2Life Communities President and CEO Amy Schectman still remembers the tearful phone calls.
Desperate family members would phone Schectman crying, and relay an all-too-familiar problem: their loved ones earned slightly too much to qualify for true affordable senior housing, but not enough to afford living in market-rate communities.
In the senior living industry, this group is sometimes referred to as “the forgotten middle,” a moniker that refers to the vast and growing segment of middle-income older adults that will have trouble affording traditional senior living services in the years to come.
“I cry, too, because I wish I could make an exemption,” Schectman said.
Those tearful phone calls were one of the driving forces behind 2Life’s newest endeavor, Opus. The concept aims to reduce senior living rates for older adults through a mix of volunteerism, centralized locations and partnerships with other health and senior care providers. Though 2Life has traditionally looked to serve residents in the greater Boston area through true affordable senior housing, the faith-based nonprofit is branching into the middle market to meet that great and growing demand among older adults.
“I’m a deep believer, almost a zealot, for the concept that every older adult should live a full life of connection and purpose in a dynamic, supportive environment,” Schectman said during a recent appearance on the Senior Housing News podcast, Transform. “If you believe that, by right, every person should have that opportunity, then you know there’s a whole group that’s being denied it for no reason other than they didn’t accumulate wealth.”
On how 2Life has fared during the pandemic:
I’m extremely proud of how we’re doing.
We love our folks, and we have every duty to protect them. During the first wave — and I would say, the most significant wave, because we’re almost all vaccinated now — we managed to keep the infection rate at all of our communities to 4.6%, compared to 8.5% for Massachusetts. And in the assisted living and nursing home communities [in our state], it was more like 47%. So, we kept that rate down. We lost fewer than 1%, which — given Covid and how distinctly it really attacked older adults, and that a third of our folks are between the ages of 85 and 105 — I think we did really well.
The minute Covid started, we made a decision that we would never look back and regret that there was anything we could have done but didn’t do because of money or time or energy. So, that fell into two basic categories.
One is doing everything to allow folks to remain in their apartments and feel safe, and to join them as our partners. We had a community heroes program where we asked our residents to be community heroes and partner with us to keep the infection out of the building.
The second category was — if you remember … we were getting bombarded with conflicting information, confusing information, terrifying information — and one of the roles we played was to sort it out and help people understand what was relevant and what wasn’t relevant, and to stay in touch with everyone.
The first week Covid hit, we had our staff call every single person: ‘Where are you? What do you need? What are you worried about? How often would you like us to check in with you?’ We had a master spreadsheet, no one was lost, everyone knew that we were there with them.
We also hired our own epidemiologist, because that was the best way we could help sort out all the confusing and conflicting information.
We provided free meals. We are an affordable housing organization, and the median household income in our portfolio is $11,078 a year. We rely a lot on government subsidies. As part of our normal programming, food isn’t part of the day-to-day, groceries are not part of the day-to-day, but we went to a plan where we provided free meals and free groceries delivered to your door.
We did laundry service for everyone so no one had to go down to the laundry rooms. We made a deal with the post office, and we could sort and disinfect mail and packages delivered to the door.
So, it was a very comprehensive set of things that we did. Together, we did it, and we’re still doing it.
On hitting the balance between mission and margin in the age of Covid:
Mission is everything. Mission drives every single decision we make. We are deeply driven by the fact that our older adults are to be treasured. The ancient Hebrew word, zaken, you can translate it either way as old or wise, it’s the same thing. And then you also think about the word kavod, which is honor. The Torah doesn’t say, ‘Take care of your mom and dad,’ it says, ‘Honor thy mother and father.’ We see that as a collective enterprise, so that drives everything we do, every decision we make.
Of course, we have a responsibility to repair the world, it’s called tikkun olam. And the inequities in our society, the vast differences between seniors of different income levels and the amount of wealth that’s in one part of the community but not at all in the other part of the community — it’s up to us to close that gap. Mission and margin … it’s not a balance, it’s the same thing. We can’t do what we need to do unless we have a way to generate the resources and steward those resources carefully, and are very forward-thinking.
For example, when I came to 2Life, just 11 years ago, we had no money in the bank. There were no reserves. We operated day-to-day, and if the government was late on its rent, because a lot of our money is from the government, we couldn’t pay our bills. And that felt like not a great way to operate.
People used to say, ‘What keeps you up at night?’ That kept me up at night. So, we set on a path to develop a rainy day fund. And it took us about eight or nine years, and we had to carefully use various strategies. But luckily, by the time Covid hit, we had a rainy day fund put aside for emergencies. Now, we have to build that back up, because we used a lot of it. In fact, we took about a $5 million hit from 2020 with Covid: $3.5 million in direct costs, and then $1.5 million in lost revenue.
There was a period of about six, eight months that we decided not to fill any vacant units. We didn’t want moving vans and people we didn’t control in the buildings. So, we’re building back and we’re strategically seeking out resources.
On the need for middle-market senior housing:
Our core portfolio is this deeply subsidized portfolio that started in 1965.
What started to happen after I took this job is that I would get calls [from mostly adult daughters]. They’re crying, and they say, ‘My mom applied for Golda Meir House or Coleman House or Brown House, and she earns $50 a month too much. And everyone in your office is saying we can’t help you. You have to be able to help us. Can’t you make an exemption?’ And I cry, too, because I wish I could make an exemption. It feels terrible to [say that to] someone who earns a little bit too much, when I know there’s nothing in the market that can serve them.
I’m a deep believer, almost a zealot, for the concept that every older adult should live a full life of connection and purpose in a dynamic, supportive environment. We call that aging in community. And if you believe that, by right, every person should have that opportunity, then you know there’s a whole group that’s being denied it for no reason other than they didn’t accumulate wealth. In the greater Boston area, it’s a lot of wealth. It’s not a market gap, it’s a market abyss.
It started making me crazy that I couldn’t help them. So we said, ‘Okay, so how do we do this?’
We’re not going to do it and look at housing alone. We believe if someone comes to us, we’re going to take care of them. And if you think about a middle-income person, what ends up undoing them is when they start to need a little bit of care. They can’t purchase it in a single-family home in 15-minute increments or half-hour increments. This happened with my own mother. She needed a little bit of help in the morning, a little bit help at night, but I had to hire eight hours a day and savings dwindled.
If you think about what a middle-income person is going to need for their whole life, you get into this dilemma. They can’t pay enough for you to run a community that provides all the supports and services that take them through their whole life. You can’t charge enough, you can’t get government money and you can’t really rely on philanthropy. In the rest of our portfolio, we get a lot of government rent and we get a lot of philanthropy. So, you can’t bring in the revenue and you can’t reduce the expenses, and the expenses are more than the revenue.
We came up with three basic concepts that we think break through.
The first is volunteerism, the second is location and the third is partnerships.
Everyone who comes to Opus will volunteer in a meaningful way — enough that we actually reduce staffing and overhead costs.
The second is that we’re locating … near other things. We’re not trying to build self-enclosed communities where everything happens on the site. You will go out to go grab dinner, or you’ll go out to a movie.
And then the third is that we have partnerships. For example, I mentioned this real dilemma about home care, so we’re going to have it on site. We can’t pay for it for you, we can’t subsidize it, but what we can do is make sure you can hire only what you need. So, your own money will go much farther.
Among those three things, we think we finally broke through the gap, particularly in the Boston area where land is expensive and construction is expensive.
We’re in permitting for Opus now, and our hope is that we’ll come out where we started, which is 174 apartments. It will be adjacent to Coleman House, which is one of our affordable communities. Those two buildings will be next to each other, and in-between will be a two-story, all-glass community center with doors from both sides. So it will provide a kind of energetic, wonderful programming visible to each community and accessible to each community.
We’re trying to break even. We are not trying to have any additional funds come out of this. Once we do the first one, and we learn more, will we decide should [there] be a little bit of margin to help fund innovation or fund the next one? Maybe. But right now, our goal is quite simply break even and serve people who don’t have the opportunity to age in community. That’s all that matters to us.
On hitting middle-market rates:
What drives the way we’re thinking about the financing is that we need to keep the monthly fee, the rent, as low as possible. As we’ve done focus groups and as people have called me crying on the phone, we hear again and again what people are frightened of is an ongoing obligation and what happens when they can’t meet that. Everything has been driven by keeping monthly rent way below market. And I don’t even mean below-market for CCRCs and fancy things, I mean below-market for rental housing of this quality.
What that leads you to is a community-share component, which is an upfront [fee], and we’re gearing that to be about 50% or so of the median single-family home price in the market areas, so that when people sell their home, they can retain that extra amount that will allow them … to have money available for their own needs as as they live with us for their whole lives.
The community share concept came from our obsession with keeping those monthly rents low. And if you want to keep them low, what does that mean? You need low debt and you need a low mortgage amount, because if you have a big debt, then you’ve got to cover that debt and the debt coverage ratio has to be over one, and that makes it hard.
Our way of keeping the debt extremely low is to have people who come to us give us a community share from the proceeds of selling their home, and what we keep pays down construction debt, and [we] make sure that the long-term debt — the mortgage, if you will — is very low, and therefore creates very low demand on the monthly rent.
On Opus’ volunteerism model:
We’re looking at how to make community life rich without having extraordinary or exorbitant staffing costs.
We tested this in focus groups. We offered people A, B, or C: A would be, you’re required to volunteer two hours a month; B was five hours a month; and C was two hours a week. Eighty-three percent chose two hours a week. I said, ‘Okay, guys, what’s going on? Why aren’t you choosing the least amount and [choosing] the most?’
One gentleman, I still remember him and I get choked up. He said, ‘My wife died two years ago. I’m lonely, and I’m really shy. And I know you’re going to tell me again and again, I could sit down at any table, and people will welcome me. And I’m going to tell you again and again, I will never sit down at anybody’s table that I don’t know. But I was a librarian. So I’m going to work in the library as a volunteer, and people are going to come in, and then I’m going to say, what kind of books do you like, and then I’m going to make the best recommendations, and they’re going to love what I recommend, and they’re going to come back again.’
It’s that kind of volunteerism. Running the library, running the book groups. We undoubtedly, given that it’s a Boston area, will have former faculty members from the universities around here. Do they have connections with other faculty members? You bet they do. So do I have to organize the lifelong lecture series? No, I don’t. Could they do it? Yep.
Here’s another thing, we’re not going to have a cafeteria dining room where you eat every night because people don’t want that. And we don’t want to have that as part of the expectations, financially.
We live in a rich area of wonderful kinds of restaurants. I started calling restaurants and said, if we gave you a certain number of hours notice and had 25 or 30 [orders], could you deliver meals for maybe $14 or $15 a person? That’s affordable for the middle, so can someone organize that. [For example,] tonight is Chinese takeout, who wants in, here’s the five menu choices. Or, tonight is Italian, or maybe someone is going to organize a potluck or someone else is going to organize a cocktail hour or dessert.
We’re not going to have an activities director, we are going to have a volunteer coordinator who will support you. So if you want to organize something, it needs five volunteers. And if you’re a little daunted by that, well, someone can help you do that.
So, volunteerism, it’s turning out not to be a turn-off. Au contraire, it’s turning out to be something that attracts people, which is really groovy when you think about it.
On partnerships with other health and senior care providers:
That is somewhat still a work in progress, because we’re negotiating with a lot of partners.
So, there is health care, and there’s home care, and I think both are really important concepts.
The home care in some ways is a little bit easier, because what you need is good quality, good support for the people who do it, and then it just needs to be affordable. The affordability for us is really going to be driven by small increments of care. We’re not asking to pay people less, we’re not asking to charge less, we’re asking to break it down. So, we will guarantee hours, and therefore the home care agency can put someone on the site and share amongst our different residents.
Health care is a whole other ball of wax. One of my frustrations in the world is that we have a health care silo and we have a housing silo, and the most effective possible platform for delivering quality health care is housing. And yet, nary the twain shall meet in terms of regulatory structure and funding structure.
So we’re working and will continue to work on finding health insurance partners who get it [and understand] the benefit to an insured of having them aging in community, not being lonely, not being alone alone, not wondering where to go and being afraid of the next steps.
If you could offer an insurance company a group of people that never smoked and weren’t obese, they would say, ‘Give me that.’ We’re trying to find that kind of partnership, and we will, because it’s in everybody’s self-interest to merge the way we think about housing and health care in a preventative way.
On the affordable side, we’re in the middle of construction on one and almost in construction on another site where we’re having a PACE center. And they’re working with us to serve our existing population, which is fantastic. They’re also interested in partnering with us to think more broadly about what happens to the people who earn a little bit too much to qualify for PACE, but not enough to get the kind of the wraparound, progressive, preventative approach that you deserve.
Medicare Advantage, of course, got a lot of flexibility in the last set of improvements and by Congress. It’s a hopeful marriage that we’re going to make — and stay tuned.
On the future of affordable and middle-market senior housing:
The older adult population is growing pretty dramatically, and will continue to grow for quite a while. We know that this generation of baby boomers is inclined to want to make the world a better place and have grown up feeling they have agency.
We also know that the wealth gap is growing, that the top 5% is accumulating more and more, and the rest of us less and less. Homelessness amongst older adults is actually rising and housing costs are the biggest factor in older adult poverty. In Massachusetts, we ranked 50 out of 50 states in elder economic security, simply because of our high housing costs.
So, all of those things are happening, and Covid has had a profound impact on all of us. I think when the dust settles, people will see what happened to people who lived in good, well-run senior communities driven by loving kindness above all else, that [those] folks did better. I think that loneliness — that was endemic anyway — grew during the pandemic for people who didn’t [have those supports].
[There was also] the fear factor of how scary it was to not even know where to turn, and when [non-residents] talked to friends who live with us, they knew exactly where to turn, that there was a 24/7 seven phone number they could call and get answers. I think it’s going to make community living, aging in community, more popular than ever.
And that is going to drive the need for, one, much more affordable housing. I mean, our current waiting list is 4,842 households. At our current rate of turnover, that would take us 37 years to clear. That’s unconscionable, and it’s not going to get better, it’s going to get worse in terms of need, which is why we’re on such an aggressive campaign to build more affordable housing.
And that middle is going to continue to have nothing viable, no place that serves them. I’m hoping they’ll get politically activated and demand it, as they should. So, I think we’re in for some interesting times. And I hope we’re part of it.
Opus will, the first time out, only close the market gap for people who own their own homes. We don’t yet have a method to get to people who didn’t accumulate savings through a home or other ways. So, ultimately, we’re going to use this to figure out how to meet the entire market failure. And we’re going to continue to drive the affordable housing industry with our other partners to be as responsive with services and programs and community life as we are. That takes some funding, changes at the federal, state, and local levels. We believe aging in community is the gold standard, and therefore ought to be a right of every elder adult. And so, we are very active in the advocacy world.
We won’t stop until, by right, every older adult has the opportunity to age in community, with a laser sharp focus on affordability.
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