Company Profile: Elevate Senior Living

by Jeff Shaw

Building ‘a Better Mousetrap’

By Jeff Shaw

Elevate Senior Living is a company with one goal in mind: make seniors housing affordable for middle-class people. 

The introductory press release for the company — which also revealed the groundbreaking of its first project in Clearwater, Florida — said the target market is “the retired police officer, fireman, schoolteacher and everyday American.” Elevate plans to build 11 middle-market seniors housing communities over the next five years.

Of course, the industry has grappled with this issue for years. In 2017, the National Investment Center for Seniors Housing and Care (NIC) commissioned a study on middle-market seniors housing from the National Opinion Research Center (NORC) at the University of Chicago. 

Released in 2019, the study concluded that by 2029, 54 percent of middle-income seniors will be unable to pay the yearly costs of $60,000 for assisted living rent, even if they committed 100 percent of their annual financial resources.

That 54 percent figure represents a total of 14 million people over age 75, and accounts for seniors who would sell their homes to afford seniors housing. If those middle-market seniors were to not sell their homes, the percentage of seniors who could not afford assisted living would rise to 81 percent. 

The NIC study defined the middle market as those between the 41st and 80th percentile of individual income and annuitized assets, which is an average of $44,326 per year. The national median annual cost for a one-bedroom assisted living residence is currently $54,000, according to Genworth Financial.

While some companies do seek to serve this middle market, the general feeling across the industry is that not much progress has been made in the nearly three years since the report was released.

Elevate Senior Living was the brainchild of Joe Jasmon, CEO of Operator American Healthcare Management Group (AHMG), and Bruce Hentges, vice president of design firm Spellman Brady & Company, as part of a discussion on middle-market affordability at an industry conference.

“We didn’t think anyone in seniors housing was doing anything differently to reach that market — just rebranding and repricing,” recalls Jasmon. “In order to do this the right way, we had to build a better mousetrap that’s more efficient to reduce costs and overhead. We have to change some things. We have to design something smarter and operate for less money.”

Jasmon and Hentges continued their conversation “over burgers and beer” and literally sketched out a plan on a napkin, which Jasmon still has.

No vendors, just partners

The first step to executing this plan was to build a team.

“We took that initial conversation to the NIC conference, had some more discussions, and realized we needed full resources to help us for everything we would need to design, develop, build and manage,” says Jasmon. 

Elevate created a private equity ownership group and developed exclusive partnerships with industry-experienced firms to implement their plan. “We invited many vendors to become partners in Elevate and help us create and fine-tune this model.”

This “partner” mindset was key, according to Jasmon. Rather than being a vendor simply looking to execute the developer’s plan, each partner has an exclusivity agreement and a seat at the table.

“We wanted partners that would act as owners and help us make this efficient,” says Jasmon. “We aren’t vendor and customer; we are thinking from the same mindset.”

The list of partners so far includes AHMG as operator, Spellman Brady as interior designer, ARCO as general contractor, HKS as architect, Merric Millwork and Seating, Sentrics for technology, SageAge Strategies for marketing, Sherpa for customer relationship management, Bouchard Insurance, Greg D’Alessandro Consulting for legal issues and Steffens Accounting Solutions.

“We provide a turnkey solution to potential investors,” says Jasmon. “For that turnkey solution, our private equity group retains 20 percent ownership in that property. If anyone wants to bring extra dollars to the table, their ownership stake can increase. Then we go out and find equity and debt, put a deal together and start building.”

Partnerships minimize owner risks, while simultaneously tapping into the combined experience of them all. The Elevate partnership team meets online once a week.

“We believe this is the only model like this in the industry today. What I have learned over this process is I wouldn’t do it any other way going forward,” says Jasmon. “All this brainpower has made everything we’ve done so much better.”

Elevate’s first project is a joint venture with Bryn Wesch, CEO of Safepoint Senior Living in Clearwater, Florida, with plans for additional locations.

Efficient physical plant

So what is Elevate doing exactly that makes its partners believe the company has finally cracked the code on middle-market seniors housing?

Jasmon believes the key to success is an efficient design that minimizes unused space and construction costs.

The template for the typical Elevate project is six separate neighborhoods with 16 private rooms each for a total of 96 units, all centered around a central clubhouse and interior courtyard. Typically, four neighborhoods will be assisted living and two will be memory care, but they can be flexed based on the needs of the market.

Each neighborhood will be themed to offer a single amenity and residents can choose in which neighborhood they would care to socialize, exercise or find entertainment. For example, one neighborhood features a theater room, while another has a bistro.

“The residents can get entertainment in their neighborhood or go to the others. They could eat at home, or they can go to another neighborhood to eat,” says Jasmon. 

In addition, through technology partner Sentrics, residents schedule their meals ahead of time. This allows residents to still eat whenever they want while maintaining the efficiency of the foodservice component.

“If it’s a beautiful day and residents want to have lunch on the courtyard, they just enter it in the system,” says Jasmon. “We want to make sure residents get everything they get in high-end communities.”

As a result of this design plan, an Elevate community totals 53,300 square feet, compared with 85,000 to 100,000 square feet at a typical high-end community. Jasmon estimates this saves $10 million in construction costs alone, and then $250,000 to $300,000 annually through more efficient staffing.

Staffing costs will be aided by each neighborhood having a single, hands-on leader with minimal office staff. In addition, Elevate plans to use family members and volunteers to assist with events and challenges at the communities.

“We could have 12 volunteers in our building on any day helping on issues and projects,” says Jasmon. “That allows us to offer all the activities and amenities, but not cost us any more money.”

“When we talked about the initial concept, those are the two most expensive components of your financial statement: people and your mortgage payment,” says Jasmon.

While the communities are yet to be tested, Jasmon believes these cost savings are the key to offering high-end senior living at a cost affordable to a middle-class senior. Jasmon estimates rents will be $1,000 per month less than the high-end options in each market.

Company structure savings

Another aspect of the business where Jasmon believes Elevate is poised to save money is corporate overhead.

“We don’t push that cost onto the community because we don’t have corporate overhead by design,” says Jasmon. “The only cost coming out of those communities would be the management fee, which is 5 percent — the same any third-party manager spends. For some communities that could save $30,000 a month. We’re absorbing that because we’re looking at the long game, not a short-term, get-in-get-out investment.”

The partnership method has also led to a wide geographical footprint. The initial development plans include communities in Colorado, Florida, Kansas, Tennessee, Kentucky, Ohio, Massachusetts and Georgia.

“Our corporate structure is flat, so we don’t have regional directors. We have folks with expertise in all the areas necessary,” says Jasmon. “We’re able to deploy our folks to those communities from their homes. Elevate is virtual, as well as AHMG. Our folks work from home. It’s a much easier way for them to be involved.”

The virtual structure enables Elevate to enter any market focused on demographics and competition, rather than pursue markets solely because they’re near other Elevate communities. This is a departure from the typical seniors housing regional development strategy, but Jasmon believes it provides Elevate with more flexibility.

It also helps that the partner companies are themselves spread out, meaning there are on-the-ground teams with ownership stakes in the Southeast, Northeast, Texas and West Coast.

“We have relationships in all the major market areas to deploy resources when needed,” says Jasmon. “For example, I don’t always need a corporate chef every day. He or she might have to help get a building started or go tweak the menu, but then I don’t need that person anymore. That’s way more effective than bearing the burden of that overhead.”

After the initial 11 communities are constructed, Jasmon says Elevate plans to have three to five projects per year “in some phase of the development process.”

“We’re unique in how we operate and deploy our resources. Every person on our team has a say in how the design is implemented. You’re looking at a team with 250 years of combined experience. That’s phenomenal.”

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