Sodalis President: After 3-Year Reinvention, We Are Stretching Toward 45-Community Portfolio

About a month ago, Sodalis Senior Living got a shout-out during the Q1 2023 earnings call for Ventas (NYSE: VTR).

Sodalis was one of the operators that “contributed significantly to the growth in the first quarter,” said Ventas Chief Investment Officer and EVP of Senior Housing Justin Hutchens.

The mention can be seen as a coming-of-age moment for Sodalis after a period of reinvention that began about 3.5 years ago, when Traci Taylor-Roberts became president of the San Marcos, Texas-based provider.

At the time, the organization was pivoting under new ownership; its portfolio consisted of some small, freestanding memory care buildings, as well as two modern, larger assisted living communities being developed from the ground up.

Taylor-Roberts and her team set about creating a robust operating infrastructure with a particular focus on workforce development and culture, along with financial systems, policies and procedures, human resources tools and other elements of more sophisticated and scalable providers — all in the midst of Covid-19.

“Then I called up Justin Hutchens,” Taylor-Roberts recounted. “I said, ‘Listen, I know I’m a mom-and-pop, you don’t do business with people like me — can you give me a chance?’”

After Sodalis achieved success with one initial property, Ventas transitioned 17 more communities — including 13 formerly operated by Eclipse Senior Living — to the operator. Separately, Sodalis forged a relationship with National HealthCare Corporation (NYSEAMERICAN: NHC), taking on management of three NHC-owned senior living properties.

With four properties under an independent owner in Michigan rounding out the portfolio, Sodalis is operating 31 communities, with more growth on the horizon. If the company can reach 45 communities within the next year, that would be “wonderful,” Taylor-Roberts said.

The company is operating “in the black” despite big workforce investments and inflationary pressures, she emphasized, helped not only by 12% rate increases but operating efficiencies — including in strategically eliminating some roles. Among the Ventas-owned buildings, occupancy has increased from about 50% to about 80% in fewer than 14 months, while level-of-care revenue has risen from $142,000 to over $500,000 a month.

These numbers appear to support the notion — popular in the industry — that mid-sized operators can drive success by closely managing buildings in markets they know well. And Taylor-Roberts also is applying lessons learned over a career in the field, during which she has built a resume that includes Emeritus, American House and Pegasus Senior Living.

‘Appreciation can’t be transactional’

One key to Sodalis’ financial stability and success was that the company did not use any agency labor during 2022, according to Taylor-Roberts. While saying that she can’t point to any one factor that enabled this accomplishment, she believes that Sodalis has been able to build “a really good culture.”

“I’ve always had this thing that I say: I don’t appreciate employees, I love them,” she said. “Because appreciation is transactional. You pick up a shift for me, I’ll give you a gift card, you do this for me, I’ll give you that, and my philosophy is, I just love our employees and their families.”

In practice, this means finding various ways to support and value members of the Sodalis workforce. For instance, Sodalis bought gifts for every child of an employee this past holiday season, totaling more than 600 presents. Last summer, Sodalis provided gas stipends to help offset the rising cost of fuel. For Thanksgiving and other holidays, employees and their families are invited to dine at the Sodalis communities. And the company has introduced intergenerational programs to enable workers to bring their children to their shifts, so that they will not have to pay for daycare.

Furthermore, every employee of Sodalis has Taylor-Roberts’ cellphone number.

“I’ve never had anyone abuse it, and right now, we’ve got close to 1,000 employees,” she said.

She has received good ideas and feedback via calls — including workers reaching out directly to report on labor market conditions and prevailing wage rates in their areas. This has in some cases led Taylor-Roberts to immediately raise wages at particular communities, and last January, the company as a whole increased wages $3 to $4 an hour.

“That’s what you have to do, for people to be able to survive,” she said.

Taylor-Roberts also “gives all the credit” for Sodalis’ success to the “very diverse” frontline staff, and notes that the majority of Sodalis’ executive directors are Black or Hispanic.

“It always bothered me when I would sit at the roundtables [at industry events], and I would listen to everybody talk about their frontline staff and how they were going to appreciate them and all of that … You have nothing but white people in here, talking about problem solving for people of color,” she said.

So, she decided to stop discussing the issue and “started giving people opportunities,” she said. This meant promoting people to positions like ED even if they did not have the typical backgrounds or experience, and paying them the typical ED salaries and bonuses while also providing training and support.

“And then they reach back, and they pull up other people behind them, and I really feel like that’s how we’ve been able to build a really good culture,” she said.

The next step is continuing to promote people of diverse backgrounds into corporate leadership roles, she said, expressing dismay over the lack of diversity among the attendees at conferences such as Argentum and NIC.

“I just don’t want them to be executive directors, I want them to be regionals, and I want them to take my job,” she said.

Making the numbers work

Being able to offset wage increases and other labor-related spending — not to mention overall inflationary pressure on expenses — has been another facet of Sodalis’ success. Reconfiguring the staffing model at communities, including through the addition of in-house recruiters and the elimination of business managers, has been a part of this effort.

About two years ago, Taylor-Roberts began hearing reports of labor shortages across the portfolio, with leaders at the community level reporting that they were unable to fill open positions.

“Then I would go onto Indeed, and really what was going on is there were people applying, but [Sodalis’ workers] were so busy dealing with Covid and out on the floor, they didn’t have time to get back with these people,” Taylor-Roberts said.

This situation led to the addition of in-house recruiters to handle everything from placing job ads to leading the hiring process to running background checks. This position has “helped tremendously” in adding new talent while taking pressure off the in-place workforce, Taylor-Roberts said, noting that “if people are happy, you close the backdoor” and drive down turnover-related spending.

Sodalis also eliminated the role of business office manager at the community level, transitioning related work — such as billing and accounts payable — to the corporate office. Money saved from business office manager salaries was reallocated to frontline staff.

Sodalis also runs a “lean and mean” operation overall, according to Taylor-Roberts. The provider eschews print advertising in favor of lower-cost approaches such as search engine optimization and social media. Food costs per resident day run to about $6.50 or $7.00, even after recent inflation.

This level of spending supports the delivery of a product at a price point of around $5,000 a month for assisted living and between $7,000 and $8,000 a month for memory care. Taylor-Roberts likes serving this slice of the market, and sees it as a lucrative proposition at a typical management fee of around 6%, with incentive fees built in.

That said, the buildings have to be the right size; Sodalis is successful today not only because of its operational approach but because the portfolio has been restructured and given appropriate CapEx infusions, Taylor-Roberts pointed out.

Sodalis has shed the small memory care communities of 16 to 32 beds, which were the “biggest challenge” during Covid-19. Taylor-Roberts sees small buildings continuing to struggle across the industry, as they do not often have the margins to absorb current levels of inflation. They also are tremendously difficult to operate, with staff quickly overstretched in the face of labor shortages. After Sodalis sold the smaller memory care buildings, staff that chose to stay with the company transitioned to some larger but struggling communities and helped turn them around.

“And frankly, they were like, ‘Well, this is cake, I have all these people, I have all this staff,’” Taylor-Roberts said.

Going forward, she believes that Sodalis’ current model is scalable, with the ability to keep adding corporate office staff to support an even larger portfolio. Already, the company has added a third regional director of operations and a culinary director to the home office team.

She has worked with organizations that grew too quickly and is cautious about maintaining the proper pace. But she also believes that her experience will serve her in good stead as Sodalis expands its management portfolio with existing and potentially new partners.

“I want to grow, I want to be able to help people,” she said.

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