Approximately 36% of not-for-profit senior living providers manage other communities through a separate subsidiary or division, according to specialty investment bank Ziegler.
Offering third-party management, consulting services or assistance with technology is a growth strategy with which many providers have found success, wrote Lisa McCracken, Ziegler’s director of senior living research and development, in an article in the latest issue of the company’s “Senior Living Z-News” newsletter.
“Unlike the for-profit owners and operators, many not-for-profit providers offer third-party management as a step toward potential affiliation at some point in the future,” she said.
Such arrangements can take advantage of companies’ expertise and capacity and can generate “significant” revenue, McCracken said. To be successful, however, organizations must ensure that expansion dovetails with the company mission and that the organizational structure mitigates risk to the parent company, she said. Also, McCracken added, the parent organization may need to dedicate staff members to the function.