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An Assisted Living Success Story

January 1, 2004
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Interview with Dwayne J. Clark, President/CEO, Aegis Assisted Living (Sidebar: Financing Progress, based on an interview with Curt Schaller, GE Healthcare Financial Services)
An Assisted Living Success Story

INTERIEW WITH DWAYNE J. CLARK -egis Assisted Living, headquartered in Redmond, Washington, was founded in 1997 by Dwayne J. Clark, former executive vice-president of Sunrise Assisted Living and now -egis' president/CEO, and William P. Gallaher, former president of Oakmont Retirement Communities and now managing member of -egis Assisted Living, LLC. The company has enjoyed remarkable success in an era when the assisted living "gravy train" was grinding to a painful halt-or at least slowing to a crawl-for so many owners, investors, and developers. In contrast, from 1998 (when its first income was earned) to 2002, -egis' revenues grew from $357,776 to $46.5 million. -egis now operates 30 assisted living residences in the states of Washington, California, and Nevada, with three more under construction, and it employs 1,500 people. Its buildings range from 43 to 158 units; four of its facilities include independent living apartments.

In October 2003, Inc. magazine ranked the company third on its list of the 500 fastest-growing companies in America, and Washington CEO magazine chose -egis as its 2003 "Best Company to Work For" in the state of Washington-out of a field of 112 nominated companies. It's significant that employee votes counted 50% toward this ranking.

Because of -egis' head-spinning success, and because such success clearly points to two essential elements-staff and customer satisfaction-Nursing Homes/Long Term Care Management Editor Linda Zinn asked Clark to share with our readers some of the reasons for his company's phenomenal growth. His insights follow; some might surprise you.

Zinn: To what factor, more than any others, would you attribute your company's success?

Clark: The number-one factor is the people we have on our management team. That team shapes company culture and causes it to evolve. Our culture is unique: Our goal has always been not just to have a top-notch senior housing company, but a top-notch business.

When you look around at senior housing, it's apparent that this industry has come to the game late in terms of how we pay staff, how we look at benefits for employees, how we reward them when they produce great amounts of revenue, and how we approach business practices. Frankly, when we started -egis Assisted Living we didn't see any great senior housing companies to model our business after, so we looked at the best business models we could find, at the best companies around the world, and emulated those.

For example, we wanted to avoid the pitfall of staff turnover. We observed that senior housing companies generally were rather complacent about it. So many people simply shrug and say, "Oh well, that's our industry." We went outside our industry to see what Costco, the retail warehouse giant, was doing, because we'd heard about its extraordinarily low turnover.

When Costco was developed, the average staff turnover among businesses of its type was 300%. Its owners set a strategic goal to get their turnover rate below 20%, reasoning that if they could do that, they would save millions of dollars and, with that savings, create market dominance. Cost-co's turnover rate today is only 10 to 11%, which benefits not only its shareholders, but also its customers, in the form of lower prices.

Zinn: How is -egis' turnover rate?

Clark: It's the lowest in the senior housing industry, ranging between 23 and 55%. That's compared to 120%, which is the industry average.

Zinn: How do your salaries compare with those your competitors pay in the areas where you have facilities?

Clark: We pay our management staff as much as double what our competitors pay theirs. For example, our executive directors who manage small buildings-i.e., 80 units-receive salaries of between $75,000 and $95,000. Our top bonused administrator last year made a $47,000 bonus. Compare that with the average executive director of an assisted living community, who is paid a salary of only $46,000 a year.

Zinn: Do you also pay your frontline staff more?

Clark: No, we pay our hands-on line staff almost the same hourly wages as our competitors pay, but the edge we have is that all our employees are eligible for profit sharing. For an average $10/hour worker, this could mean another $500 to $1,500 a year. In addition to profit sharing, we have an exceptional benefits package. For one thing, we give healthcare benefits to our line staff, which is becoming less common in our industry. We also provide for both our managers and our line staff what we call "soft" benefits. These are benefits they enjoy as a result of our negotiating with all our vendors on their behalf.

For example, all employees can get haircuts for $3 at any of our buildings, as well as discounts on massages, tux rentals from our uniform company, laundry services, food, and much more. We also negotiated with the bank that handles all our deposits to provide our staff with free checking. In fact, we ask every vendor we deal with, "What can you do for our staff?" The resultant discounts and benefits add up in real dollars that cost us nothing but show our employees that we're advocates for them.

Zinn: In addition to paychecks and benefits, what is the best way you've found to show your staff they are appreciated?