By Steve Moran
I wrote about the Atria-Holiday merger a few days ago, expressing a level of skepticism about the likelihood of this being a good idea. A few days ago I got a chance to talk to John Moore, the CEO of Atria, about the merger. I started the conversation in my usual non-confrontational way . . . asking him to respond to the skeptics.
Why It Makes Sense
Here is why he is convinced this is the right move.
First, and perhaps most important, Atria has never been about growth for growth’s sake. This merger/acquisition was a strategic move to leverage the imminent demographic evolution of a huge number of boomers getting older.
Right now the Atria portfolio skews heavily toward the higher end of the market. And yet they know that as boomers start to look at senior living, there is going to be a significant number who are going to say no to high-end senior living, primarily for three reasons:
- The most obvious is that many will simply not be able to afford it.
- Others who could afford high-end senior living will simply want to live in a less expensive, simpler community that will allow them to spend their money on other things: kids, grandkids, travel, and passion projects.
- Third, those who have all the money they could ever need, but would still prefer a simpler lifestyle. These folks would be uncomfortable in high-end senior living no matter how much money they had in the bank.
This acquisition was first suggested by Welltower, believing it would be a perfect fit for Atria where the portfolio would benefit from the finely tuned Atria systems and broaden Atria’s offerings. What the Holiday portfolio offers consumers is a “more approachable” style of senior living.
What Makes the Holiday Buildings Special?
John calls these buildings “Approachable Senior Living”, meaning it is affordable and comfortable. One of the unique features of the Holiday communities is that they are nearly identical to each other. He suggests you should think of them like the B-52 bombers in the military. Since they are nearly identical they are much easier to operate, maintain, and upgrade. That means lower costs for consumers and lower operating costs for Atria.
An important part of the plan (Welltower and Atria) is to give the buildings a small but meaningful “shot” of CapEx and refurbishment. Then, just like the B-52, with just a little bit of updating, the Holiday buildings will continue to serve residents well into the future. This visionary thinking on the part of Welltower sends a powerful message about their commitment to quality and value for residents.
Another thing that makes them great communities is that they are all built on large sites and have mostly one- and two-bedroom units. They have a single community area where all residents can gather for activities and the dining rooms are large enough to seat everyone at the same time. All of this means, according to John, is with a little love and attention, as well as refining how you run the communities — using technology for example — superior service can be provided at a lower cost while creating a great experience for residents. When you use the right systems, you not only create a better resident experience but you create a better experience for team members.
Scaling for Atria means having the right technologies, like their internally developed platform, and picking the right locales. They are primarily focused on the two coasts believing that is where the best opportunities are and where they are most able to find the right people. They see themselves mostly serving the middle of the country with their software services business.
I did ask John if they had plans to go public. His response was mostly no. “Right now they are focused on delivering a great environment and the best lives for our residents”, plus “delivering great results for the people we manage for.”
The Future of Senior Living
My last question for John was to look into his crystal ball and talk about what he sees for Atria and senior living 5 years down the road.
He expects massive change. The demographic math is powerful with the over-80 population growing by roughly 200,000 per year from 2005-2019. It will grow by about 350,000 this year and is projected to grow by around 650,000 in 2026 and then to around 2 million a year where it will stay for the rest of our lives.
We are in a really exciting time where we can expect to see many revolutions because of changing demographics and how different boomers are from prior generations.
I would love to hear your thoughts on the merger and what it means to and for senior living.