Atria CEO: Time To ‘Step On The Gas’ With Senior Living Development Despite Tricky Challenges

With an occupancy recovery underway and the prospect of favorable demographics around the corner, Atria Senior Living CEO John Moore believes that now is the time to evolve senior living offerings and build for the future — despite a challenging operating environment and some development headwinds.

Atria recently has taken some decisive steps toward building the company for the future, including through its acquisition of Holiday Retirement and the unveiling of its Coterie brand of ultra-luxury urban communities developed in partnership with Related Companies. With this progress, as well as ongoing work to create a middle-market assisted living model, Moore’s thinking has continued to evolve with respect to how programs such as Medicare Advantage can fit into the senior living community of the future.

All these moves are part of the company’s strategy to create multiple brands to serve different price points. The strategy pre-dates the pandemic, and stemmed from changes to the industry in the aftermath of the Great Recession.

Moore remembers how homogeneous the senior living industry was in the mid-2000s, he said this week at the Senior Housing News BUILD event in Chicago.

Before the Great Recession, a senior living community in Westchester, New York, might have carried similar rates as another in Louisville, Kentucky, give or take a few hundred dollars; and, the communities incurred similar expenses in areas such as staffing.

Then came the financial crisis. In the aftermath, certain metropolitan areas saw relatively steady economic recoveries compared with others. That disparity drove up average monthly rates in some markets by thousands of dollars, while in other markets they stagnated.

Moore has taken that lesson to heart in building out Atria’s multi-brand portfolio in recent years.

“You realize you can’t deliver the same product everywhere … in some places, you can win with the top line, and some places you have to win with the bottom line,” Moore said. “One size doesn’t fit all.”

Today, the Louisville-based company operates more than 430 communities across six different brands, most recently with the launch of Coterie in San Francisco and New York City. Atria and Related are “close” to announcing further Coterie projects, and Moore sees particular growth prospects for this brand as well as communities on the other end of the spectrum, to serve the middle market.

‘Time to step on the gas’

Although the industry is in a “tricky time,” according to Moore, now is not the time for operators and developers to hit the brakes on growth — instead, it’s “time to step on the gas.” That’s because “peak senior” — the arrival of the baby boomers en masse — is just a handful of years away.

“We’re in an important, but still difficult time and … I think the bright future is inevitable,” Moore said. 

In fact, Moore wonders whether the industry will be able to meet the demand wave given its current rate of new inventory growth.

“Time marches on in terms of demographics,” he said. “We’re to the point where it may be too late for supply to ever catch up with demand when it shows up.”

With regard to Atria’s projects with Related, the two companies announced a JV in 2018, with the intention to develop a $3 billion pipeline of urban, luxury senior living communities.

The first of these projects to open will be Coterie Cathedral Hill in San Francisco. Monthly rates for that community’s two-bedroom units will start at around $16,600, while the highest monthly rates will exceed $27,000.

Large, homelike residential units are one key feature of Coterie, Moore said at BUILD. In fact, he believes that too-small apartments — and too many studios — are common mistakes made by senior living developers.

Inside the Coterie units are kitchens with cooktops and refrigerators large enough to fit a full-sized pizza box. The units also will have integrated technology and home automation from tech companies such as Amazon, as well as washers and dryers.

Beyond the large and well-appointed living units, Coterie will offer a variety of distinctive amenities — ranging from exclusive access to cultural or sporting events, to on-site health care and wellness offering through partnerships with organizations such as the Mayo Clinic.

And, going forward, Moore foresees further opportunities for innovation with Related. That could even include the formation of a wellness brand that leverages Related ownership of Equinox fitness clubs.

“We’ve had those kinds of conversations,” he said.

In terms of the pace of future Related projects, disruption in supply chains and labor markets has created challenges and uncertainties in terms of operations and development; as Moore put it, “How do you decide what to do when you don’t really know what it’s going to cost to build?”

That said, he emphasized the demographic imperative to create senior living options and was unequivocal in saying that for those organizations that have the wherewithal to develop, “this is the time to do it.”

Putting new engines on the B-52s of senior living

While Atria is seeking to serve older adults across a wide spectrum of price points, Moore said he thinks growth“is most interesting at either end [of that spectrum].”

That is, he is focused on the ultra-luxury market with Coterie but also on the middle market, with the acquisition of Holiday’s independent living business and ongoing efforts to create a scalable mid-market assisted living model.

As he said when the Holiday deal first was announced, Moore sees the buildings as “the B-52s of senior living” — that is, they are warhorses that continue to prove their value decades after being constructed.

However, he also sees a lot of upside in the buildings that can be achieved through capital expenditures to freshen up and elevate them to serve the next generation — a process he compared to putting new engines on B-52s.

In this effort, he sees a major advantage in the uniformity of the Holiday buildings across the country.

“So if we decide the standard department upgrade is a set of cabinet inserts and bathroom inserts and fixtures … you can mass produce that,” he said.

Prior to the Holiday transaction, Atria had plans for a middle-market assisted living brand called Gladwell, and this model is still in development, Moore said. The first Gladwell building is located in the Boston suburb of Malden, Massachusetts — an area well-suited for a middle-market product due to its sizable population of retired city workers, cops, firemen and the like.

The vision is to offer assisted living at “plus or minus five grand” in higher-end suburban markets where newer product commands closer to $7,000, Moore said.

To achieve this, Atria is leveraging some of the Holiday independent living playbook, such as banquet-style dining. On the design side, having a large common area is important, as this facilitates the use of universal workers. And “simple things” like making sure memory care capacity is always divisible by eight — to match a 1 to 8 staffing ratio — are also important.

Technology also will play a key role in driving more efficient operations, including by alleviating staffing burdens and creating more standardized and simplified job descriptions. This is critical to driving retention and achieving scalability, in Moore’s view, as it enables training to be “straightforward and repeatable.”

He envisions a senior living brand akin to Starbucks, with national scale, consistent price and quality.

“There’s a lot of talk about how scale and success in senior housing are inversely related. I don’t think the Atria experience has ever suggested that,” Moore said. “We think scale is part of what will allow us to create standardization.”

However, the Gladwell “pilot lab” is ongoing, and how that brand or model might ultimately fit into this part of Atria’s portfolio is also still in progress, he noted.

Evolving for the future

Atria is also evolving for the future in its operations, across all price points.

For instance, Moore sees opportunities to expand Atria’s partnership with the Mayo Clinic Labs, which is part of Rochester, Minnesota-based Mayo Clinic. The company had previously worked with Mayo as part of a partnership to conduct and process Covid-19 tests, and they are collaborating on the wellness program at Coterie.

“That relationship, we think, is going to bear very interesting fruit and make what we do better,” Moore said.

Additionally, Moore believes that Atria can increase its usage of Medicare Advantage (MA) in the future, particularly as a way to pay for services that help meet seniors’ medical needs. That is somewhat of a turnabout for Moore, who before the pandemic said he was reluctant to jump feet-first into offering services that are paid for through MA.

Though he cautioned that he doesn’t want Atria to “become an insurance company,” Moore does see the benefits of including a Medicare Advantage platform in senior living communities.

“We want to get better at managing access, helping our residents access what’s available to them in the health care world,” he said. “And we want to be the facilitator of access to things that people need.”

In particular, he described Holiday as potentially becoming a “do-it-yourself” care model, for people who decide they want the larger living units at an approachable price point, and can leverage MA plans and other resources to manage their care by tapping into services that in the past were not accessible through these vehicles.

“Medicare Advantage has been evolving into a product that makes sense for solving seniors’ medical needs,” Moore said.

During the pandemic, Moore and Atria also observed that residents going to the hospital were entering a “black box going in and a black box coming back.” That prompted the company’s leaders to think about better ways to share information with hospitals, such as a resident’s electronic health record and care plan.

“A lot of technology that we’re focused on is all about better managing that information, getting people access to that information,” Moore said.

Bigger picture, he said senior living has been hit by a “quadruple whammy” of oversupply, Covid-19, a staffing crisis and supply chain disruption. This onslaught has put some senior living companies on the back foot, but Moore advised looking further into the future.

“I think growth is going to sneak up on people … and all the excuses or reasons people are finding to pause are going to be in the rearview mirror,” he said.

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