Leading From the Heart for the Middle Market

by Jeff Shaw

To succeed for residents of moderate means, we must balance compassion with the business aspects of seniors housing.

By Joe Jasmon

In order to create a successful and financially sound solution for the middle market of seniors housing, we have to change the paradigm. This change must come from the heart and begins with a single focus: the resident. We must address the resident’s needs with compassion and provide the care required for them to live their best life.

Entering the middle-market space is a valid and well supported business strategy. It is imperative to balance financial performance, operational improvement and compassion in order to be successful in this space.

Success requires a concept we refer to as “leading from the heart.” We must use this concept as a fundamental guide that will drive change in design, operations, overall concept and mission. Comparatively, it is easy to go after the high-end market, but it takes courage and compassion to enter the middle market. Utilizing the traditional model in this market is a mistake and will certainly lead to low returns and potential failure. 

What bring us into the middle market? 

The demographics make sense and the growth curve is solid, but the definitive factor is a calling to serve — from the heart, to help people, to offer access to those who cannot afford the existing high-end offerings. It is possible to address this market segment and deliver the returns our investors are looking for.

The middle market is frequently referred to as the “forgotten middle” and is populated with the core of our society: retired police officers, firefighters, teachers, factory workers and our beloved veterans. 

At Elevate Senior Living our solution begins with a fundamental re-design of the traditional community. We focused our efforts to eliminate wasted space and create efficiencies. Our re-design had to focus on the individual needs of our residents while allowing for the creation of a space that will honor them and provide for their needs.

Starting here we could design an efficient space for our residents to thrive. Our efforts saw a reduction in 30,000 to 50,000 square feet of space from the traditional model. We did this without sacrificing any amenities and ensuring each resident had a private room.

In order for the re-design to be successful, it must include the creation of programs that cater to the individual, i.e. what they want and when they want it. This subtle change of perspective allows us to put compassion on the front burner, which then in turn drives design and operations.

The operating model requires change as well, we recommend the inclusion of family, friends, volunteers and compassionate, caring staff. The key in operations is to fully engage the leadership team into the daily routines of the community. This effort forces your leadership team to become hands-on in the day-to-day operation of the community. By design, they are responsible for an individual neighborhood or section of the community.

We recommend the implementation of a neighborhood ambassador program. This program focuses resources specifically to care for the needs of the care staff and their well-being. This simple investment will pay dividends by creating a special environment for the staff who are caring for our residents. It is a simple gesture to bring the community compassion full circle.

At the end of the day, leading from the heart provides an opportunity to reduce expenses and deliver a positive bottom line without sacrificing quality of care or diminishing the overall experience. Many might think, “This is a costly effort that will lead to budget overruns and increased expenses.” As matter of fact, it is exactly the opposite. Leading from the heart does not technically cost us anything — just our time. It does require a significant change in mindset.

How do we do it?

It is simple: we design a smaller footprint, identify the multiple opportunities to create efficiencies and eliminate wasted space. Revise your operating model to fully engage leadership. Include families, volunteers, essential caregivers and a lot of love into your staffing model.

Our entire focus is to honor the individual. That starts with private rooms, one-on-one activities and a technology platform designed to serve them. We created a neighborhood concept that includes dining and activities. Each of our neighborhoods is themed to ensure we did not miss a crucial activity, lifestyle or space.

Finally we redefined the cost structure to allow us to charge $1,000 per month less than the average of the top communities in our market. 

Our first cost cut was corporate overhead. We eliminated it from the conversation. We do not push allocations into our communities. We have to be able to operate within the financial structure of the community.

In the latest study, the middle market consists of approximately 15.9 million seniors who cannot afford the current senior living offerings in the higher spectrum of the market. This market segment has continued to grow and will most likely expand in the near future as costs continue to go up. This market segment is too attractive to ignore.

With a compelling model that shifts the traditional paradigm, more operators can enter this segment and see successful financial returns. Fair warning: it will take more that labeling your product “middle market” or “affordable” to find success in this space.

From a practical perspective, the market gap makes sense. The senior living market has segmented itself into high-end communities, then a handful of older assets re-positioned into the middle and the lower end of the spectrum — many of which are very undesirable. The high end is where the money is made and the returns keep the investors happy. This traditional model has been successful and met the test of time in both up and down markets. 

Due to the segmentation, the gap in the middle continues to grow and the needs are not being met. The numbers are staggering and we cannot address this need alone. We welcome and encourage other operators and senior living “movers and shakers” to join us in this space. Our beloved seniors need more options that are led by the heart.

Joe Jasmon is managing partner at American Healthcare Management Group, a management and consulting organization focused on creating industry-leading and challenging solutions for hospitals, health systems, senior living organizations, mental health, physician practices and family enterprises. He also founded the developer Elevate Senior Living.

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