Owner-operator becomes one of the largest in the country by serving middle-class seniors.
By Jeff Shaw
The recipe seems simple enough, but few have served it as effectively as Affinity Living Group: find every efficiency possible to keep rents low enough to serve middle-income seniors.
Often “trapped in the middle” between qualifying for government assistance and being able to afford luxury seniors housing, the retired middle-class firefighters and teachers of this world don’t currently have enough seniors housing within their price range. Affinity aimed to tackle this problem with an active approach all the way up to the C-Suite level.
Charlie Trefzger, the company’s founder, president and CEO, visits up to eight communities a week, meeting with executive directors, frontline employees and residents. He expects similar in-person appearances from the rest of his executive team.
This is possible thanks to a tight geographic concentration. Affinity’s communities are located in five states: North Carolina, South Carolina, Virginia, Georgia and Alabama, with the vast majority in North Carolina.
This high level of attention to detail and geographical grouping have allowed Affinity to grow to 143 communities totaling 11,267 units of assisted living and memory care, while keeping rents affordable. The portfolio is approximately 55 percent assisted living, 40 percent memory care and 5 percent independent living.
Assisted living rents range from $2,600 to $3,200 per month, while memory care rents range from $3,600 to $4,200 per month.
Seniors Housing Business spoke to Trefzger about his successful targeting of the middle market, how to keep rents manageable and his hands-on approach to leadership.
Seniors Housing Business: What is the main focus of Affinity as a company?
Charlie Trefzger: We manage assisted living communities, but we also develop. Through other investment relationships outside of Affinity, I own, develop and purchase assisted living and memory care communities across the Southeast.
I get involved in the industry because there is such a tremendous need for middle-income, middle-market assisted living and memory care services. There are very few of those being built by others, so it’s necessary for us to complete our mission — to have something that we can operate. That requires us to be out in front buying and developing those properties.
SHB: Why do you focus on the middle-income seniors?
Trefzger: We’re seeing a growing population of individuals who live between the eligibility requirements of the various government programs [for the poor] and the operation of communities for the more financially well-heeled. As that population continues to age, we are seeing a greater and greater deficit of available resources and services.
We have to become attentive to their needs and become extraordinarily efficient in the operation of our communities. We have to listen very carefully to the residents and prospective residents and what they can afford to pay, then develop communities that are capable of responding to those needs.
SHB: So how do we serve those people?
Trefzger: We design communities that are very efficient in the operations, both the physical plant and the day-to-day care we provide our residents. We employ technology that allows us to not only be efficient with regard to how we staff and operate the buildings, but also how we anticipate the needs of our residents. We use predictive analytics based upon the data collection resources we’ve developed over the past few years so that we’re able to anticipate the needs of our residents before those needs manifest themselves.
SHB: Give us an example of how that’s used.
Trefzger: We can deploy our data analytics to predict the likelihood of a future fall — even within a certain number of hours. We can use our health records and diagnoses to predict drug interactions that would likely result in a bad outcome for our residents.
Hands-on approach
SHB: Per the ASHA 50, you operate 143 properties totaling 11,267 units. How do you steer the ship with such a large portfolio?
Trefzger: We deploy and embed high-level professionals within our communities as operators. We’ve reduced the middle management level to minimize the distance between the C-Suite and our communities.
All of our staff members from our headquarters in Hickory, North Carolina, spend at least two days a year in the communities. The C-Suite is expected to be in buildings every week. Last week, Rick Grimes, our executive vice president, was in five communities. I try to visit as many as seven or eight communities a week myself.
We look at our office here in Hickory as a support center to our communities. We look at our executive directors as our customers. We do all that we can to support them in their mission to provide outstanding care. I have a good friend who used the term “the anti-corporate community support center” to describe our headquarters.
SHB: Your properties are throughout the Southeast, with a heavy concentration in North Carolina. Do you plan to expand more in the future?
Trefzger: No. We’re going to stay heavily focused in the Southeast. It’s important to remain regionalized so that we can visit our communities and benefit from the economies of scale in a region or market, and create support amongst our communities.
That’s part of how we run efficiently and how we are able to have more connectivity between the C-Suite and the communities.
SHB: Affinity has a very high percentage of memory care units in your communities, so much that you’re the fourth largest operator of memory care in the country. What led to that specialization?
Trefzger: First, from my own personal experience with family members who have suffered severe memory loss. I have been on the front line as a family member trying to navigate the challenges that accompany it.
Second, we were seeing (before we became heavily involved in memory care) that 50 percent of the residents in our assisted living communities either needed memory care or at least would benefit from the provision of memory care services. They had memory problems, some more severe than others.
It became untenable to have a mix of assisted living residents with our memory care residents, so we began segregating and securing them where we could better serve their needs.
Memory care requires very extensive programming and the performance of healthcare services well beyond your traditional assisted living residents. You have to be equipped for that. You have to train your staff for that. It certainly is very challenging.
Making the team
SHB: You made two notable executive hires this year: longtime seniors housing veteran Rick Grimes as executive vice president; and Mary Raddant, who came from the retail sector, as chief of human resources. Why did you select someone from another real estate sector for that position?
Trefzger: In her most recent assignment, she was in charge of all of human resources for David’s Bridal, and prior to that she was a high-ranking executive at Lowe’s Home Improvement.
Retail has many of the same challenges we face, with high turnover of hourly employees and the need to create an attractive benefits package. She is very familiar with the challenges we face in our industry, but has a fresh perspective. She has also been able to develop a world-class human resources team, which is required for success in seniors housing.
When building her team, she was very focused on frontline recruitment. We’re also using many of the same strategies she deployed in the retail arena. She has overhauled our continuing education efforts and has enriched our training and development programs. Importantly, she listens to our team members and helps meet their needs.
We have employed a full-time chaplain to meet the needs of our employees when they have personal issues and we have trained professionals who understand the challenges that our staff members face in their day-to-day lives. In this way we are able to provide counseling for them in an attempt to help them overcome their issues and prepare them for the positions we need them to fulfill.
Regarding Rick Grimes, he is an extraordinary individual and we’re very fortunate to have him on our team. He has great insight into the industry and the challenges that our industry faces. He’s highly respected inside and outside of the industry.
But what really sets Rick apart is his extraordinary compassion and empathy for our residents and the staff of our communities. He is very, very in tune with the challenges that our executive directors face. He is able to provide great organizational development and leadership skills to executives throughout the company.
A learning experience
SHB: Walk us through your personal history in seniors housing, up through the founding of Affinity and the other companies you’ve founded.
Trefzger: I entered the industry in 1986 as the general counsel of a nursing home company and continued in that industry until 1996, when I branched out and formed what is today Affinity Living Group. We started with one facility in Hickory, and I can remember vividly hoping to build the community and actually operate it.
Very early on I learned that I had a special compassion for people of limited means who so desperately needed the care that we provide. Serving the middle market has been my focus since the beginning of Affinity Living Group.
SHB: How did you make the jump from in-house lawyer to company CEO, and how did your background prepare you for this job?
Trefzger: I learn how to be a CEO every day.
I learn by listening and I learn by paying attention. I learn by watching some of the great leaders who work in our communities and in our C-Suite. I’m in awe of, and humbled by, their participation in our mission with me.
SHB: What’s an example of something you’ve learned?
Trefzger: One of the greatest leadership lessons is that, in our industry, no detail is too small. If someone expresses a concern, it’s probably important and you’d better pay attention.
I’ve learned that it is important to hold people accountable and to create a culture of accountability. I call it “extreme ownership” of whatever challenge may arise.
We’re on a mission to care for people in their most trying times. The executive directors who own our mission are the most important individuals in our company. They “own” their community and are accountable for ensuring the best quality of care we can provide.
SHB: You’ve brought up executive directors several times, so that’s clearly important to you. How do you choose an executive director?
Trefzger: We test extensively. We do personal inventory testing, character testing and integrity testing. Before an offer is extended, we want to fully understand their strengths and weaknesses, and complete a full analysis to ensure we are matching the needs of the community with the strength of the candidate.
There are many wonderful empirical testing resources out there, and we use several to validate and revalidate our results. We also have a doctor of psychology on our team who works with our executive recruiting group to help administer the tests and interpret the results.
SHB: What are you looking for?
Trefzger: We look for people with high integrity and extraordinary leadership skills. We embrace those who have extreme ownership of the mission. I’m looking for highly intelligent people, highly intuitive people and highly compassionate people.
Some of our best executive directors have walked the floor and been caregivers themselves. Some are highly educated and some are not. The commonalities among all of them are that they are extraordinary leaders and own their mission.
One of our executive directors has been with me since the very beginning — Geraldine Yancey at Canterbury House in Roxbury, North Carolina. In her time there, she’s received numerous accolades from the state and has stayed at 95 percent occupancy or above for the last 20 years. She’s the kind of leader that we seek in all our communities.
Hitting home
SHB: You seem to have a soft spot for the Southeast. That’s where you received your full education, raised your children and founded your companies. What appeals to you about this region?
Trefzger: Each region of the United States has its own unique culture and customs. Having grown up predominantly in the Southeast, I’m very comfortable with that culture and those customs. It allows me to better understand the folks that we’re caring for.
SHB: What’s the best part of your job?
Trefzger: I recently had the opportunity to visit a community in North Carolina where I met a gentleman who had a veteran’s hat on that said USS Indianapolis. I don’t know how much of a student of history you are, but I knew that ship well.
[The Indianapolis helped transport parts of nuclear weapons during World War II before being torpedoed in 1945. Nearly three quarters of the crew perished during the sinking, the single largest loss of life at sea from a single ship in Navy history.]
I sat with him for 45 minutes. I asked, “Did you serve?” and he said, “Of course I did” and pointed at his hat.
I asked if he was on the Indianapolis when it went down. He said that yes, he went in the water. I asked if he was on the crew when they moved the atomic bomb and he said yes, he was. I asked if he lost friends in the water, he said “many.”
He told me it was by god’s grace that kept him alive during those trying times.
On another occasion, I went into a community and was invited into a resident’s room. He said he wanted to show me something, and he handed me a jar with sand in it. He said it was from Omaha Beach. “I was there on D-Day and I got this sand. It was in my pocket and I kept it ever since.”
That’s the best part of my job. Talking to the residents, learning their stories.
It’s hard not to be humbled and not to tear up when you hear these stories. That’s why I do my job every day.