Ingleside Balances Margins And Mission To Target Affordability 

Senior living operators must walk a delicate line to balance rate increases with growth to meet demand. That is even more true more so for non-profit senior living operators such as Ingleside.

The Washington, D.C.-based operator has had to roll out “significant” rate increases over the past five years in order to keep up with inflation and increasing labor costs, sometimes going as high as 9%, according to CFO Jamie Spencer. The latest round of increases at the beginning of the year were 4%, he said.

Among the benefits of operating as a nonprofit, Spencer said, is that its foundation can step in and help support residents who feel they can no longer afford their stay and have outlived their assets. While it is rare for that to happen, it brings up a concern with pricing rates above what residents can afford, all while trying to balance margins in an expensive market.

“With no margin, there’s no mission,” Spencer told Senior Housing News. “We don’t seek to overcharge our residents or inflate rates more than they need to be inflated.”

While Ingleside focuses on high-end offerings, it’s looking to further branch out and expand into offerings closer to the middle-market, and is updating its three existing communities with expansions geared specifically toward the baby boomers to better capture incoming demand. The operator is spending this year looking at available sites and looking into investing in ground up development to better control pricing options.

“The baby boomer consumer is looking for something a little different than maybe half the people who are residing in our communities currently who are of a different generation,” Spencer said. “We’re trying to architecturally be more creative with design, bring services to the residents more so than we have in the past and we’ve modernized some of our common spaces.”

To support this growth, Ingleside is looking long-term, Spencer said. Part of that strategy comes from having most of its residents coming from the Washington, D.C. metro, meaning they have a higher level of assets and income to afford living in the communities. There is growing demand for larger units, which cost more for residents to rent. Ingleside’s waitlist currently exceeds 500 people for a community with 233 units.

Spencer said between 10% and 15% of residents will be vocal about rate increases when they do have to enact them. To sway them, someone from Spencer’s team speaks with a resident finance committee on a monthly basis to educate them on community performance and cost drivers such as economic factors and labor costs. Alongside this, the finance team discusses how service and amenity asks translate into the rate increase, and the organization maintains enough liquidity to maintain a BBB credit so it can remain investment grade.

In order to expand its offerings, however, Ingleside has to consider reducing some of its existing offerings, as they would not remain sustainable for middle market customers without pricing them out.

“Inherently, we want to give everyone everything, but we can’t if we’re trying to maintain accessibility from an affordability and financial standpoint, while maintaining a financially solid institution and organization,” Spencer said. “It’s something we’re trying to figure out. I don’t know if we have the answer quite yet, but we’re working hard at it.”

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