Cassia Pursues Senior Living Growth, Medicare Advantage Play After Merger

Cassia Pursues Senior Living Growth, Medicare Advantage Play After Merger

Medicare
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Next week, about 125 people will start working out of the new home office of Cassia, the senior living organization formed through the merger of Elim Care and Augustana Care.

Located in a renovated building in the Minneapolis suburb of Edina, Minnesota, the Cassia headquarters will be the corporate hub for a nonprofit provider serving about 22,500 people across five states — including about 3,000 independent living and assisted living residents.

With its new scale, Cassia plans to expand its senior living footprint, get into the Medicare Advantage space, and pursue other ambitious goals, CEO Bob Dahl told Senior Housing News.

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Rural meets urban

In February 2017, Dahl received a lunch invitation from Tim Tucker. At the time, Dahl was CEO of Elim and Tucker was CEO of Augustana, both based out of Minneapolis.

At their lunch, Tucker and Dahl first discussed the two organizations affiliating — a process that would involve Tucker retiring and Dahl starting a new chapter in his senior living career.

That career began in 1981, when Dahl was hired as a summer administrative intern at Elim Care. He went on to earn his nursing home administrator license and take a job with a provider in New Jersey. After five enjoyable years, Dahl and his wife decided to move back to the Midwest — they now had a child and wanted to be closer to family.

That decision led Dahl to become executive director of Rest Haven, in Holland, Michigan.

“It’s a great nonprofit community,” Dahl told SHN. “I thought I’d stay there for quite some time, and then one day, I got a call from Elim.”

Elim’s CEO was retiring, and wanted to give Dahl’s name to the search committee as a potential successor.

“I told my wife, I got this call, and the first words out of her mouth were … we’re not moving,” Dahl said. “It turned out, we did move, and she would say it’s the best move we ever made.”

With Dahl at the helm, Elim Care expanded from five nursing homes to a diversified senior living and care company with 14 campuses, a therapy arm, a 50% stake in a home health agency, and a major regional medical supply business.

Elim’s annual core service budget reached about $120 million, which was about equal to Augustana’s at the time when Tucker extended his lunch invitation. Although roughly equal in size, the two organizations also had differences that made a combination attractive.

Courtesy Cassia

Whereas Augustana had roots as an urban provider in the Twin Cities, Elim’s footprint was more rural. And Augustana Care’s portfolio was weighted more heavily toward private-pay senior living, compared with Elim’s.

Affiliation also made sense from a leadership perspective. Not only was Tucker planning to retire from Augustana, so too were the company’s CFO, COO and chief human resources officer.

Increasing pressures and changes in the senior living sector also made the merger attractive, even necessary, for these two organizations— as has been the case with many other nonprofit affiliations around the country.

“Tim [Tucker] really believed that with all the changes coming — regulatory, workforce, reimbursement, new insurance products … and value-based purchasing initiatives — that our organizations needed to be stronger,” Dahl said.

The affiliation became effective Jan. 1, 2018. Last year was dedicated to integration efforts, including: leadership transitions; new governance structures; getting on common tech platforms and streamlining processes; and preparing for the move to the new home office.

“Early on, we talked about finding the Cassia way, not retaining the Augustana or Elim way,” Dahl said. “It’s going along really well — not without hiccups, but no meltdowns or anything that’s left major scars. It’s really been a unifying process.”

The go-forward strategy

As of Jan. 1, 2019, Cassia should be fully positioned to execute on the strategic plans that have been drafted, Dahl said.

Growing Cassia’s senior living portfolio is one part of the strategy. It’s a play that Dahl is familiar with, as he spearheaded Elim’s push into assisted living after taking the reins as CEO.

“It was a recognition that [assisted living] was the future and we needed to be part of it,” he said. “That trend continues today, even more so, because certainly the nursing homes are more and more challenging to operate.”

That said, skilled nursing will continue to play an important role for Cassia, with a smaller number of beds but an upgraded approach to running this portion of the portfolio. For instance, Cassia is nearly ready to finance a project in the suburbs of the Twin Cities, which will involve rebuilding an outdated care center and creating about 80 beds of independent living/assisted living/memory care, along with an adult day service.

Dahl believes full-continuum communities such as this one are the ideal way to serve the senior population, and hopes to develop other projects along these lines. The forthcoming project will be a rental model, as are all of Cassia’s existing full-continuum communities.

Cassia’s growth is well underway, considering that Augustana and Elim had projects in the pipeline prior to the merger, with six new sites under construction even as the affiliation was coming together. Given that Minnesota is already a stronghold for Cassia, the strategy is to build up regional scale in other areas where the company has a footprint, meaning Iowa, North Dakota, Colorado and Florida.

In addition to growing its portfolio of owned and operated communities, Cassia is also actively pursuing third-party management opportunities, Dahl noted.

While growing its portfolio, Cassia intends to expand into new service lines as well.

Just as Cassia was launching last year, the board gave authorization to start a new pharmacy company. This internal pharmacy now serves about 85% of Cassia’s sites, is profitable, and will look to bring on outside customers down the line, Dahl said.

Creating a Medicare Advantage (MA) insurance offering is another priority. Doing so is a trend in senior living, as providers see new opportunities for MA to reimburse services within assisted living. And companies that serve a large population of potential beneficiaries, and offer a range of services that could be covered under MA, are particularly well-positioned to create plans — although doing so is not easy.

Dahl and his team are considering a variety of potential avenues into MA, including Cassia starting its own plan, partnering with other senior living providers to launch a plan, or working with existing MA insurers.

“I’m pretty committed to getting us in that space, it’s just with the right design and the right partner, if that’s what we choose,” Dahl said.

The goal is to make those decisions by the end of the year, he added.

Other areas of focus include driving technological innovation and pursuing workforce initiatives.

On the innovation front, Augustana had used grant funding to establish a lab for technology to support aging in place. Now, Cassia is using one of its large housing sites as a testing ground for these types of technologies.

And in terms of workforce, the affiliation has enabled Cassia to create a recruitment team, which is dispatched to sites that are struggling to attract and hire workers. Thanks to these efforts, Cassia has been able to almost completely eliminate the use of temporary labor across the enterprise.

“That’s a huge advantage I’ve seen come out of the affiliation,” Dahl said.

Although the affiliation is already bearing fruit, Dahl also is aware that it is still early days, and establishing a strong shared culture is imperative. The imminent move to the new home office should be another important step forward, he believes, saying that the custom-designed space is meant to enable and encourage collaboration.

“There are some great design elements in there to facilitate the culture, the mission, the values of our organization,” Dahl said.


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