Marvin Mashner, president and CEO of ACTS Retirement-Life Communities, faces little guesswork when determining whether his $263-million business should grow.
The numbers say it all.
Mashner has five years worth of people ages 70 and older waiting to move in to ACTS’ 18 continuing care retirement communities, eight in Greater Philadelphia, the rest in Florida, Georgia and the Carolinas.
“Our occupancy levels over the last three to five years are the highest they’ve been in history,” says Mashner. “We have sustained occupancy above 95 percent.”
When units that are sold but not yet occupied are taken into account, less than 2 percent of his inventory is available for sale.
“We can look at that and say, ‘Good,’” Mashner says. “‘If we have this many people interested, we should look for more land and develop more communities nearby. There is pent-up demand for our product.”
But growing in the business of retirement communities isn’t that easy. Existing facilities must be modified to meet changing market demands, and new construction is a lengthy process subject to the whims of local zoning and planning boards. Finding enough good people to deliver top service is an ongoing challenge, and as the population ages, more competitors are entering the market.
Mashner’s job is to respond to these trends. By meeting the needs of his existing residents, he can help guarantee a reputation that leads to referrals for more business. To meet those needs, he has to provide modern amenities and a skilled and caring staff, all while carefully expanding the company’s footprint to meet increasing demands.
“This is a business,” he says. “We have a responsibility to our existing residents — they made an investment in us, and we have to fulfill that.”
Reacting to change
ACTS, based in West Point, is the largest not-for-profit builder, owner and manager of its kind in the United States. Its marketing materials highlight 18 communities with resort-like settings, where residents enjoy a choice of dining venues, fitness centers, a pool and spas.
Few people today are interested in the basic care that satisfied their parents. This format change is in response to the changing attitudes of people moving in and is how ACTS competes with seniors’ multiple options for care.
“While the baby boomers are not in full effect, they are involved in the decisions for their parents,” Mashner says. “As a result, they have certain outlooks and expectations. They want more choice. Their parents were content with a standard program, and they were grateful for that. Individuals coming in today want more options, more flexibility.”
ACTS turns to generation industry studies as it shapes new facilities and updates existing communities. Coupled with annual satisfaction surveys it distributes to residents and people on its waiting lists, it determines what needs are not being met in its facilities. For example, Mashner learned that residents prefer to choose among a casual eatery, gourmet restaurant and snack bar venue for meals rather than eat in a grand dining hall.
“We try to make our centers less institutional,” Mashner says.
As part of that, ACTS seeks property in both rural settings and suburban neighborhoods.
“We recognize individuals have different preferences,” Mashner says. “It’s like whether you want a Ford, Chevy or Volkswagen. They all have four wheels, but the differences are what features people find attractive.”
Mashner describes the organization’s growth strategy thus far as a game of leapfrog: It built communities where it already has footprints, filling in suburban properties around the metro area.
“If we have several operations in a certain area, it’s beneficial to build nearby where we can use existing operations as a reference and support,” Mashner says.
In Philadelphia, ACTS’ reputation secures the company’s market share.
“Having been here for almost 35 years, we have significant name recognition, and those who know our name have a positive impression of us,” Mashner says. “So we build on that.”
Traditionally, the company’s growth has been through new construction. ACTS has built 16 communities in the last 35 years and acquired two facilities, one in Florida and one in Rock Hill, S.C.
Considering the resistance from anti-development groups ACTS experiences when laying out plans for new facilities, acquisitions are a more efficient way to grow, Mashner says. Acquisitions present opportunities to enter new markets without wrestling with real estate and new construction issues. By assuming ownership of existing facilities, ACTS can open its doors much faster, in a little more than a year. But any acquisition has to be a good fit.
ACTS acquired its Florida property was after making sure it had amenities comparable to other ACTS facilities. This was especially important as ACTS has continued to update and enhance its services to stay ahead of the curve. Acquiring a subpar facility would be counterproductive, which is why it has historically expanded only through new construction.
“The nice part about building from the ground up is the whole product is what you want it to be,” Mashner says. “An acquisition can have facets that you wouldn’t include if you were building it from scratch.”
One example is wellness and fitness facilities.
“In an acquisition, they may not have that in place,” Mashner says. “You have to determine, do they have the capability to support it.”
Mashner says ACTS will consider approaching acquisition candidates in its three key markets because acquisitions allow it to jumpstart growth.
“There are opportunities in the Philadelphia area, and we would be receptive to those,” he says. “What’s good about it is that operations are already up and running and blending into the existing corporation is easier.”
With acquisitions come employees. Human capital is the deciding factor in whether a facility will be acquired, and the people who work in the existing organization determine whether it will blend into the ACTS culture. After all, ACTS is in the people business, and in any business, people matter most, Mashner says.
“We look at the employees as part of the overall decision and the due diligence process,” he says.
Acquiring a facility with a talented staff removes the pressure of finding qualified workers in an industry where labor is scarce.
Labor challenges
Because much of what ACTS provides is based on service, it’s critical that Mashner has a staff at each facility that is qualified and capable of delivering a great overall experience.
“In heath care, there are concerns over the limited number of talent,” Mashner says. “Over the past couple of years, the number of nurses coming into the industry has continued to decrease, and the need for nurses is growing. There is competition for trained and skilled staff, especially in retirement housing.”
Meanwhile, many of the people who reply to ACTS’ help-wanted ads are foreign-born. Of its 5,800 employees, 35 percent are immigrants, largely from places such as the Caribbean and Mexico. That can pose language difficulties, Mashner says, so English courses supplement job training, and supervisors brush up on Spanish. ACTS offers programs for both camps.
“We even have residents in our communities who are participating,” he says.
Because competition for skilled nurses is so great, ACTS’ retention efforts center on career development so it can continue to provide opportunities for its employees to grow within the organization. More than 2,000 employees participate in 66 programs at ACTS’ Corporate University each year, including certification courses for college credit, three-year chef programs and management degree programs.
Additionally, supervisors and professionals teach programs on topics such as preventing resident abuse. Online training programs allow employees to log on in kiosks at work, access programs and participate in the courses.
“We also set up a leadership academy that focuses on developing supervisors,” he says.
The retention efforts have paid off. Four years ago, the company had a 39 percent turnover rate.
“This past year, our turnover rate hovered around 20 percent, and our target is 15 percent,” Mashner says. “We already have six communities who were at 15 percent at the end of the year.”
Mashner recognizes ACTS’ mission is to serve its residents, whether the organization must change, grow or adopt new services to do so.
“This is a business that affects the lives of people,” he says. “That is really what we are doing — providing a need and responding to individuals.” How to reach: (215) 661-8330 or www.acts-retirement.com