Earlier this year, the lofty price of new construction drove many senior living companies to shift their growth strategies in favor of acquisitions. Not Westmont Living.
With all but two of its 17 communities in California, Westmont’s acquisition targets are limited due to that state’s higher barriers to entry. But thanks to an in-house construction arm, Westmont Construction, the company has the flexibility and expertise to build where it makes sense, according to President Andy Plant.
“As we can get the right locations and have the right financing in place and the right capital structure, we’re in favor of building,” Plant said during an appearance on the Senior Housing News podcast, Transform.
With an occupancy recovery of a little more than 100 basis points per month and high levels of staff and resident vaccinations, Plant is bullish on the future of Westmont. And the company is taking that momentum into 2022 with new initiatives including adding primary care clinics to communities under a partnership with Pine Park Health.
On how 2021 has gone so far and why Westmont eschews third-party management:
We had our challenges, as every company did in 2020 and 2021. But we feel we’ve been making great strides and 2021. Eleven of the 12 months have been net positive in terms of gains, so we’re extremely excited about that. And that’s on top of opening up four new communities this year. So we’re very bullish coming out of the heat of the pandemic and looking forward to 2022.
We want to focus our resources where we think it’s most important, and we like to speak with one voice and not have multiple owners trying to give direction to where the priorities are and where leaders need to focus. We’re trying to be a very focused company, and to become an increasingly strong regional operator in California.
We had a central stockpile early on of PPE, we had daily phone calls with our executive directors to get everyone on the same page in terms of protocols. We’ve had regular updates throughout the pandemic, and it’s brought us together as a team, going through this journey. We feel that it has a huge benefit that we don’t have the private equity parties and the public REITs directing us to the extent that many of our competitors do.
On staffing pressures:
We did not go to hazard pay to try to retain workers and motivate them during the pandemic, but we did bring them family meals. We’d have family nights where we’d have special meals for family members to bring home and things like that. And that did make a difference in terms of esprit de corps.
We’re moving forward and we’re really focusing on how we can improve our onboarding, our training and our support. Because our team members certainly are what we’re all about. And that’s what our customer counts on, and they’re everything to us.
We see the labor issues continuing moving forward, particularly in dining with cooks and with nursing and caregivers. We’re just trying to aggressively increase our pay and be competitive and see what we can do in terms of becoming a better employer. We’ve had a match with our 401k, but we’re going to auto enrollment.
We’re doing other little things throughout the organization to try to be more team member friendly. If people want to get paid by the day, they can easily do that using a phone app. We’re just trying to be more employee-centric.
On whether current wages are the new wage floor:
Absolutely. Immigration is down, you’ve got an aging population. We have more senior living communities, more people as they age need caregivers at home – there’s just going to be a lower ratio of caregivers to people that need care. This is just the reality, and we just need to adjust and be strong in what we do.
We’re in a favorable position compared to home care companies that need much more staffing. I think it gives us a competitive advantage in a community where we can leverage our staffing over a larger community.
On being a regional operator:
Our first community, we built in the mid ‘90s in Oregon. That’s still with us, but we live in California. And so we’ve made that our focus. The real benefit is that our team is here. If it’s HR support, we can get out to a community. If it’s IT support, if it’s operations, dining, maintenance, we can be there and have a presence in the communities.
We have three regions: a northern California region, a southern California region and a central coast region. Most of our regional support team can drive to the communities, they’re not getting on planes. We feel that it’s better in terms of our corporate culture as well. Just because we’re closer together.
We feel when you get too big, it’s sort of hard to have a pulse on the operations. And secondly, we’re in California, where there’s a lot of barriers to entry. So we’ve sort of grown strategically where we’ve tried to find locations that were within our trade areas and then also met our demographic parameters. We don’t really see being able to grow immensely, nor do we really want to.
On the benefits of having an in-house construction arm, Westmont Construction:
We focused on some remodels of some of our existing communities and addressing how we could isolate residents better, making minor tweaks to our communities to try to be better prepared and do a better job.
Moving forward, we use our construction company to increase our knowledge, because we have plans that we work with, standard units. It’s helped us to build communities that are consistent with what we want, and to not have a lot of surprises by switching contractors from project to project.
We’re continuing to build communities. We have a project planned in the San Luis Obispo area, where we have a project that will break ground in January in Culver City, near Los Angeles. And then we have one under construction in Carmel Valley in San Diego, just east of Del Mar. A couple of those projects will open in 2023.
We feel that, in California, there are barriers to entry. There aren’t that many quality opportunities to buy. So if you’re going to expand, you need to have flexibility to be able to build, as well. Our biggest operating costs are really labor. We understand construction costs are going up, and we don’t expect that they’re going to be going down in the future because there’s a labor shortage in construction, as well. So it’s just a reality that we’ll live with and manage through, and as long as we can get the right locations and have the right financing in place and the right capital structure, we’re in favor of building where it works within our clusters.
On digital leads and using technology during the pandemic:
We are increasingly using more and more digital [functions] as time goes by. There are more channels out there to reach customers. Two of the channels that we’ve increased our spend on are Facebook and Google My Business. We’ve moved completely away from print, and it’s all digital. We’re very optimistic about that, and we would rather increase our spend dramatically, than get leads from the paid referral sources.
The real key is the salespeople at the communities, that quick response to the leads and then following through with the leads. Speed to lead is important. If you’re not responsive, folks are looking on the internet, and they’re looking at multiple options very quickly. And if you’re not first to respond, you’re at a disadvantage from the start.
During the pandemic, we rolled out LifeLoop in our communities to increase communication with our residents and families. That was very effective for us, and we’re using it for emergency communication, as well. In terms of moving forward, what we have is a full-time person in our office who focuses on business intelligence — dashboards that are actionable, that allow our corporate team and our managers at the community level to have visibility on what they’re doing; whether it’s a screen that would show nurse call response times or hospital readmissions, or trends in terms of sales and marketing, instead of them having to gather the information and connect the dots. We’ve done that through reporting, and we’re in a better position to act on it as a team.
Moving forward, one of our goals in 2022 is to increase our team’s training, because we’ve got lots of great tools out there. And, to make sure we’re utilizing these tools the best we can moving forward.
On the threat of the omicron variant, and what’s ahead in 2022:
We’re confident at this point that we’ve got a good playbook together in terms of protocols and that we’ll pivot if there are things that come up.
We had a community in Northern California where all the staff were vaccinated, all our residents were vaccinated, and we still had a case of Covid. Then when we tested everyone, there were six cases. So, we realized that there are going to be issues that come up as we move forward, and it’s going to continue. More than 60% of [California] at this point is vaccinated. We’re just going to have to realize that the general world is still very vulnerable until we get much higher vaccination rates.
We have a couple of planned initiatives [for 2022]. We put therapy services in all of our communities, and we’re also putting primary care clinics in our communities, as well.
We really want to be the one-stop-shop for our residents. If they’re being discharged from the hospital and they’ve had a knee replacement, they don’t have to go to the nursing home. They can come to our community and they can get rehab services, live there and we’re their home. They don’t have to go out for services or coordinate with third parties.
We’re also setting up primary care offices in our communities so that if someone wants to see a physician, they can do that there as opposed to going out. They may have their own physician, as well, and this could be secondary, but that’s fine. We just want to broaden their services and be able to serve our customers the best way possible. We’re working with Pine Park Health, and they have contracts through Medicare Advantage with a number of the Medicare Advantage plans. And so, we can offer that to our residents.
We’re hoping that 2022 is the year where things get back to more normalcy. We’re encouraged by the Merck pill and additional therapies that are coming out.
We’ve had a mandate for our staff in place, and our team members are vaccinated and our residents are vaccinated. So we’re very bullish moving forward, and we’ve been growing occupancy better than a percent a month in 2021. We anticipate that continuing in the new year.
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