Seniors housing operator and advocate gives a voice to the industry
By Jeff Shaw
Brandywine Senior Living is not among the largest operators in the seniors housing space, falling outside the American Seniors Housing Association’s AHSA 50 listings for 2015. Yet everybody knows Brenda Bacon, the company’s president and CEO.
Bacon co-founded the company in 1996 and has seen it grow to 27 locations and more than 2,600 total units across five states. The company’s portfolio is currently concentrated in the Northeast, and it will soon expand to include Virginia and Maryland.
Headquartered in Mount Laurel, N.J., across the Delaware River from Philadelphia, the private operator focuses on luxury independent living, assisted living and memory care. Communities partner with top local health systems to help improve care and reduce hospital admissions.
Brandywine maintains 90 percent occupancy across its portfolio with 40 percent EBITDARM (earnings before interest, taxes, depreciation, amortization, rent and management fees) margins.
What makes Bacon a household name in the seniors housing space, though, is as much about Brandywine as it is about her advocacy for the industry.
She will soon complete her third year as board chair of Argentum, formerly the Assisted Living Federation of America (ALFA), the industry’s largest advocacy organization. She regularly speaks at industry events.
She has long been a voice for healthcare reform to better improve care of seniors, even serving as chief of management and planning for former New Jersey Gov. James Florio from 1989 to 1993 and on the Department of Health and Human Services transition team for then-incoming President Bill Clinton to enact these goals.
Seniors Housing Business spoke with Bacon about the state of seniors housing, the impact of her political career and what the future holds for this dynamic industry.
Seniors Housing Business: In our last SHB interview, Welltower CEO Tom DeRosa spoke glowingly of Brandywine’s operational model. Welltower invests heavily in your properties. What does Brandywine do that’s so different from other seniors housing owners and operators?
Brenda Bacon: First of all, those were very kind words. Tom and I share a passion for senior living and a commitment to give customers the support they need or desire to maximize independence and wellness. Welltower is fundamentally a different kind of investor, one as devoted to the quality as it is to its shareholders.
We develop our properties in partnership with Welltower. We own a small portion of
the real estate, but generally operate the communities through a triple-net lease structure with Welltower.
There are several things that make a successful operator. There’s the real estate aspect — the markets you choose and their ability to support the product. That has a lot to do with education and income. The high-barrier-to-entry markets with a population of adult daughters that want the best for their parents are the best markets to be in.
Beyond that, we’re highly operationally intensive. You have to pay attention to operations every day. It’s not a matter of making a sale, then everything takes care of itself. Your team has to know they weren’t hired to make the bed or cook the meal. They were hired to change lives.
We believe senior living is the key to people maintaining their independence as long as they can. Families come in and talk about home care, and there’s a place for that. But a lot of times, mom is isolated waiting for someone to come visit. She’s not in the best situation. In-home care isn’t the right option for everyone.
Isolation, we believe, is the biggest ager. We see a massive difference after people stay with us 30 to 40 days.
Our passion about what we do leads to our success. That, in turn, leads to success for Welltower and its shareholders.
Identity change reflects broader attitude
SHB: The company is undergoing a rebranding right now, dropping “senior” from the name to become Brandywine Living. Why are you doing that, and when will the rebranding be complete?
Bacon: We want people to pre-choose us as part of their life plan, and to see Brandywine as a place to maintain or grow their independence, where they can engage in things that make them happy. We want people to see themselves as living a luxurious life rather than feeling sorry for themselves because they’re in something called a “senior facility.”
People don’t like the word “senior.” It denotes the end of growth. We want to be seen as a place where, as we like to say, you can abandon all those things that can stress you, such as how to get to the doctor and cooking. You
can invite friends over for lunch, or go out to the fundraiser at the art museum. Senior is a defining term, but it doesn’t define what we are and what we’re becoming as a company.
What made this really clear to me is two things that happened in my personal life. There’s a colleague I’ve known for many years. He’s a judge here in New Jersey. He’s 76 years old and was working every day until eight months ago when his wife died. They sold the house, and now he just stays at his children’s houses, going from one to the next. He’s very sad, but he said he can’t move into a senior facility.
Another resident now living at one of our communities in New Jersey was a 75-year-old female CEO. She didn’t want her important friends to see her in something called a senior community.
We’ll be migrating the brand during the next six months. I use the term migrating because our signs will start to change and our marketing materials are going to change. Making this happen will take a few months. We’re working all of that out right now. It’s in motion.
Small footprint strengthens brand
SHB: Geographically, Brandywine’s communities cover a fairly small area in the Northeast. Why stay so regionally focused instead of spreading nationally?
Bacon: We’re in five states now: New Jersey, Pennsylvania, New York, Connecticut and Delaware. Over the next three to four months, we will break ground in Alexandria, Va. We are also going through the approval process for our first community in Maryland.
Having a small footprint allows us to strengthen the brand. People in these markets know Brandywine. They know us as a good community member. They know people who have been in a Brandywine community or are employed there. We are a part of the community in this region.
Proximity also allows us to drive our culture. Instead of being on the phone in various places across the country, we bring our team together a lot. We talk about new programs and what’s going on with the company. Everybody feels really devoted. We’re a team, and we’re proud to operate that way. It’s important to actually see each other and feel close.
This is done on purpose. It’s the way we want to develop the company. There are lots of challenges to a portfolio spread across the country. Every market is different, and every submarket is different. There’s an advantage to living in your market.
Maryland and Virginia are adjacent states and high-barrier-to-entry markets, so they’re still a good fit. I do not see us as a company going to California or Texas or anyplace like that.
SHB: How many communities and units does Brandywine currently have in its portfolio, and how many are under development?
Bacon: We have 27 operating communities for a total of 2,608 units. We have a building under construction in Livingston, N.J., with 120 units. We’ll break ground in Alexandria in a couple months, and that will have 116 units. If we receive governmental approval in Potomac, Md., we’ll have 120 units in that development. With 120 units, our capacity is around 140 people.
We are sourcing sites in Maryland and Virginia. We’d like to build five or six communities in that region — around the beltway, west of Washington, so northern Virginia and Montgomery County in Maryland.
SHB: It sounds like 120 units is your sweet spot.
Bacon: Absolutely. In skilled nursing, having multiples of 60 beds is the most efficient. In our buildings we have a mix of services — our regular assisted living beds, our Reflections memory care unit, and our Serenade high-end units with butlers and room service and large suites. The Serenade units can be very large: 900 to 1,000 square feet.
Generally, 60 units will be regular assisted living, about 30 will be Reflections and another 30 will be Serenade.
While 120 units is larger than a lot of assisted living developers build, we like that number of people in our buildings. We think of it as a small town, and in a small town you’re going to find people you have a lot in common with and make friends. It just works out to be a good number to create a very vibrant community.
Credentialing program will raise industry standards
SHB: You have been board chair of Argentum, formerly ALFA, since 2013. What have you accomplished in that time? Is there anything coming down the pike you can share with us?
Bacon: Argentum is on a big mission for changing, expanding and advancing senior living. That goes in many different directions.
We want to expand the recognition of the industry as a real estate and investment class that’s growing over the next few years. We want to expand the public’s knowledge of senior living as an alternative to homecare or living alone.
People aren’t going to retire at 65 and live another 10 years any longer. They’re going to live another 30 years. We have to let people maintain their independence and stay engaged.
We want people to understand seniors housing so it becomes part of their life plan. You know what kind of house you want when you get married, then another type when you have kids. When you need support services, we want you to know where you’re going to live then as well. We want people to look forward to this life.
We also want to expand how we interact with legislative representatives. Senior living is regulated state by state, and I think we can be partners with the regulators. We all have the same goal.
We’re also working very hard on credentialing. A lot is required of the leaders of our industry. We want some professional standards for our leaders, so we’re developing a credentialing program where people can study the core issues that make a good operator.
The initial credential that is currently under development is for individual executive directors. Once that is in place, a memory care credential will be the next target. As for company-wide credentials, Argentum recently put in place the first round of standards for member companies.
It’s important that all the people who are stakeholders in this industry move toward credentialing and standards and self-regulation. We have a need for more executive directors, more line staff, more leaders of our companies, so we need to prepare for the future.
SHB: Do you worry about oversupply in the industry stemming from the recent development boom?
Bacon: Development is inevitable in seniors housing, as it is in any business. We as operators have to choose our markets carefully and make sure we’re paying attention to operations, and it will be fine. It will work itself out.
SHB: Your background before seniors housing was in government — serving under New Jersey Gov. James Florio as an advisor overseeing healthcare reform efforts from 1989 to 1993, and on the Department of Health and Human Services transition team for President Bill Clinton in 1992. That’s an extremely unique history. Can you tell me more about those jobs?
Bacon: My approach to government and the private sector is not different. You can do good and do well, but it’s harder in government because you can’t be as nimble.
I did my career in a different order than a lot of people. A lot of times people start in government and segue to the business sector. I was in business first. I am a businessperson, but I have a strong sense of public policy.
We can change people’s lives with good healthcare and good education. Jim Florio is very committed to those things, and we worked on them together. I put my businesses in a blind trust and went to work for him for three years.
There was never an easy day. We had a big agenda. On that agenda was healthcare reform, and we did that. I’m very proud a lot of those changes are still affecting people’s lives today.
Prior to going into government I built two seniors housing facilities, and I also had a consulting practice. Some of those relationships many years later allowed me to develop Brandywine.
I can see lots of common things between what I did in government and what I do in the private sector. While politics is now a spectator sport for me, I enjoy the dialogue about the Affordable Care Act.
I was there when Bill Clinton was working toward healthcare reform. I know how hard it was, and it wasn’t successful at that time. I’m very proud of the Affordable Care Act. But there’s so much more that needs to be done.
There is a lot more work to do in New Jersey and all over the country as far as access to care and keeping people out of acute care when they don’t need to be there.
When we look at our aging population and all the medical breakthroughs, we have to provide a vibrant array of choices
for people living longer — for both the taxpayers’ sake and for the industry.
Personalized environment necessary now for residents
SHB: You co-founded Brandywine in 1996. What are the biggest changes you’ve seen in seniors housing in the last 20 years as a CEO?
Bacon: The day of people being in a small studio with very structured meal times, then trivia and a movie after dinner are gone.
The Baby Boomers are becoming the buyers. It will be 15 years before we see them move in, but they are now the buyers for their parents. They are demanding very different things than before. We’re challenged as an industry to meet those demands.
They want a customized environment for their parents. Just because you’re 85 doesn’t mean you should only be limited to do certain things. Our residents are taking college classes. Several of our residents are in art classes, and we’ll have a big art exhibition in May.
We have a group of retired educators in one of our buildings. They wanted to still be involved in education, so they started a fundraiser for kids in the school district.
That’s what makes you get up in the morning — they feel like they still have work to do.
Seniors housing operators are going to expand their options for people of all interests, of all income levels. It’s entering a period of great vibrancy.
We do so many things you wouldn’t think of doing 20 years ago in senior living. Our goal is that when people drive past our building, they proudly say, “That’s my mom’s house.” It’s not a facility. It’s where mom lives.
SHB: What’s something people in the seniors housing industry would be surprised to know?
Bacon: A lot of people know this, but not everyone until they read this article. I am afraid to fly. So, before I get on the plane I urge people to just say hello and don’t try to have a conversation with me.