Aegis Living is set to pilot its own staffing agency in a move aimed at saving millions of dollars in workforce expenses and potentially creating a new business line down the road.
The Bellevue, Washington-based operator in January plans to launch the new agency in Seattle, where it has close to 30 communities. Aegis expects to pilot the new agency, called Aegis Staffing, for a period of about 12 to 18 months. The agency will exist as a separate entity from Aegis, with its own staffing software and management.
While the initial goal will be to help with staffing at only Aegis communities in Seattle, CEO Dwayne Clark believes there are opportunities to expand the service to other regions and potentially even other senior living companies down the road.
“The [staffing] philosophy that we’ve used for years and years and years is going out the window,” Clark told Senior Housing News.
That usual philosophy entails hiring full-time workers at wage rates that are competitive for their markets, with two days off per week, with “some perks and bonuses and benefits.” But workers’ expectations and their priorities related to work-life balance have shifted over the last 18 months, Clark observed.
In 2021, Clark estimates that Aegis will end up spending around $10 million to $11 million in agency staffing. But with an in-house staffing agency, he sees a chance to save money on workforce while creating a new revenue stream by leveraging Aegis’ reputation as a quality senior living company.
The decision to launch a staffing agency comes amid intense staffing headwinds for senior living operators across the country. Conditions are such that Clark said, in his 36 years in the industry, he has “never seen anything like it” — although hiring at Aegis has picked up in recent months, he added.
Aegis has made headway whittling down its number of open positions in 2021. Over the summer, the operator was facing 450 vacant positions, but as of today, that number is about 250.
More generally, Aegis is making good headway on regaining the occupancy lost in 2020 and last year. At the outset of the pandemic, Aegis dipped from an average occupancy of 93% to less than 82%. But by December — typically a slow month for move-ins — the company was already back to 88% average occupancy.
“What we have seen in the last four months is like the light switch flipped on, especially in the last two weeks,” Clark said. “We had a 1% surge in census just last week.”
This recent occupancy growth is particularly noteworthy given usual seasonal trends, of move-ins slowing around the holidays, he added.
Aegis’ new agency
Underpinning Aegis Staffing will be a centralized system to deploy workers where they are needed within Aegis’ portfolio.
Although Aegis already employs many seasoned caregivers, the company won’t draw from its own workforce to staff the agency. Instead, the company will look to recruit workers from existing staffing agencies and tap other alternative recruiting sources.
When recruiting workers from other staffing agencies, Aegis plans to leverage the fact that it is a large company with a stable balance sheet. When faced with a choice between working at Aegis Staffing or a typical mom-and-pop staffing agency, Clark believes “the answer is simple” and that workers will take the former.
The company will also look to recruit people from all walks of life, including recent refugees, retired military personnel and even older adults themselves. Clark gives an example of a stay-at-home parent. While they may not want to work swing shifts five days a week, they may be open to working two days a week while their kids are at school.
“That’s a workforce that we haven’t been exposed to,” Clark said.
While Aegis Staffing workers won’t get benefits like full-time employees in Aegis communities do, they will be paid at a higher hourly rate comparable to what other local agencies are paying for staff.
“You can afford to pay someone $24, $25, $26 an hour with no benefits, and they will be happy,” Clark added.
To prevent taking employees from other Aegis communities, the operator has mandated that prospective workers must have a break from the company — either three months or six months — before they can work at the staffing agency.
“What we don’t want to do is just shift our people over from working in our buildings, causing disruption,” Clark said.
Initially, Aegis Staffing will meet the operator’s own needs in Seattle, where Aegis has a large concentration of communities, with workers being kept to one location as much as possible. But down the road, Clark believes there will be opportunities to work with other senior living operators.
“It could be a $30 million, $40 million business pretty easily,” Clark said.
At a recent senior living industry conference in Santa Barbara, California, Clark asked other attendees about their experience using staffing agencies and got a range of responses, most complaining about poor training or a lack of sophistication. Once Clark mentioned Aegis was launching a staffing service that could be offered at a similar or even lower rate than other agencies, “they were all over it.”
“I don’t think they’re going to look at us from a competitive standpoint as much as a resource,” Clark said. “They’re going to look at their current situation and go, ‘Hey, this is not very good, and if you can solve this problem, that’s interesting.”
Staffing is just one challenge facing senior living operators at the moment, and Clark believes that providers must be open about sharing their challenges as well as their victories.
“I think that’s one of the pivots that we have to make as an industry, is to be very transparent, honest about the challenges we face, whether that’s in staffing, whether it’s supply chain issues, whether it’s, our occupancy has been low, and we’re trying to get it up,” he said. “You have to be transparent about that, because that’s the only way you win consumer confidence back.”
While the big challenge of the moment is staffing, the occupancy story is a brighter one for Aegis.
The company “is not back to normal,” but has seen “huge, huge traffic,” particularly in the two buildings that opened in the last six months. One of the communities — open for four months so far — is $2.5 million ahead of budget, while the other — open for six months — is $1.2 million ahead of budget, according to Clark.
Aegis’ senior living residents and their families are also more willing to pay additional community fees and higher rates than they were just two years ago, he has observed. This is a view shared by other industry executives, such as Brookdale Senior Living CEO (NYSE: BKD) Cindy Baier, who believes 2022 will be a year of rate and occupancy growth for the industry.
At the same time, the pandemic has muted new development and construction, which Clark believes will be a tailwind for further occupancy growth in the months ahead.
“I think there is going to be more demand, which is going to increase rates, community fees, therapy, everything,” Clark added. “And I think this is going to have a gigantic impact on the values, the cap rates and multiples of our industry.”
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