Seniors Housing Business

AUG-SEP 2018

Seniors Housing Business is the magazine that helps you navigate the evolution of the seniors housing industry.

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70 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2018 in Healthcare Lending The expertise and products to meet your needs: • Tax-exempt Bond financing • Working capital lines of credit • Bridge-to-HUD lending • Taxable term loans • Construction loans • Equipment leases • A/R lines of credit Kim McMahon Mike Taylor Head of Healthcare Lending Michael Mason Diana Poole Donald Woods Gerri Ann Bagdonas Rachel Nelson Ken Sinha Get connected. Learn more at FirstMidwest.com/commhealthcare design, entitlements, finance struc- ture and ultimately the marketing, sales and operations. Company No. 3 is CPS, a national procurement company. It's unique in that it has as many non-LCS clients as LCS communi- ties as clients. Our whole goal of CPS is to build scale and develop group-purchasing services for ourselves as well as some of our competition. We have the infra- structure, we have the specialists, we negotiate contracts. The more volume we have, the more we can offer and extend that value industry-wide. The fourth company is an insur- ance captive (meaning an insur- ance company wholly owned by the insured members) called Hexa- gon. We partnered with AIG, and the LCS portfolio is the largest senior living portfolio insured by AIG. This is to provide an insur- ance advantage where we share in the risk. For us, Life Care Ser- vices will basically take the first layers of risk as it relates to work- ers' compensation and liability. It aligns the interest of all stakehold- ers. It reinforces the importance of best practices, safe work environ- ments. We have over 100 commu- nities in that program. The fifth company is our fastest growing and most progressive, LCS Real Estate headed by David Laffey. We just closed on a $300 million fund and we have $2 bil- lion of assets under management. We are continuing to deploy capi- tal for new development as well as acquisitions that will be under the LCS ownership umbrella. The last company is Health at Home. That's a service-add in some of our markets where we provide Medicare and private-pay home healthcare services for resi- dents in communities managed by Life Care Services. Between the six companies, we serve 33,000-plus seniors and rep- resent about 145 communities across 33 states. SHB: That's a wide umbrella. Nelson: It's a wide umbrella, but the companies all complement each other. The strategy is that each one of these companies can bring value to each community. I'm always asked, "Will there be a seventh company?" It's likely. I don't know what it will be today, but we always look at opportuni- ties to add value, synergies and ser- vice to what we do. If there's one that fits and there's a need, there's likely to be a seventh company. Steering a heavy ship SHB: With a company this large in an industry this dynamic, how do you adjust to the ever-changing landscape while maintaining that scale? Nelson: We are a national net- work, but served via a regional platform. We have nine regional offices across the country. We really try to remain nimble and provide hands-on service and be present in the communities we serve. You look at those nine loca- tions and draw a radius — it's at most a few hours' drive to any of our communities. The other key part is increased standardization. With the regula- tory environment as it is, and the service expectations only increas- ing as we expand, there is an increased level of standardization. It's very important to us, though, that this is not franchising. You have to have core practices, while maintaining the regional feel that allows an entrepreneurial spirit to serve that local market. That's been very successful for us. This industry is always chang- ing. You have to recognize that and build the infrastructure to support working through the changes that we're always facing each and every day. SHB: What do you think is the greatest challenge facing seniors housing today? Nelson: Most people answer that question by saying the work- force is our greatest challenge, and I don't discount it. It's not only hir- ing and recruiting, but also retain- ing employees. There are a lot of drivers behind that such as immi- gration law. In addition to that, though, are supply challenges. We have to manage the abundance of supply with the need, which is driving pricing and occupancy compres- sion across our space. Going out on a limb a bit, I might also suggest one of the biggest chal- lenges is identifying the product of the future. That's where we spend a lot of our time. What's being built today is very nice, and there are a lot of providers offering some great senior living options. But is that going to be the product of the future with baby boomers? Figuring that out might be one of the greatest challenges in under- The Delaney at Georgetown Village was the first owned rental independent living, assisted living and memory care community prototype for the company. Developed by LCS Development, the 207-unit community opened in 2016.

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