The current and anticipated continued growth of the senior housing market has been well-established.  Much of the recent industry news seems to focus on the projects and mergers of very large-scale operations, like the $2.8 billion Brookdale Senior Living and Emeritus Senior Living merger.  The opportunities and growth of these large operations is undeniable, but as pointed out by Senior Housing News, there is another segment of the senior housing industry that also has a promising future: the smaller operations.

The Burdens of Going Big

Bigger isn’t always better.  Opportunities to benefit from scaling operations abound but so problems can be scaled along with them.  Employee management and satisfaction can become more difficult and harder to manage.  It’s difficult, if not impossible, for one of thousands of employees to really have a voice and feel committed to the company.  Its much easier to achieve this goal when employees are only one of a few hundred or fewer employees.  Similarly, when two large operations merge there is often a great deal of redundancy between their employees and it can take months to years to sort it out and adjust roles.  Finally, large operations are almost always beholden to more investors – which means more differing opinions to appease and more focus on profit margins.

The Advantages of Staying Small

Smaller providers, with 10 communities or less, still make up about 60% of the senior housing market and there’s good reason.  All of the burdens of going big mentioned above are advantages of staying small.  Smaller operations can react quicker and more easily make changes, tend to have more “mission-focused”  employees less prone to turn-over, and change corporate structures more easily.

In addition to these corporate operating advantages, smaller operations are able to provide a more customized, personal experience to residents.  Local owners are much more accessible to residents and their families.  Randy Holcombe, President of Regency Senior Living (10 communities), even provides his cellphone number to residents and their families.  Additionally, since it is easier for employees and administrators to communicate with one another and make changes to policies, its often easier for residents to obtain exceptions or specialized services.  In an industry whose purpose is caring for others, this individual touch is a huge competitive advantage.

Translating the Small Advantage to Consumers

One advantage that larger operations typically do have over smaller ones is their budget.  However, with careful planning and use of local knowledge, smaller providers can capitalize on marketing opportunities and showcase their unique advantages to consumers.  Marketing is an expense, but a necessary one.

Financing for Senior Housing Providers of Multiple Sizes

Of course, even (relatively) small senior housing projects require capital to begin or continue their success.  Contact Cambridge Realty Capital today to discuss the financing needs of your project and learn why many owners and operators have chosen Cambridge Realty Capital as an alternative to large, traditional banking institutions.

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