GenCare CEO: Covid-19 Could Ease Workforce Shortage, Lessen ‘Pay to Play’ Wage Pressure

As senior living providers pay higher hourly wages, bonuses and other incentives to frontline staff responding to Covid-19, some industry leaders believe that this is setting a new wage baseline that will remain once the pandemic subsides.

However, GenCare Lifestyle founder and CEO Leon Grundstein is not so sure — the massive unemployment caused by Covid-19 could be a counterbalancing factor, he told Senior Housing News.

“Certainly when you’re [short-staffed], you’re willing to pay to play. But when things settle down … there are a lot of people who are going to need work and there might be some softening of their attitude of working and getting certified to work in senior living. I’m not saying wages will be cut by any means, but it may not have to go significantly higher to recruit people or incentivize them for hazardous pay,” he said.

One thing is certain, however: Covid-19 has changed the way that senior living communities are staffed, and workers have stepped up by wearing all sorts of hats.

“Everybody has become a universal worker,” Grundstein said.

Grundstein is an industry veteran with nearly 30 years experience. He was a co-founder of Seattle-based Merrill Gardens, which is now one of the largest providers in the country, with 56 communities in 17 states. GenCare, which he founded in 2000, focuses on cutting edge wellness innovations, which he calls “whole life living.”

GenCare’s portfolio includes six communities offering independent living, assisted living and memory care, and Grundstein is working with seasoned investors such as Pacific Medical Buildings (PMB) and Harrison Street Real Estate Capital into the firm’s projects. The relationship with PMB resulted in a wellness-focused health system partnership last year with MultiCare, a nonprofit health system based in Tacoma, Washington, as well as DispatchHealth, a national provider of on-demand medical care for patients in their homes.

Grundstein also discussed how GenCare’s residents and staff are faring after nearly two months of lockdowns, how the company and its investors are working together on finance solutions, and the need for more consumer and media education about the differences between senior living and nursing homes.

This interview has been edited for length and clarity.

How are GenCare properties faring in response to the outbreak?

We’ve had two communities that had [coronavirus outbreaks]. Between the two buildings, we had 23 staff and residents combined and we implemented in-room quarantines, delivered meals and didn’t allow anybody in the apartments other than caregivers.

In Washington state, [public health agencies] won’t test for coronavirus unless the virus is confirmed in the building. Those two buildings were tested a week and a half ago, all the residents and to staff are cleared to go. We’re lifting the full quarantine in the two buildings and life is relatively normal. Residents can come and go from their apartments [provided they adhere to] social distancing protocols and [wear] face masks. We’re still bringing meals to the apartments.

We’re doing some things like exercise activities in groups of five people [or fewer] with our trainer, and corridor karaoke, corridor exercises or storytelling. Residents can go outside [with face coverings and social distancing] and walk around, and we still screen visitors.

Our other buildings have been Covid-free. The protocols there have been very effective.

If GenCare’s residents are able to at least go outside, how does that impact the sense of isolation?

Their morale is pretty good. They do feel the effects of isolation but they’ve come together, along with the staff, and really accepted the situation. In some cases, because they aren’t as physically active, they’ve lost some physical strength. In the buildings where we had [positive cases of] Covid, some [residents] get depressed and we have to motivate them to walk around the unit.

What aspects of operations have seen the biggest pressures from the virus?

Labor costs have [increased]. Everybody has become a universal worker — delivering food, picking up trays, talking to residents to keep them positive and connected. Everyone is working 12-hour days, just to cover all the needs. In the buildings where we had staff out, we were able to hire some agency support for nurse replacement or staff replacement. Obviously that’s more expensive, but we had to cover it.

As far as a percentage increase in expenses, I couldn’t give you an accurate ratio until the end of this month because we were hit hard [in March and April]. Things are starting to go back to normal now with the staffing for us, assuming we don’t have another outbreak.

Were there any concerns that turning to agency staffing would expose communities to the virus?

We isolated the agency staffing to one building, and we and the agency both screened them [for symptoms] before they came in. We screen all staff.

Has GenCare seen an increase in job applications for openings as more people file for unemployment? If so, are those being converted into interviews?

We are, but I think a majority of it is [maintaining qualifications] for unemployment. Most people in the hotel and restaurant industry don’t have certifications for aides or skilled care workers.

The applications we’re taking seriously are for culinary openings. The restaurant industry was hit hard and we got some people to come in and work in those positions. As far as CNAs and nurses [are concerned], those were not really affected.

What wage incentives or benefits is GenCare offering its employees? Is providing higher wages something you will consider to recruit new talent to the industry once this subsides?

We didn’t increase [front-line worker] pay, but we gave them [extra] sick leave and vacation benefits.

[Right now], it’s panic time and everybody’s scrambling. With unemployment being as high as it is and people wanting to reposition themselves, some may get certified and some may look at the senior housing industry as a demand area. It may not be necessary to do significant increases in wages, but that remains to be seen.

I still think if you have [health insurance], benefits and some 401k, and treat the employees right, assuming your pay is commensurate with the market, you will be able to attract people. It’s still going to be a challenge to get employees, as it is now, but it might be easier since there will be so many unemployed.

Has GenCare been able to leverage its relationship with MultiCare and DispatchHealth to gain access to testing, and to respond quickly in the communities that did test positive?

If someone got sick or we knew was sick, [the relationship] was a huge benefit. DispatchHealth is still servicing clients in our buildings. If a situation escalates where more care is needed, they’re instructed to call 911 to transport residents to hospitals.

The issue with testing [in Washington state] is that no hospital or agency would come to any community unless you had Covid [in the building]. And then they would do complete testing of everybody in the building including staff. That’s pretty much true throughout the state right now.

Last month, you shared how the virus is impacting move-ins and lease-up pro formas at the newly opened GenCare at Point Ruston. How are the sales and marketing efforts across the portfolio faring?

The marketing [teams] in the buildings have been actively reaching out to [prospects who] either [placed a] deposit we had to put on hold, or hot leads. We are still getting inquiries. We have some highly interested people that are just on indefinite hold.

What we’re doing is staying in phone contact and, in some cases where they’re in a reasonable geographic radius, delivering meals to their homes or apartments to help them weather the storm and keep them positive towards our product, which has been really helpful because it’s keeping those prospects engaged.

We do have a waitlist of some degree on every building. Obviously, the longer the delay for moving, the more chance you have of losing them because they may get sicker, especially if they’re high [acuity care]. We suspended move-ins when Governor Inslee’s order went into effect. I think we’re planning to start moving in people around May 25. All new move-ins will be quarantined in their apartment for 14 days.

Senior housing is being conflated with nursing homes in many reports on Covid-19 outbreaks. What are state industry groups doing to provide some clarity and ensure the public that senior housing is still safe for residents and referrals?

I think there is a confusion in the general population — certainly at the beginning — on what was the difference between the products. [Reporters are] getting better now and understand the difference between skilled nursing and [senior housing].

I’m not saying wages will be cut by any means, but it may not have to go significantly higher to recruit people or incentivize them for hazardous pay.

GenCare Lifestyle founder and CEO Leon Grundstein

I wrote an article [for the Tacoma News Tribune because] a lot of the operators were taking a defensive position. [State industry groups] are working hard to educate [the public] and get over that mindset. I think more needs to be done to tell people that this is different and you’re actually safer living in a [senior housing] environment.

How have GenCare’s capital partners responded to the outbreak, and is the pandemic putting pressure on cash reserves and lines of credit?

They’re very supportive and they’re very aware of what’s going on. We’re strategizing on what we can do to save money with the lenders and/or add additional capital.

In one case, one lender is willing to give us a 90-day drop in our interest rate in the loan from 5.75% to 2%. On this particular project that’s like $125,000 of money we save. On another building, we’re still using a lease-up reserve that we had a significant amount of. On two more properties, the lender has given us a forbearance for 90 days where we don’t have to pay principal and interest, and they deferred that to the back end, either when we refinance or sell the property.

We [were approved for] CARES Act [PPP] loans, so all the payroll related expenses on all our properties [are covered]. Our investors are excited about that.

Last week, Washington Governor Jay Inslee announced a gradual easing of outdoor restrictions. Assuming the restrictions continue to ease, will GenCare continue securing its communities to non-essential personnel?

We’ll just see how things are going … see if there are any regressions.

Governor Inslee has been very mindful [with his isolation] protocols and dialing it down. We’re trying to follow that, and guidance from LeadingAge, on how to manage the issue. It isn’t going to be like switch on/switch off for us. It’ll be a gradual lifting of protocols.

I can’t tell you when we’re going to decide to do full dining room service again. We’re going to continue to do room service for a while. Besides that, we do have salad bars in our communities and those have been totally instructed to close down, even if we were dining in the dining room.

There is a growing push for senior housing providers to establish Covid-19 cohorts in empty space, for people who are recovering from the disease but do not need the intensive care of a hospital setting. Would GenCare consider co-opting some empty space at Point Ruston for this?

I don’t think we would be into that. That’s the first time I’ve been asked that question.

What changes do you envision in a post-Covid senior housing landscape?

We might see more sanitation of [fitness centers and equipment] or in the dining room where people are touching a lot of plates. I think screening of people who come in the building, taking their temperature with some sort of device or making sure they wash their hands with sanitizer when they come in. I think everything will be heightened as we edge away from the pandemic. And then I think, as humans, to some degree we’ll just go back to the way we’re behaving before.

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