Addressing Labor Shortage Issue Remains Top Priority for Executives at InterFace Conference

by Jeff Shaw

Ask senior living CEOs and operators to name their top issue and the answer is the same as it’s been for the last two years: the workforce.

Despite a slight easing in the overall employment environment, along with some high-profile tech layoffs, the labor market is still tight. Top executives are laser focused on the task to recruit and retain good workers for a simple reason: They can’t run a highly service-oriented business without help. Seniors aren’t going to move into an understaffed community.

“Employees are my number one priority,” said Sloan Bentley, president and CEO at Lutheran Life Communities. “We need to listen to them.”

Bentley shared her insights on the labor crunch and other top issues alongside other industry experts at the InterFace Seniors Housing Midwest conference. The event was held Oct. 20 in Chicago, drawing 234 seniors housing professionals. The day-long conference featured six panel discussions on timely topics, along with networking opportunities.

A panel of operators discussed how to deal with a challenging senior living market. Separately, a panel of CEOs took a deep dive into the state of the industry.

Operators shared how to address workforce challenges. John Polatz, CEO at PS Salon & Spa, moderated the discussion.

At Lutheran Life, Bentley has two recruiters for each of the system’s five communities. Wages are competitive. Culture is a priority. The nonprofit organization emphasizes mission over margin.

Employee perks include free meals, gas cards, babysitting, manicures and massages. Team members have a concierge room where they can relax. A resilience program gives the team an opportunity to express the challenges of loss they’ve experienced over the last 2.5 years since the COVID-19 pandemic began.

Residents, families and team members alike have access to “My Chaplain,” an app that puts the user in communication with a personal chaplain to provide guidance and support.

The panelists believe more people are starting to return to the workforce. In fact, the U.S. economy added 261,000 jobs in October, with the healthcare industry seeing the largest gains with over 50,000 new jobs, according to an employment report from the U.S. Bureau of Labor Statistics.

But employers aren’t predicting a flood of job applicants.

“We have to make sure our workers are successful,” said Lisa Rogers, president and chief clinical officer at Distinctive Living. “The organization has to support them.”

Rogers uses employee surveys to gauge their job satisfaction. “We have to meet them where they are,” said Rogers. Her goal is to treat employees better than they expect to be treated. “We have to elevate our customer service approach to the employee,” she said, adding that the “spill over” effect is a better resident experience.

Operators said employee outreach depends on geography too, a challenge for senior living companies with communities in multiple states. “We consider the location,” said Gale Morgan, senior vice president of sales at Mather, a nonprofit owner and operator with properties in Illinois and Arizona. A new Mather community is under construction in Washington, D.C. During the pandemic, health safety protocols differed based on local requirements.

Automation is helping to ease labor shortages. LCS has 28 communities that use robotic vacuums. Residents at one community have even named the vacuums “Dusty” and “Hazel.” The cost of the vacuums translates into a pay rate of about $6 an hour.

“We have redirected our labor to resident-facing activities,” said Allison Pendroy, senior vice president and managing director of life plan communities at LCS.

Beyond the workforce challenges, inflation and rising interest rates are having a big impact on operations, according to Sevy Petras, CEO and co-founder, Priority Life Care. “We’ve been spoiled over the last 15 years,” said Petras, referring to the low-interest-rate climate. “We have to readjust.”

CEOs size up industry

During a separate panel discussion at the InterFace conference, CEOs covered a wide range of topics but agreed that the greatest challenge is labor. “What’s working? What’s not working?” asked panel moderator Brian Cloch, principal and co-founder, Innovative Health.

New Perspective Senior Living made a tactical decision to treat recruitment like sales.

“We doubled down on human resources,” said Chris Hyatt, president at New Perspective. Metrics are charted, such as the closing ratio of interviews to new hires. Managers meet every week to tally results.

“We’re moving in the right direction,” said Hyatt, adding that the use of expensive staffing agencies to fill gaps in the workforce has declined from 30 to 10 percent portfolio-wide.

“You have to always be hiring,” said Keven Bennema, president and CEO at Charter Senior Living. “There’s no revenue without caregivers.” The company hired an in-house recruiter to focus on hourly positions, such as cooks and housekeepers. The recruiter sets up interviews and follows up by text. As a result, more applicants show up for job interviews.

Retention is more important than recruitment, according to Guy Geller, president and COO at Grace Management and CPF Living Communities. His strategy is to bring in good leaders and pay well.

Economies of scale will matter as more time and money is spent on human resources, according to Dan Hermann, president and CEO at Ziegler, an investment bank. Bigger companies will be able to spread expenses over their portfolios. Single-site owner-operators will struggle.

The CEOs discussed other sector challenges, as well. They said new development has slowed. Financing costs are up as the Federal Reserve continues to raise interest rates to cool inflation. Construction costs are up, too.

Transaction activity has also slowed. Sellers and buyers can’t agree on valuations or pricing. “The market is too unsettled,” said Geller. Sellers are in no rush to dispose of properties at a discount. If possible, they’re generally willing to wait as long as occupancies and the rate of inflation continue to improve.

The CEOs agreed that the industry would benefit from more transparency, similar to the way the hospitality sector shares pricing. Investors want more transparency, too. At Charter Senior Living, investors have access to back-office systems, such as billing. “If we are ultra-transparent, we will get more business,” said Bennema.

— Jane Adler

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