The March 2019 merger of Porter Hills Presbyterian Village Inc. in Grand Rapids and Chelsea-based United Methodist Retirement Communities Inc. brought together the strengths of two like-sized and like-minded organizations.
For the senior living nonprofits, the deal afforded greater opportunity to generate administrative efficiencies, favorably compete for talent and better divert dollars to directly serving their communities, according to United Methodist Retirement Communities President and CEO Steve Fetyko.
Porter Hills Presbyterian Village Inc. and United Methodist Retirement Communities Inc.
Top executive: Steve Fetyko, president and CEO
Annual revenue: $120 million to $150 million
Full-time West Michigan employees: 650 people, 1,300 overall
Brief business description: Operator of senior living communities and senior services provider
Advisers: MHS Consulting LLC, B.C. Ziegler and Co. (financial)
“I think (the merger) was unique from the standpoint that it’s really two very like-sized organizations choosing intentionally to come together, not out of a dire need, but of a desire to strengthen our ability to serve those that live with us or receive our services,” Fetyko told MiBiz.
The combining of Porter Hills and United Methodist Retirement Communities, which won the nonprofit category in the 2019 MiBiz M&A Deals of the Year Awards, creates the third-largest nonprofit senior living organization in Michigan and a top 75 provider in the U.S., according to the organization.
In addition, the new organization’s commitment to affordable housing places it among the country’s top 25 nonprofit affordable housing organizations.
United Methodist Retirement Communities is now the sole shareholder of Porter Hills, although each nonprofit maintains separate boards with representatives of both organizations serving on each board. Previously, Porter Hills was held by Westminster Presbyterian Church in Grand Rapids.
Together, Porter Hills and United Methodist Retirement Communities employ more than 1,300 people, with 650 full-time employees in West Michigan. The combined organizations serve more than 6,700 senior citizens annually in 22 counties across the Lower Peninsula and generate $120 million to $150 million in annual revenue, according to Fetyko.
“From both sides, (the merger) was a way to strengthen, to offer some additional opportunities and to remain independent — apart from larger health systems,” Fetyko said.
So far, the organization has found a proportionate cost savings in combining overhead and administration and gained enough scale to have greater bargaining power with vendors.
“We’re preserving more dollars to invest in those who directly deliver care and services to be able to reach more people together in service of our missions than we could have each of us on our own,” he said.
As the consolidation trend in acute care spreads into senior living and senior services, both Porter Hills and United Methodist Retirement Communities were looking for a deliberate “coming together of equals,” Fetyko said.
“We wanted to be able to move forward on one of these (deals) when we weren’t forced to or we could do it by choice rather than by necessity,” he said. “For both organizations, it seemed like an opportune time. As we grew to know each other, we could do this from a position where it was a want rather than a need.”
The spring merger came after a six-month due diligence process that began in August 2018. The transition and integration process remains ongoing, as both organizations learn and grow from each other to standardize best practices.
“We’ve intentionally tried to take it a little slower because we want it to be a meld of both cultures and both organizations rather than one side or the other coming in and saying ‘this is the way we do things,’” Fetyko said. “We want to take the opportunity to learn from both sides and which might be in the best interests to those we serve — and sometimes it’s a third choice. Let’s take elements of both and create a new way we go about our business that would really be better than either one of us has thought possible before.”
For nearly 50 years, Porter Hills has provided communities and services for older adults and has a variety of senior living options in 10 communities across West Michigan. Affordable housing, independent and assisted living, rehabilitation, skilled nursing and memory care, and in-home care have all been a part of the organization’s mission.
Building on a foundation of 113 years of service, United Methodist Retirement Communities has nine locations in Southeast Michigan that include independent and assisted living, memory care, rehabilitation and skilled nursing.
Taking the time to allow established employees to adapt to change, contribute new ideas and become comfortable with new processes has allowed both Porter Hills and United Methodist Retirement Communities to learn “from both sides of the state” to achieve the best results, according to Fetyko.
“We certainly have had our hiccups, but fortunately, we have wonderful team members who really are very grounded in the ‘why.’ Both the organizations are getting very firm in our understanding and our commitments to why are we doing this,” he said. “We’re better able to serve not only the people who live with us and utilize our services today, but lay the groundwork for being able to serve more older adults going forward.”
MiBiz new coverage of Michigan’s nonprofit sector is made possible through a generous sponsorship by Grand Rapids Community Foundation, a leader in funding, initiating and leading programs that benefit the greater Grand Rapids area in arts and social engagement, education, health, neighborhoods, economic prosperity and the environment. For more information, visit grfoundation.org. This sponsorship is advertising. It has no effect on editorial consideration in MiBiz.