By Jack Cumming

As we enter 2023, we face the same uncertainties with which we left 2022. No surprise there. The economic outlook for senior housing, senior services generally, and the economy at large is hard to foresee.

We have lingering inflation, dramatically higher interest rates, continuing low unemployment, and global political uncertainty. All those factors impact the choices we face, whether you’re the CEO of a mega-corporation or an entry-level caregiver, housekeeper, or management trainee.

Nationwide Excellence

Until most recently, there was widespread talk of mergers and consolidations among senior living enterprises. Most recently, perhaps in the holiday spirit, the pundits have been giving optimistic reports of occupancy and industry recovery from the pandemic. Of course, readers like good news, and pundits need readers.

My sense is that the industry can benefit greatly from consolidation, so my judgment would be that wise operators are seeking partnerships, joint ventures, and cooperation as a path toward piloting and building more close-knit consolidations. There will always be standalone boutique providers, but the industry can benefit from nationwide brand awareness like that in the hotel industry. Nationwide brands require large, trusted, high-quality providers.

Size Matters

Aside from positive public awareness, consolidation leads to advantages like those that benefit all large organizations. Benefiting from these “advantages,” though, requires more than just overcoming the challenges of mergers and consolidation.

Challenges include managing disparate cultures, systems, pricing, and more. My preference is to let merged entities keep their culture and only gently over the course of time, in the natural progression, evolve a shared culture.

It can work the other way around as well. A nationwide organization with a unified culture can allow subcultures to emerge. Marriott, for instance, has spawned multiple brands to meet varying public and cultural wishes. Consolidation need not be forced; it’s best when facilitated without coercion.

Benefits

Still, lest we get ahead of our story, let’s look at the advantages of consolidation, which are the same as those of large organizations in general. These “advantages” are separate from the challenges of achieving them.

  1. Large organizations can achieve economies of scale. That’s obvious, though it won’t materialize if bloat and deadwood are allowed to encrust the dynamism.
  2. Large organizations can invest in innovation and research, becoming less dependent on the sales pitches of vendors presenting the latest shiny object, often wrapped in a veneer of artificial intelligence.
  3. Large organizations can devise uniform structures and standards so that quality and consumer experiences are improved and predictable.
  4. Large organizations can achieve national brand awareness, which provides a major marketing edge if brand benefits are backed up by customers’ experiences, e.g., say, Ritz-Carlton vs. Motel 6.
  5. Large organizations can afford the expertise needed to lead the trend toward greater automation — admin or task-oriented — to reduce labor cost per dollar of revenue.
  6. Most importantly, large organizations can better tell their story to the public and can thus better build the trust that is essential, especially for an industry dedicated to improving how people live.

The list is long. The potential is vast. Reputation reduces customer acquisition costs. My own dream would be a trusted nationwide enterprise or more than one as is the case with hotels. It could have high standards, a positive brand reputation, cost and value advantages, and more. It might have been Brookdale, but that now seems unlikely. Those mission-driven nonprofits which are open to change, including reconsidering some of their most cherished imaginings, are best situated to seize the opportunity.

Opportunity Beckons

The opportunity to come together for the greater good can lift service to customers and nation to a higher level. As difficult as change can be, the new generation of customers coming into residence is likely to expect no less and even to take it for granted.

Picture a nationwide, trusted housing brand, suitable for those who are aging, but open to all who want the convenience and carefree existence of congregate housing with easy meals and socializing for those who want it.

Back to the Future

Recall the days of the family farm with grandma taking care of meals and happy times around the dinner table. Everyone knew their tasks and their chores. Today’s congregate living can bring back that happy feeling, that closeness, that knowing that you belong.

Life on the family farm was a life of purpose from childhood’s earliest chores to life’s final moments. The cycle of life was a natural order. New model housing, grounded in the understandings of senior living, can restore that natural order for our divided, urban, industrial, digital world.