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After C-Suite Overhaul, Lifespace Turns to Growth and Stabilizing Distressed CCRCs

Lifespace Communities CEO Jesse Jantzen had his work cut out for him when he joined the company in April 2020.

He joined a nonprofit provider that entered into an affiliation with Texas-based Senior Quality Lifestyles Corporation (SQLC) in May 2019 — a merger that took a year in negotiations to complete. The SQLC affiliation brought with it two communities that were underperforming — one of them filed for bankruptcy protection.

Lifespace also had been without a permanent CEO for over a year; Jantzen’s predecessor, Sloan Bentley, departed in February 2019.

Complicating matters further, Jantzen assumed his new role one month into the coronavirus pandemic, and it would be five weeks before he finally met his team in person.

The past year has been a trial by fire, he sold Senior Housing News.

“It was really difficult to get fully plugged in and be able to feel like I’m contributing meaningfully, doing everything remotely,” he said.

Eventually, Jantzen found his footing. Lifespace completely overhauled its executive leadership while responding to the pandemic.The newly reconstituted C-suite has gelled, the clinical teams in Lifespace’s campuses have driven positive outcomes for residents and staff through the pandemic’s duration, and the central office evolved into a support center for the communities.

With vaccinations building confidence among prospects, and industry leaders hopeful that a bounceback in operations and occupancy is in sight, Lifespace is laying the groundwork for a strategic plan for growth, with expansion projects underway on several of its campuses.

But there are still areas of concern: in mid-March, the bond rating on another of its Texas campuses was downgraded.

Lifespace’s portfolio includes 15 communities in eight states totaling 5,179 units. The provider ranks ninth on the list of the 200 largest nonprofit operators compiled by financial services firm Ziegler and industry association LeadingAge. In 2019, Lifespace brought in about $265 million in cash operating revenue, and its margin of about $4 million was up from about $2 million a year prior.

Executive leadership overhaul

Jantzen’s resume includes a stint as president and CEO at Lutheran Life Communities from February 2018 to last April. Coincidentally, Sloan Bentley, his predecessor at Lifespace, succeeded him at the Arlington Heights, Illinois-based nonprofit provider last September. Jantzen also served as president and CEO at St. Louis-based Ascension Senior Living from March 2015 to September 2017.

His arrival heralded a flurry of moves intended to bolster Lifespace’s executive team.

Nick Harshfield was appointed CFO in May 2020, replacing Larry Smith, who delayed his retirement to serve as interim president and CEO in addition to his other responsibilities. Harshfield was most recently CFO at Johnston, Iowa-based provider WesleyLife, and also served in the same capacity at Ascension Senior Living, Exceptional Living Centers and Christian Care Communities. Harshfield and Jantzen worked together at Ascension.

Eddie Fenoglio was named COO in September 2020. His career includes 23 years at Brookdale Senior Living (NYSE: BKD) as a divisional president, and as a director of operations for Life Care Services, and he brings experience in large-scale acquisitions and turnarounds.

Lifespace also hired Kenneth Poinsette as its chief information officer in February 2021. He was most recently deputy CIO for Fulton County (Georgia) government and was vice president of end user services for hospitality conglomerate Wyndham Worldwide from 2012 to 2015.

Preceding Jantzen’s arrival, Lifespace hired Greg Sieman as chief revenue and communications officer. He arrived from Oak Street Health, where he was senior vice president of marketing. His resume also includes over four years as vice president of marketing for Vi Living.

And the provider is also set to announce a new chief people officer. Jantzen would not name the person, but acknowledged that the hire was recruited, like Poinsette, from outside the industry.

He believes the mix of industry veterans with professionals recruited from outside the industry will bring fresh perspectives to the myriad challenges Lifespace, and the industry at large, face.

“When we think about transforming the aging experience, it’s not going to be incremental change,” he said. “We’ve got to have some creative, fresh thinking, to escape gravity.”

Lifepsace also promoted from within. Dr. Sara Hamm was named chief clinical and public health officer last July. She joined the provider in 2015 as senior vice president of successful aging and health services, and Jantzen credits her with spearheading Lifespace’s Covid-19 response. Its protocols and clinical systems were derived from evidence-based practices, and emphasized training and support.

As a result, Lifespace was able to keep its infection rates low throughout the pandemic. The Centers for Medicare and Medicaid Services (CMS) has conducted over 130 infection control surveys on Lifespace throughout the pandemic’s duration; according to Jantzen, only two revealed deficiencies in protocols — and those were minor deficiencies which were quickly remedied.

“That’s a testament to the training, systems, support, and the dedication that [team members] have to keeping our residents and other team members safe,” he said.

Planning for growth

With the new C-Suite in place, Lifespace is in the nascent stages of developing a new strategic plan, hinging on three foundational components: people, diversifying service lines and growth of scale.

The incoming chief people officer will work closely with Jantzen on recruitment, training and retention strategies, with plans to cast a wide net for new talent from within and outside the industry.

Fenoglio’s responsibilities will include examining daily operations across the organization to identify ways to improve services and engagement between staff and residents, including identifying technology platforms to scale across the portfolio.

The growth strategy consists of three subsets. First, Lifespace will look for ways to improve occupancy across its communities. An audit of occupancy rates over the past five years revealed a slow but steady decline in independent living census, which Jantzen likened to a receding tide. 

“You can’t see it moving, but then you realize, ‘Oh, my god, the water level is lower,’” he said.

Covid-19 compounded this; Lifespace has seen occupancy dropoffs across all of its care segments throughout the pandemic. Sieman will work closely with Jantzen to revamp marketing and efforts, which is already showing results, helping the provider to exceed independent living targets set by the board prior to the pandemic.

Meanwhile, Lifespace has several expansion projects underway or nearing completion.

Friendship Village of Bloomington, a life plan community in Bloomington, Minnesota, is nearing completion on an independent living expansion, and redeveloped part of its skilled nursing wing into assisted living and memory care.

Village on the Green, a campus in Orlando, brought 20 new independent living villas online, as well as an assisted living and memory care wing and an expanded skilled nursing component. The Waterford, a life plan community in Juno Beach, Florida, is in the preliminary stages of an expansion which will include independent living, assisted living and memory care.

Lifespace is entertaining growth through affiliation, and has received inquiries from outside providers impressed with its Covid-19 response. Jantzen attributes this to the central office’s shift to supporting the communities, instead of a more top-down approach. He believes that smaller, single site providers undergoing distress will provide opportunities for Lifespace to tap into demand for rental-based middle-market senior housing.

LIfespace is also looking to diversify its service lines to bring care to seniors who need it, away from its campuses. This is a trend that has accelerated during Covid-19, with providers such as Ohio Living, Kendal, Greystone Communities and United Church Homes adding or expanding home- and community-based services (HCBS) over the past year. Lifespace has an HCBS segment and is exploring options for expanding it.

“We have some work actively underway at growing our [portfolio],” he said.

Stabilizing inherited CCRCs

Jantzen hopes this growth strategy will be a rising tide that floats the operations of all of its life plan communities. A couple of its communities acquired in the SQLC affiliation are notably struggling. The Stayton at Museum Way, a campus in Fort Worth Texas, filed for Chapter 11 bankruptcy protection in November 2019 after defaulting on nearly $110 million in liabilities related to bond issuances. 

But there are signs of improvement at The Stayton. Total occupancy has remained high at around 92%, and its financial performance is stronger than in previous years, Jantzen told SHN.

Earlier this month, Fitch Ratings downgraded the rating on $109 million in revenue bonds issued by the Tarrant County (Texas) Cultural Education Facilities Finance Corporation on behalf of Edgemere, a life plan community in Dallas, to “CC” from “B+.” Fitch has also assigned a ‘CC’ issuer default rating to Edgemere, citing weak revenue defensibility and a deteriorating financial profile.

Edgemere missed its debt service coverage ratio on Edgemere in 2019, and recently issued a joint filing to the Securities and Exchange Commission (SEC), conveying that the community will miss its historical debt service coverage ratio in 2020, as well. The provider is in talks with its restricted group of bondholders on its available options.

Jantzen pointed to occupancy declines for much of Edgemere’s distress, but noted that the distress predated Lifespace. Daily operations have improved considerably since the affiliation with SQLC, and both Edgemere and The Stayton are showing signs of solid future performance.

“Those communities are benefiting from being part of the Lifespace family,” he said.

The post After C-Suite Overhaul, Lifespace Turns to Growth and Stabilizing Distressed CCRCs appeared first on Senior Housing News.

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