GRAND RAPIDS — A need to generate administrative efficiencies and better compete for talent contributed to driving the affiliation between senior living providers Porter Hills Presbyterian Village Inc. in Grand Rapids and Chelsea-based United Methodist Retirement Communities Inc.
The two nonprofit organizations this month finalized an affiliation that provides for shared governance and leadership. Each remains a separate corporate entity with a local board while they operate as one organization.
Together, Porter Hills Presbyterian Village and United Methodist Retirement Communities serve more than 6,700 senior citizens in 22 counties, employ more than 1,300 people and generate $150 million in revenue.
“There is a strong strategic case that we are stronger together than either one of us can be on our own,” said Steve Fetyko, the interim CEO overseeing both organizations under the affiliation.
“We wanted to be kind of master of our own destiny. By joining together, we think we have a better chance of really controlling what our future looks like,” Fetyko said. “By coming together and creating this larger, shared affiliation, we increase bargaining power and gain some efficiencies, in particular at that administrative level. That would allow us together to become stronger financially, which then cascades into an ability to reinvest in ourselves and invest in growth opportunities.”
For instance, Fetyko cites the administrative savings that come from having one statewide CEO or single individuals for other shared executive positions. Through the affiliation, the two nonprofits can also gain greater purchasing power in areas such as employee health benefits, medical supplies and many other contracts for goods and services.
A strengthening voice
Since residents at either organization are generally paying for their care through Social Security or retirement income, “we need to be really efficient when it’s not affecting our direct care models,” he said.
A larger organization and market presence also provides benefits through having a bigger voice with the state when addressing Medicaid, Medicare and issues affecting senior care.
“We serve enough people (that) our voice does matter more and maybe is heard a little more,” Fetyko said.
Porter Hills operates nine senior communities in the Grand Rapids area that offer affordable housing, independent and assisted living, rehabilitation, skilled nursing and memory care, plus an in-home care agency.
United Methodist Retirement Communities has nine locations in Southeast Michigan that include independent and assisted living, memory care, rehabilitation and skilled nursing.
Both organizations also offer Programs of All-Inclusive Care for the Elderly, or PACE, which provide an array of medical and social services for frail and elderly persons.
In announcing their affiliation, Porter Hills and United Methodist Retirement Communities said their combined operation creates the third-largest nonprofit senior living organization in Michigan and a top 75 provider in the U.S. The affiliated organization also ranks among the top 25 nonprofit affordable housing organizations in the nation.
Both Porter Hills and United Methodist Retirement Communities had been looking at their options for the future. The two nonprofits first connected last year through a boutique investment bank, Chicago-based Ziegler and Co., which was working with Porter Hills.
The decision to affiliate follows months of due diligence that started in August 2018.
“We worked thoughtfully to ensure not just the right financial and operational fit, but the right culture and ethos for a truly strong partnership,” said Mary Wagner, chair of the Porter Hills board. “We are pleased at the outcome and optimistic about the future.”
Through the affiliation, United Methodist Retirement Communities can benefit from the in-home care service Porter Hills operates, as well as the Tandem 365 care model that uses partnerships with community organizations and local care providers to assist seniors living at home who have complex health conditions.
Porter Hills can learn from the 113-year-old United Methodist’s expertise in repurposing aging residential facilities on its Southeast Michigan campuses.
Operating as a single organization also gives both companies a greater ability to compete for talent in a tight labor market, both in administrative positions and care settings. Each company competes for nurses and clinicians against major health systems such as the University of Michigan and Trinity Health on both sides of the state, and Spectrum Health in Grand Rapids.
“And it’s hard to compete with them. So by getting some additional scale, that gives more ability to compete at that level and think differently,” Fetyko said.
Porter Hills and United Methodist need to make sure “we are very market competitive for what we pay our team members” and together can do more in areas such as supporting continued education for staff, he said.
“Low unemployment is great for the workforce, but it means our team members have much more opportunity. We need to make sure we’re providing the pay structure and the benefit structure that makes them never want to look somewhere else,” Fetyko said. “That’s always going to be a pressure.”