To determine the future of the Senior Living industry, one need not look further than the recent merger between Ally Senior Living and Onelife Senior Living. 

That is the opinion of Dan Williams, former CEO of Ally Senior Living. Ally merged with Onelife in  late February that brought together two small, but growing, Senior Living Operators. The merger was the result of years of communication with Onelife Senior Living Founder Zack Falk in sharing their respective experiences as a start-up senior living operator amidst the challenges of the Covid-19 pandemic. 

Now the CEO of Onelife in tandem with Falk, Williams foresees more opportunities for small to midsize senior living operators to join forces in the coming years.

“I think that a lot of smaller companies can look to a [merger] because you can leverage and get better pricing through GPOs and you can get lower food costs and you can get all those different things to support,” Williams said during the most recent episode of the SHN Transform podcast. “You need some scale in order to get the resources to make the building successful and I think both Zack and I realized that and I think the other, smaller companies may be in the same position.”

The Denver, Colorado-based senior living operator’s portfolio consists of 19 communities, with a roughly 50/50 split between owned and managed communities.

Looking ahead, Williams said Onelife will consider future value-add opportunities, with the potential to add three acquisitions this year. With one completed in the Las Vegas, Nevada metro area, that strategy is already bearing fruit.

‘We still want to talk to new capital partners, clients who have third party opportunities to find a good operator,” Williams said during the podcast. “In order to handle that, we need to have our house in order.”

As the dust settles from the merger, Williams said the executive teams from both Ally and Onelife have worked this year to integrate all systems, finding efficiencies by mixing and matching best practices from both organizations. Both Williams and Falk are committed to internal leadership development while also recruiting new talent as turnover demands it as the merger resulted in 1,500 employees coming together.

“The main goal is to get all that sorted out going into next year we’re really well-aligned with all of our systems and how we operate so that we can be a best-in-class operator. We’re not going to let the integration process stop us from growth,” Williams said.

Highlights from Williams’ podcast appearance are included below, edited for length and clarity. Subscribe to the Transform podcast via Apple Podcasts, SoundCloud or Google Play.

On Ally and Onelife’s merger:

It was a big journey, a big decision. I had Ally Senior LIving and it started a couple years ago and we were growing 10 communities that we were operating in. A friend of mine, Zack Falk, who had a company called Onelife Senior Living — we were close to the same size and we would have conversations and there was an echo going on because we were saying the same things. We started talking about what it would look like if we both merged, and how that company would look.

Through those conversations, we found out that we are aligned and our vision much aligned in our mission in the way that we approach the business and there are a lot of synergies there. So we, in the end, wanted to scale and take advantage of the headwinds coming up in our industry over the next 10 to 15 years.

So scaling up, merging, was a good thing for us and it gives us a lot of benefits. We can have those specialists, and we can have programming people and we can have an asset manager. When you’re smaller, you don’t have the money to do those things. It’s been great and that’s how we got to that decision.

On Onelife’s portfolio and growth strategy:

We’re at 19 buildings and we will be at 20 buildings as of April 1.

We call it Onelife 2.0 because we stuck with the Onelife name and Onelife brand going forward. But prior to that we had owned and operated their communities [as Ally]. Onelife built it at the time of the merger of eight communities and we’ve added one since. Ally had 10 buildings under management contracts and we were going towards purchasing another building.

It was a difficult time to start an operator and get acquisitions going so we never got one under the belt during the first two years, but we were headed that way. So that’s the portfolio as it is now and we’re about half management contracts and half of what we own and operate ourselves.

I think that 50-50 is a good mix and it’s going to fluctuate over the years. We have an organization now with over 100-plus years of experience just in the top few positions, so there’s a lot of industry knowledge and we want to be able to utilize that and we want to help out other owners of properties who need services. We’re going to be selective in that we need to have fully-aligned in how we look at senior living with those clients.

It also includes acquisitions and we’re actively looking for value-add acquisitions, distressed communities, that we can take on leverage our operational expertise and turning those around and creating value, creating a good environment for the employees to work in. We’re looking at opportunities to grow and we want to create opportunities for those employees that are in-house. We want those opportunities to be there and it’s part of the mission as a company.

It is by-opportunity, but we’re the strongest in the west coast in California, Oregon—so the Northwest and the West. We have a building in the Phoenix, Arizona area, Utah, Nevada and then we have Texas where we have a couple of communities and then one in Florida where we’re probably going to transition out of it’s just a third-party contract. Great owners, but it’s just a little too far from where we are.

The goal was you want to try to cluster. We want to try to cluster build. We’re in Dallas, we have two buildings there, and we’re looking for two or three more because you can share resources, it’s easier for your corporate office to travel and there’s a lot of benefits to having buildings that are close to each other. That’s kind of what we’re looking for when we enter a market.

A lot of markets like Las Vegas, we have one building, we’re looking for more. We’ve got a letter of intent out on trying to purchase another memory care building in that area and so we want to build that up and stay, I am going to say west of the Mississippi, but we’ve got one in Illinois and it’s hard to say so we’re going to the opportunity. If you look at the top 30 metros in the country, we want to stay in those maybe—top 25— so [that] versus more rural assets.

On Onelife’s newly-combined mission and vision:

We knew years ago that we were aligned on how we thought of things. We’re both very purpose-driven people. We look at this industry and what we do and the product that we provide to the consumer and the workplace. We provide employees with a mission and we have a purpose in life and that’s to take care of seniors at the end of the day. That’s what we do and we care for seniors.

At the end of the day, we’re caregivers in a way and that’s how we look at it. We both want to create an organization that is a mission-driven place. We employ 1,500 employees and we want all of those individuals to find their purpose and their meaning in life and we want to help them do it. We found ours and a lot of people haven’t found theirs.

We want to create an organization and that’s what we developed our mission statement around. That’s what we developed our vision around being a purpose-driven company.

On Onelife’s merger integration:

We knew going in you have two average-sized companies and each company has their own systems that they use. Accounting, sales and marketing, CRM, EHR for resident care delivery; EMR’s. It’s integrating those two systems that go best of what works best for each company and that’s been great. We’ve been going from the best of each system. We’ve gone: ‘Onelife does this much better than Ally did it, so let’s use that’ and on the flip-side, well Ally, they do really well here.

That’s been a great benefit that I underestimated going in. Creating that infrastructure and integrating those systems, it’s not an easy thing and it’s a task and that’s what pulls my hair out and thinking about it. However, the longer you go, the better it’s getting and so we’re seeing a lot of gains there.

We want to look at acquisitions and we’ve got some letters of intent out right now. So we’re looking for buildings that are distressed, that opened during the pandemic and never really took off. Maybe it was special circumstances…maybe it was a developer who didn’t realize how operational-centric this business is and this community didn’t succeed. We’d like to go in there and find those kinds of opportunities.

We plan to do about three or four of those this year and we’ve already done one in Henderson, Nevada. So we’ve got one on the board now and that’s in our owned and operated SHOP. We still want to talk to new capital partners, clients who have third party opportunities to find a good operator.

In order to handle that, we need to have our house in order. I call the merger controlled chaos and you’re integrating two brands, two teams, two systems. So the main goal is to get all that sorted out going into next year we’re really well-aligned with all of our systems and how we operate so that we can be a best-in-class operator. We’re not going to let the integration process stop us from growth.

On the challenges of integrating two senior living companies:

The tough part is you’re bringing together two very talented, industry-veteran, tight teams. You’re putting those people together and playing nice in the sandbox. It’s easier said than done sometimes so what we did is really emphasize culture and where we’re going on our mission as a company and our vision.

I think having that foundation to lean upon for both sets of teams as they came together really helped and it’s not been as much of a challenge as I thought it would be bringing two teams together because there were definitely synergies. There were some things that Ally didn’t have and vice versa for Onelife.

For instance, HR, Onelife had an internal HR department, we didn’t at Ally and we had it out-sourced. So now we’re bringing it in-house so we’re kind of a hybrid but we’ll probably end up building out that accounting department as internal and not out-sourced. So meshing all those together has been the toughest part. It’s a lot of evaluating the current talent we have and making sure we get the right people in the right spot on the right seat of the bus.

There’s a lot of back-and-forth as far as the legality of bringing two companies together so that’s been a challenge working with insurance companies, working with attorneys with those contracts for the systems that you’re working with, and you’re working with a lot of people that in your day-to-day as an operator with 20-30 communities not merged, you don’t have those distractions. Right now it’s all getting sorted out but it’s time consuming to make sure everything is in-line. It’s more of a distraction, but it’s necessary going forward for our infrastructure to go through that.

On M&A and industry consolidation in 2024:

I certainly do because it’s not easy, speaking from experience to open an operator during this time in our industry. We’re coming out of the pandemic and we’ve kind of got a hangover from the pandemic and how we operate in our margins, how we’re looking at staffing just a lot of different things coming out of the pandemic.

The industry suffered really hard with occupancy. It was just a very tough time for me to start an operator. I think that a lot of smaller companies can look to a [merger] because you can leverage and get better pricing through GPOs and you can get lower food costs and you can get all those different things to support whether it’s a third-party owner or yourself if you own the building.

You get talent acquisition and you can merge the talent. When you’re small, you can’t afford too much talent and so you get that in today’s operations and what we’re seeing it’s a lot different than 10 years ago when we were operating communities. It’s more complex, there’s a lot more nuances and how you’re gonna run your assisted living and there’s a lot of extra regulation that came out of Covid.

You need some scale in order to get the resources to make the building successful and I think both Zack and I realized that and I think the other, smaller companies may be in the same position that we were in, so I think it makes sense to merge. I would highly advise the owners of those companies to certainly make sure they’re merging with somebody that they know and trust and have the same vision going forward.

Zack and I, we both have the same 10 to 15 year goals and we both know the headwinds of this, the demographics of this industry, we have been through the cycles. We’ve seen the industry go down and we’ve seen it go back up and we know it’s going back up now. It’s just waiting it out and getting what you can in order to take that on during the good years so other companies could look at combining, scale up and get in a good position to really grow, if that’s your goal, to a larger scale in the next 10 to 15 years.

On Onelife’s staffing challenges and opportunities:

Staffing is the key and 60 to 70% of operating costs is labor and it’s critical to the success of a community. Our caregivers and care partners are so valuable, so important to us and can make or break a building so you have to put staffing retention and staffing recruitment as a main priority.

We’ve seen a lot of positive things when it comes to staffing. Over the last few years, wages have gone up. The people that deliver the care are the hardest working people out there and they deserve everything, and the wage increases.

But it has a ripple effect on the prices we have to charge and we’re treating staffing today as a priority. We treat every applicant that applies as a caregiver just like it would a consumer inquiring to tour to move into a community. It’s an aggressive follow-up, convincing these prospective employees that we’re part of a great mission-driven culture and we [would] like them to be part of it.

We want to create an organization that people want to be in and we want to create hope, growth and opportunity for them and we do that by growing and having them as a part of us. We’re going to try and develop everybody here in-house with a lot of training, micro-learning videos, all kinds of different things that we have planned for that…We’re not utilizing agency in our buildings and we’re seeing wages stabilize and we’re seeing the applicant pool of potential employees increase, just a lot of positives there. So I remain optimistic on staffing in our industry.

One of our biggest challenges over the next 10 to 15 years is going to be staffing and it’s going to be at the care delivery level in each building and that has to be good in your building to succeed. As an organization, we have to focus hard on that aspect of it.

The post Onelife CEO: ‘It Makes Sense’ for Smaller Senior Living Operators to Join Forces  appeared first on Senior Housing News.