Aegis Living President: We’re Revamping Memory Care, Growing New Staffing, Development Agencies

Aegis Living had a busy 2022, but if the company’s plans are any indication, 2023 could be even busier.

In the last year, the Bellevue, Washington-based senior living operator has piloted a new memory care program called Symphony, launched a staffing agency called Kalon Care and created a new development services company.

And it’s not done there, according to President Sandra Preyal, who joined the operator at the beginning of 2022 and is leading the charge on several initiatives. On tap for the year ahead is even more evolution in memory care, a deepening focus on staffing agency work and potential exploration of new service lines, such as residential housing development consulting.

“I don’t have a vision of where senior living is going to be in five years,” she told Senior Housing News in a recent interview. “But I do have an aspiration: I wish it was less needs-based and more-desire based. I wish it was a place where people would say, ‘I want to be in an Aegis community when I start to slow down.’ I wish we were not a place where families go when they’re overwhelmed.”

Read on for a recent Q&A with Preyale covering topics including the year ahead, what Aegis Living is working on for 2023 and how the company is growing beyond its 36-community senior living portfolio:

SHN: You ascended to the president role at Aegis earlier this year. How has 2022 gone for you? Any highlights you can share?

Preyale: It’s been a sobering and humbling time to step into this role.

The thing that I’m most proud of has been what we’ve done with people. Very few leaders have had the opportunity to do an almost full rebuild of their senior leadership teams coming into their role, and that was the case for me. It’s been a labor of love to get it right over the last 10 months.

I have now a great mix of leaders who have either been promoted from within or have come from external talent. I didn’t have a CMO. I didn’t have a head of clinical for several months. And I was juggling getting into my own role. So all of that was really a great experience, because it allowed us to become a team together. And, you know, I’m very fortunate to have a team that is really passionate and excited about what we’re doing.

At the same time, what we’ve done at Aegis through the last two-and-a-half years is realize that there’s a really important focus and a need for focus on [communities and people working in] the field. And I’ve put significant emphasis on investment in supporting the field, both in terms of resources and in reinforced officer leadership at all levels, care, such as marketing and culinary. That may surprise you at a time where other other businesses were hunkering down and not looking necessarily to invest in talent.

We have probably been the safest place for team members and residents through Covid. And we’ve demonstrated that through the number of cases we’ve had. We have had a few people who have passed, but it’s significantly lower. What it’s allowed us to do is learn to pivot.

We’ve had to face probably the biggest headwinds that any generation has had to face in terms of the economy and how people are looking at how work fits into their overall purpose. Losing people around you or seeing people around you suffer, each of those things has put a lot of pressure on leadership. What leaders have been asked to do in the past is have confidence, certainty and control. And those three things have been significantly challenged over the course of the last two years. Coming into that as president of this company, it’s been humbling for me.

I’m asking how I can support the team in bringing clarity, focus and purpose to what we’re doing, and going back to more tangible things. We have, over the last 10 months, put a lot of focus on reinvigorating what we call the ‘Aegis secret sauce,’ which is the culture of the company. It’s our 25th anniversary this year, and we have had 27 celebrations in our communities to celebrate. We’ve created fun committees; we’ve created a big event called Aegis-palooza,which was bringing our general managers together for the first time in two years and having them work on their mind, body and spirit in addition to having a business meeting. And we’re hosting a winter fest, which is a big party here at the home office, for our employees to celebrate Christmas with their families.

We also created the “Aegis games,” which is sort of based on the formula of the Olympic Games, where our residents, across all of our communities will be participating. And that’s going to be launched at the beginning of next year.

Like everybody, the cost of doing business has increased, and while our revenue has been increasing solidly; managing expenses has been a focus point. And the biggest leverage in optimizing our expenses has been looking at how we address headcount and labor in general. When I came into the role, in January, we I think had about 350 open positions across the organization. We now probably have about less than 100 open positions. So we’ve significantly filled our needs in the organization.

Like many of our competitors, we were having to utilize agency staffing. We decided that independent of the cost impact of agency staffing, the biggest impact is quality. And we decided that we needed to own our agency ourselves, allowing us to control the quality of the people we’re bringing in. We have created our own agency called Kalon Care. We currently have about 15 people who are part of that program. We’re doing it in a very thoughtful way because we want to ensure that we have people who are certified. What we’re asking for in terms of qualifications are probably more significant than what we were receiving when we were utilizing external agencies.

Why start a staffing agency?

What has happened over the last two and a half years is that people want to work differently. And there’s a gig economy that we weren’t reaching through our classical hiring approach. As an industry, we look for people who are ready to do a certain amount of shifts. If they don’t want to do those shifts, we don’t hire them. That has been sort of the general practice with.

So, we weren’t reaching that gig economy who wanted to do maybe one shift a week or two shifts a week, or three shifts a month. And that has become more prevalent. And so reaching that gig economy can only happen through something that is more temporary in nature.

And of course, if we can control … the margin of an external agency, well, that’s even better. So the original goal was to provide additional resources to our teams in case of need, at a time when we were needing more resources because we weren’t finding permanent staff and the level we needed. And over time, we believe that this can also represent a revenue stream for us through the one-on-one care that is required in certain cases for our residents. We even potentially see this as something that we could provide to our competitors. But that is a much longer-term goal.

We’ve seen our agency needs diminish very significantly. We’ve probably reduced by two thirds our spending on agency over the last year, it’s been very progressive. We would never sacrifice providing care to our residents, so we’ve had to do it as a necessity, but it’s been decreasing.

It has been a huge rock in our shoes, but also something that’s allowed us ultimately to grow and become better as an organization. In many cases, we weren’t staffing the way we needed, we were overstaffing. And we’re seeing that we’re becoming far more disciplined in how we staff and are providing a better skillset to our communities. That has been a secondary benefit to the pain which we’ve experienced in the last year and a half or two years.

Aegis launched a development company earlier this year. How is that going?

We have a really solid team. We have very talented project lead managers and interior designers who have a real understanding of architecture and we want to continue to utilize them even when there are periods of activity that may not necessarily require the size of that team.

So we’re looking at other revenue streams for that business. And there are a number of actually pretty exciting things that are starting. Aegis won’t grow internationally, but we could provide development services for clients where senior living is still nascent; and to those who would like to learn more about how to develop that product but don’t have the skills to do it.

Residential housing is probably not our first consideration, but there might be an opportunity that would make sense. And so we’re currently still building the model and what that can look like. We will be their first client, and that will never change. But they will develop other revenue streams and those other revenue streams will be in senior living and potentially in residential housing.

What big initiatives do you have planned for 2023?

The first one is around one of the key areas of focus as an organization that we’re very excited about and it’s called Symphony.

I’ve been intrigued as I’ve been in my role in understanding how our residents and their families perceive the value of what we’re doing. I come from a very different space, so I’m not a I’m not a veteran in this universe. My last role was with Amazon, and before that I was in luxury retail. If you’re selling a handbag for $2,000 and it’s a leather handbag, it can have beautiful design features but you could probably buy a leather handbag that’s equally as functional for $150. The reason somebody is buying that is because they perceive real value, through the brand, the aesthetic, through the quality of all the details and the experience they get as they’re purchasing that handbag and what it means to them when they buy it.

When I came into this space, there are a number of things that I feel I brought with me from that world. Through Covid, unfortunately, our industry has suffered from a perception of senior living being very much an antiquated place where people go to die. And we have a lot to do to modify that perception of the experience. Symphony for us is a focus on memory care, and how we can really elevate memory care across all of the different touch points. From when our residents wake up in the morning to when they go to sleep in the evening and throughout the day, there is a full program that involves the whole community in terms of activities, experiences and wellness. It touches every single touchpoint, from health services to culinary and life enrichment.

For me, this is something that is quite groundbreaking in terms of what that can look like. We’re basing some of it on research on how people wake up in the morning and wellness techniques. Even how you socialize while you’re eating can impact your morning flow. The program also goes into gratitude, dining, hydration experiences, musical journeys, activities that are AI-focused with a lot of AI software, and then how you wind down using aromatherapy, comfort touch, and evening wind-down rituals.

This is something that should continue to enhance the value people and families perceive in what we offer. Clearly, memory care is expensive. And there should be a real perception of not just value for money, but that the experience is something that is enhancing your mom’s life, your dad’s life.

I was in one of our communities recently for the 25th anniversary celebration. And I met one of our residents who said to me, “I don’t know why you don’t change your name. I think you should call it Ageless Living. Because since I’ve been here, I feel 20 years younger.” And I thought what an incredible tribute to the work that our teams are doing.

What does all of this lead to as a company? Where do you think Aegis is headed and how are you getting there?

One thing that has been a win from a financial perspective in the organization — and a tribute to the confidence that our banks and investors can have — is that we managed to refinance two of our communities this year: Mercer Island in August, and we’re just closing on Newcastle at the end of the year. When we refinance a building, we’re demonstrating the increased value of that building through the operation. And in essence, we have received through the refinance of Mercer Island 172% value over cost, which has allowed us to redistribute double-digit million equity back to our investors, who are both external and Aegis.

Newcastle will probably be similar to that. So it’ll be around 160% value over cost. And being able to do that in the current environment is a real testament, I believe, to the work that Aegis has done over the last 25 years; and to building trust and demonstrating on an ongoing basis that what we do enhances value from a financial perspective.

We have two communities that opened last year, Aegis Living Kirkland Waterfront and Aegis Living Bellevue Overlake. They opened, really, in the height of the pandemic. Overlake was in April, Waterfront was in August. Waterfront is currently at 82% of census, which is historically fast. And it’s 106 apartments. The community fees that we have received at Waterfront have also been historically high.

So, again, when you have a really great location and a beautiful building and a great brand, you really are able to continue to demonstrate record results, even at a time when the industry is suffering. We opened this year Aegis Living Greenwood and Aegis Living Lake Union. Greenwood is currently at 30% full and that’s you know, a little bit over 100 days in. So we’re showing robust interest and growth, and Lake Union is trending somewhat similar.

Lake Union is our first real foray into green building. And it’s not our last, because we do have a second one planned over the next couple of years. We’re pumped, we have another six in the works. So Aegis Living Laurelhurst is going to be our biggest-ever building. It’s 136 apartments that are currently being built. The opening is in the first quarter of 2024.

We have two opening in 2024, Laurelhurst and Aegis Living Ballard; we have Aegis Living San Rafael, which is opening in the first quarter of 2024. It’s our first build in California. And then we have two others in the works for the following year, Aegis Living Sammamish and Aegis Living West Seattle, which is our second green building.

We’ve had one to two buildings open a year, and we’re continuing to trend that way. We’re still obviously really interested to look at other opportunities. We’re significantly exploring the Bay Area, and we do believe there’s still opportunity in Washington. So I think we’re on the same trend. We’re fortunate we have a very healthy cash flow. And that we have investors who believe in us.

We are a West Coast company. I think we have 35% of market share in Washington, and we’ll continue to grow on the West Coast. And we’ll continue to be premium and high-end with a lot of focus on high acuity.

I don’t have a vision of where senior living is going to be in five years, but I do have an aspiration. I wish it was less needs-based and more-desire based. I wish it was a place where people would say, ‘I want to be in an Aegis community when I start to slow down.’ I wish we were not a place where families go when they’re overwhelmed.

Aegis as a company will want to do what it does best, which is, ‘Dare to care.’ It is our slogan — that is what we say internally. It’s a militant statement, because it requires courage, it requires really hard work. It requires not just being focused on our residents, but deeply focused on our employees, our team members. If you really dare to care about your employees authentically, and sincerely believe that they have value and you demonstrate it on an ongoing basis, I think that will allow us to be the company that people want to work for. And if we have that kind of culture then we will continue to be successful.

What is your outlook for 2023?

I’m actually quite optimistic. As I’m looking at trends, currently they’re only progressing in the right direction. But I do believe we have to do things quite differently.

We can no longer believe that doing what we did, even three years ago, is enough to attract people and retain [workers]. We’re going to be reinvigorating something we had started to do just before the pandemic. We created our own CNA school, and we got certified. And it allowed us to hire people and say, ‘We will certify you and you’ll have a much higher chance of being certified faster through Aegis than through an external school.’

When we put the program in place, it was an experiment in the beginning. Coming from Amazon, experimentation was something that was kind of in the DNA of the company. So, we did it, we found we lost no one through the program. And when you look at the general turnover of people in the first three or six months in our space — two years later, we still have those employees who got certified through the CNA academy.

It’s an investment. We opened a space in one of our communities, Aegis Living Queen Anne Rodgers Park, and it was a long process to get the certification from Washington. That’s just one of the examples of the ways I think we have to innovate if we want to attract people.

I think there will always be people who will want to do something that’s purposeful, but we have to do a far better job of demonstrating to the demographic that’s evolving in terms of job candidates for our space. We need to show why it is a place to be, and why it’s not just a place you go if you can’t get a job somewhere else.

I think there are a lot of things that we need to invent, but that’s exciting.

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