the data is getting more sophisticated,” Gall told me. “We have that data and now we’re laying that to have more of an impact on improving the residents’ daily life.”
As margins remain stubborn and operators look for improvements wherever they can find them, I think it’s important that they heed Gall’s observation:
Getting there can result in some missteps, as Eby alluded when he said Bickford isn’t afraid of “stubbing our toe” when it comes to finding value in leveraging data in operations. But toe-stubbing can be an important part of the process, too, as the act of fine-tuning operations to achieve success is rarely linear.
A stubbed toe is painful but not serious; of course, providers must also be vigilant about much more serious problems that can arise as reliance on data becomes more prevalent. Lawyers and regulators are trying to crack down on how large insurance companies are using data systems and predictive analytics to drive coverage decisions, including for post-acute care. And the recent Change Healthcare cyber attacks demonstrate how the increasing use of technology also is creating new and serious vulnerabilities and risks for health care providers.
The risks of using more data in operations are ever-apparent as cyber security attacks continue to be a major challenge to health care companies nationwide, as evidenced by the recent cyber security incident involving St. Louis-based Ascension, which operates 140 hospitals in 19 states.
So, as the use of data begins to differentiate good from great operators, long-term success also is contingent on having more robust risk management practices and partnerships. These costs must be factored into the transition to a more data-driven senior living operating model as well.
It’s a point that Juniper Communities CFO Chuck Hastings made at our recent Capital & Strategy conference in Washington, D.C. He observed, jokingly, that it was no “big shock” that tech expenses skyrocketed after Juniper hired a chief technology officer a few years ago – but the company views these costs as an investment, and is committed to its data strategy and the accompanying costs even through the current environment that is straining margins.
Specifically, Juniper is creating a “data lake” to support a predictive analytics tool that hopefully will be able to flag when a community is at risk of deteriorating performance. The idea is that the industry as a whole needs to become more sophisticated in determining what drives the success or failure of communities, beyond relying on truisms such as success being a function of having a good executive director.
Despite the risks and costs, the necessity of accelerating into a data-driven future is undeniable, given the benefits.
In the last 12 months, Anthem Memory Care CEO Isaac Scott said the Lake Oswego, Oregon-based operator’s business intelligence platform has been able to identify data points indicative of “what makes up a successful community.”
“The biggest benefit of all is going to be the transformational education across our company of what are the underlying fundamentals that are going to make this business work and that we can control it,” Scott told me. “It’s been an eye-opener for us to be able to do that.”
Welltower, which has continued recent investment with $6 billion ready to deploy, is leveraging its data science platform known as Alpha to provide insights into what communities it acquires.
“As we have said in the past, our goal is to achieve significant regional density, seeking to go deep in our market, not broad. And with the help of our data science platform, Alpha, we are able to identify one asset at a time, which not only have the strongest growth prospects, but also the strongest fit to our portfolio,” Welltower CEO Shankh Mitra said during the REIT’s first quarter call on April 30.
Ventas is also leveraging its data platform, known as Operational Insights, to improve its senior living portfolio, having made $350 million of investments so far this year.
“We continue to leverage Ventas’ OI’s vast datasets and powerful analytics and insights to drive performance outcomes,” said Ventas Executive Vice President of Senior Housing and Chief Investment Officer Justin Hutchens during the company’s first quarter earnings call. “Notably, our SHOP portfolio delivered double-digit, same-store cash NOI growth for the seventh quarter in a row.”
At the operating level, companies like Pegasus Senior Living and Avamere Living are using technology to drive operational efficiencies. Pegasus is expanding its analytics-based hiring platform for executive directors. Avamere Living uses a machine learning-based decision support system to help staff in their roles.
With operators keen on making swift, but lasting, operating performance gains in occupancy and widening margin, I believe now is a critical time for operators to chart future growth driven by more sophisticated analysis and technology systems integration.
The coming months and years ahead will be shaped through how operators interact with technology, regardless of a few stubbed toes along the way.
