Expect to see Human Good and Presby’s Inspired Life expand into the middle market after their affiliation is finalized, HumanGood President and CEO John Cochrane told McKnight’s Senior Living.

The two organizations on Monday announced their plans to create a unified company in a deal expected to close by June 30. Based on the numbers from the 2018 LeadingAge Ziegler 200 list of largest not-for-profit U.S. senior living providers — on which Pleasanton, CA-based HumanGood ranks eighth and Lafayette Hill, PA-based Presby ranks 28th in total market-rate and affordable housing units — the combined entity will be the sixth largest not-for-profit senior living provider in the country.

Once the affiliation is finalized, Cochrane will assume leadership of the merged organization. Presby President and CEO Judee Bavaria is retiring but will stay until the end of the year to support the transition.

Presby will keep its name for now, with the expectation that it will assume the HumanGood name sometime in the future.

The Pennsylvania organization’s commitment to expanding its mission to serve the middle market was one of the reasons HumanGood was attracted to it, Cochrane said Monday between “town hall” meetings at Presby’s market-rate senior living communities, where he, Bavaria and the organizations’ two board chairs were discussing the affiliation with staff and residents.

The middle market is “vast” and “so dramatically underserved today,” he said.

HumanGood President and CEO John Cochrane

“We are actively looking at opportunities there, and I think we’re actually taking an approach that is somewhat unique in the field,” Cochrane said. “When you talk to most people in our field about getting into the middle market — and I’ll say middle market, although it ought to be middle markets, plural, because there’s not just one monolithic market there — what most people mean is, they’re taking a CCRC and they’re trying to ‘skinny it down’ and remove some services and make it a little more financially accessible.”

Although that approach is “fine” and will allow an operator to reach a larger market, he said, “We’re looking at taking our affordable housing expertise and trying to leverage that up into the lower middle income market with a market-rate product that will much more closely align with what we currently do in affordable housing.”

Both HumanGood and Presby’s Inspired Life have a considerable number of affordable housing properties in addition to their market-rate communities. HumanGood has 59 affordable housing communities in California and Washington along with 18 continuing care retirement communities (also known as life plan communities) across five states in the West. Presby has three senior living communities in Pennsylvania and 35 affordable housing communities, one in Delaware and the rest in Pennsylvania.

The concentration of properties in the Philadelphia area was appealing to HumanGood, Cochrane said.

“We believed that there was enough scale, mass and market presence to effectively run this as a regional operation, keep the leadership teams in place and really build on a very strong foundation that has the scale to make this manageable from a remote perspective,” he said.

Despite the geographical distance, Cochrane and Bavaria said they first got to know one another about 10 years ago through their work with Caring Communities, a member-owned liability insurance company for not-for-profit senior housing and care organizations.

“We’ve talked through the years about the benefits of consolidation in general, about the dynamics in our field,” Cochrane said. “And I presented to the Presby board a couple times over the last seven or eight years.”

With Bavaria’s retirement looming, Presby began considering next steps about two years ago, she said.

Presby’s Inspired Life
President and CEO Judee Bavaria

“The board was convinced, if I retired, that they would like to look at this ahead of time, before they would go out recruiting for another CEO,” Bavaria said. “So they did, and we shared with them organizations that we felt were important to interview. We interviewed about seven of them. We selected three to visit and we selected HumanGood.”

Two things about HumanGood appealed to Presby, she said. “One is John’s leadership that he displays to the world, and the second thing that’s near and dear to my heart is the fact that not only do they have 59 affordable housing buildings, but they’re really so committed to the ministry that after HumanGood came together, they purchased a development company just for affordable housing.”

The combined organization also plans to expand in the area of affordable housing.

So far, feedback to news of the affiliation has been “very positive,” the CEOs said.

After the first town hall, at the Rydal Park life plan community in Jenkintown, PA, Cochrane said, “I thought the resident population was engaged, very interested.”

“This group would have been the most challenging,” Bavaria added. “We have over 300 independent living apartments, and they usually are the most challenging group that we have.”

No formal town halls are planned for HumanGood staff and residents, although people will have access to a website, videos and additional information, Cochrane said. He’ll be discussing the agreement as he makes routine visits to properties in the West, he added.

“This is of significantly less interest and concern to a lot of those residents,” Cochrane said. “They’ve seen the benefits that come from affiliation, and so I think that they will view this pretty readily as a net positive for them.”

HumanGood came into existence after a 2016 affiliation between ABHOW and be.group; the company changed its name in 2017. The joining of the California company and Presby’s Inspired Life will mark the latest in several high-profile affiliations of senior living organizations finalized so far this year, among them Lifespace and Senior Quality Lifestyles Corp., Acts Retirement-Life Communities and Integrace, United Methodist Retirement Communities and Porter Hills Presbyterian Village and the Evangelical Lutheran Good Samaritan Society and Sanford Health. Presbyterian Senior Living and Westminster Communities of Florida are in talks.

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