Frontier Senior Living CEO: Now Is the Time to Build, Not Wait

The senior living industry must start on the path of new development – and soon, according to Frontier Senior Living CEO Greg Roderick.

Roderick and Frontier Senior Living are putting that notion to the test by taking a targeted approach to building new. Over the next 12 to 16 months, the Dallas-based operator is targeting 5 to 10 new developments that include full-continuum properties, with prominent independent living components to attract the baby boomers.

“I don’t think it’s going to get less expensive. Interest rates are what they are, your land is going to cost what it costs and the cost of construction is what it is,” Roderick said during the most recent episode of the SHN Transform podcast. “I think it’s more about realizing where we are and just hunkering down and starting construction.”

Frontier’s leaders are targeting states the company is already operating in and preparing to take on 5 to 10 new management contracts to oversee new communities. This new growth follows a period of change for Frontier Senior Living. The Dallas-based provider shrunk from over 120 communities to 25 today.

“The results have really spoken for themselves. We’re staffing well, we’re charging the right rate and we’re following the rules and regulations in every single market,” Roderick said.

As part of these changes, Frontier Senior Living overhauled its staffing model to include more training opportunities for staff, while aligning clinical care standards based on State of Oregon assisted living requirements, regarded as one of the toughest regulatory environments today, Roderick said.

“We have one model that meets all states at a far higher level than anyone expected,” Roderick said. “They can all speak the same language about how they staff, we can measure everything the exact same way and our levels of care and how we price based on minutes are all aligned.”

Editor’s note: The following transcript has been edited for length and clarity.

On Frontier’s current portfolio:

We are a company based in Dallas, Texas, with properties spanning from the Pacific Northwest through the mountain states of Nevada, over to Texas, up through the Midwest and into some Midwestern states, and we are now venturing into Georgia and Florida. So, we are truly across the entire United States. We have 25 open and active properties, with conservatively 5 to 10 management contracts nearing the signing date and another 5 to 10 strong likely new developments that will break ground over the next 12 to 16 months.

On reshaping Frontier’s portfolio:

I think some of the toughest lessons I had to learn were that we were getting so much business, business was just coming to us. We had been in business for many years, people knew about us and our competition was doing well, we were doing well. Those days of easy growth, we certainly missed that. We’ve had to work really hard to keep ourselves relevant, stay out in front of the business world, the development community and the investment community. There are a lot of new and very good competitors out there.

The ‘build it and they will come’ mentality is gone and we’ve had to really reemphasize who we are, get the message out and perform extremely well. On the investment side, if you perform really well your building can sell for a high amount. We’ve seen a lot of buildings perform really well and then exit, and that’s been hard, saying goodbye to those buildings we worked so hard on.

Although they’re thriving, and we’d love to see them continue to thrive beyond us. We’ve also had to say goodbye to some people. When you shrink from 130 buildings down to 30, you have to say farewell to certain people. Some have gone on to do great things with other companies, some have gone on to start their own businesses inside or outside the industry. It’s hard to say goodbye but it’s great to see people thrive.

On how technology helps shape operations:

There’s the promotion of new tools available to our industry and they are very dynamic and innovative. Technology is going to continue to evolve and just get better. As a company, we have moved software for our CRM and accounting, and we’ve outsourced our accounting team to a professional firm. That’s all they do. We’ve made some pretty major adjustments, but what we haven’t done is diverted our attention entirely to new technologies. We’re learning about them, we’re interviewing companies on remote patient monitoring like everyone else, we’re just not quick to pull the trigger. We’re being very mindful of the costs and the liabilities.

In the future, it’s just going to be better. Sitting back and holding off for a year or two, or even longer, we’re probably going to get in at a better price point and a better point in time where those systems will speak to our existing systems more easily. So we’re just laying back for a moment and allowing all of those things to work themselves through.

It’s fun to look back at the last year and a half. We immediately focused on connecting closely with all of our teams. We had several hundred training sessions, multiple per day, offered to a wide variety of departments including environmental services, clinical and culinary. We were doing high frequency, very short training, anywhere from 5 to 15 minutes, on a broad number of topics. We did 371 trainings last year. This year we’ll probably do around 250 or so. Really connecting with our people in so many different ways, even bringing in vendors and guests to speak on different subjects, which was a very good connection. We saw our turnover drop drastically.

The other thing is just being able to get around to our buildings. With a half dozen or a dozen of us we can get around pretty quickly and touch them all the time. We just concluded our 20th consecutive month of net occupancy gains. Some of those months we went up five, some months we went up 40, but having 20 months in a row is something we announce internally and externally and it really does build camaraderie and a great culture of winning. Everybody wants to win and it’s been really fun seeing our entire industry go up again.

When COVID hit us about six years ago, it was a terrible time. We all took our lumps, losing residents and losing staff. It was scary and there were so many different issues hitting us at once with occupancy dropping so fast. To now have 20 months in a row just feels great. It almost feels like a reset, back to where you were with that momentum building.

How staffing evolved during Frontier’s transition:

Having a staffing model that is set for all communities and based on the toughest rules and regulations is a very difficult framework. Why would you put yourself through it? But you are meeting the nation’s highest standards. At that point you have one model to share. We’re not saying if you’re in this state you can staff to this minimum. We were able to put it all in one frame and it actually sounds really odd but we are saving a lot of money. We have one model that meets all states at a far higher level than anyone expected. We’re saving money and we’re able to share this clinician or this business office manager. They can all speak the same language about how they staff, we can measure everything the exact same way and our levels of care and how we price based on minutes are all aligned. Everything is now perfectly aligned.

The outcome is we don’t have to worry about whether we’re staffing appropriately when state surveyors come in. We know we’re staffing at the highest level so that’s off the table. The surveyors are appreciative of our commitment and our survey results have been fantastic.

The results have really spoken for themselves. We’re staffing well, we’re charging the right rate and we’re following the rules and regulations in every single market. The number of complaints we’re getting from residents or families has been zero last year and this year. That’s clinical, that’s culinary and that’s environmental. We are experiencing very high levels of resident satisfaction. Those play really well in the world of social media. When you’re getting no deficiencies and happy residents it feels good to showcase those things.

On why Frontier is pursuing new development:

New development is extremely necessary. There’s a huge demand coming and we’re starting to see the early stages of the boomers now. We have seen a significant lack of development, understandably. From an investment standpoint if you’re strictly into the real estate investment side of this business, buying existing versus risking new development is a real consideration. I’ve always been involved in some way in development throughout my entire career and there are ways to reduce the risk. Get a market study. Look at your NIC Maps opportunities where you can see where there’s demand and where there isn’t. You can engage a market study specialist and say ‘Can you run a market study in this particular town? Is there a need here? What would the demand be for this specific site?’ Those are minimal investments to find out if this is going to work.

The obvious states are going to be the sunshine states, Arizona to Florida, where people are moving. But there is also a compelling demand story in the Midwest. Wherever you see population growing that’s typically good. It is very wise to spend whether it’s $3,000 or $7,000 on a market study. It’s cheap insurance to find out where the demand is. It is also helpful having a team built, whether it’s your general contractor, project manager, architect, lender or investor. Make sure you’ve got your team ready to go because there is significant demand. We completed a property about two years ago in the Dallas-Fort Worth market and just opened the last of the cottages. It’s filling up at a rapid pace. We built the same building down in Spring, Texas near Houston a couple years back and it filled right up. We’re seeing the effects of building a thoughtful, beautiful property.

We keep the band together, calling on the same lenders, investors, general contractors and architects from town to town and that has paid off in big dividends for everyone. Most importantly the residents are getting a fantastic property that just gets better and better. We’re hoping to announce before the end of the year at least four more of those 120-unit IL/AL/MC blend properties with some cottages around them. The Boomers like the heavy independent living and the cottages but they also want to know that assisted living and memory care are there if needed for themselves or a spouse. These buildings are very dignified. I would say they really take the fear out of retirement.

On maintaining value amid costly development:

I don’t think it’s going to get less expensive. Interest rates are what they are, your land is going to cost what it costs and the cost of construction is what it is. I think it’s more about realizing where we are and just hunkering down and starting construction. We need to charge what we need to charge. I don’t believe you can go into a market where the going rate is $3,500 for a one bedroom in assisted living and charge $6,000 a month in a brand new building. That’s a hard pill to swallow, although you might be surprised. You might be rewarded by the fact that you built a brand new building in a highly desirable market with pent-up demand. We’ve realized we need to charge what we have to charge and do this right. We owe it to the residents, the staff, the lender and the investors to run this like a business and do a good job. Having confidence in your rates and in your delivery of service will for the most part be the key to success.

On current moment for senior living opportunity:

The last time I saw a period this profoundly affecting our industry was 1990 when the Resolution Trust Corporation took over all the savings and loans and foreclosed all the assets. It was a general mess but the winners were incredibly big. I don’t care if you were in car washes or senior housing, whatever sector you were gobbling up you were rewarded immediately. It was fantastic.

Then later in 1997, 1998 and 1999 we saw a big explosion of construction. Sun West Management out of Salem, Oregon was exploding in size, Holiday Retirement was building out vast numbers of buildings and Sunrise was making their big push. These were big moments in our industry and exciting times but they also kind of flooded the market. Everyone was anticipating the boomers coming. Well here we are 28 years later and the boomers are here. Those buildings did well and some took a little longer to fill but today they’ve done great things.

COVID was the start of a very difficult time and I would say the last five or six years have probably been the hardest for anyone in this industry. Anyone who jumped into this business seven or eight years ago probably really regrets it. Anyone who jumped in the last couple of years is probably thinking this is the best thing they could have ever imagined.

We are going to have to do some major development. We just have to do it. Or we have to buy hotels and somehow make those work, which will be very difficult. Student housing communities are another option but who knows what colleges are going to do. There’s a population reduction underway, fewer children are being born and fewer people are going to be able to afford college. States aren’t going to be able to keep them funded like they are today.