At Arvida, it takes a village to create a vital new approach to retirement and aged care
New Zealand native Katherine Mansfield once wrote, “Could we change our attitude, we should not only see life differently, but life itself would come to be different. Life would undergo a change of appearance because we ourselves had undergone a change of attitude.”
Bringing the right attitude to the business of developing and operating retirement and aged care living facilities is the foundational tenet of one of New Zealand’s largest providers in the space, the Arvida Group (NZX:ARV). For Arvida, the right attitude is one that is committed to excellence, service, and deep caring for the residents who choose their long-term living facilities.
Arvida stands apart from its competitors by taking a holistic, truly customer-centric approach to providing quality health and wellbeing services to ageing communities. They are balancing needs-based ageing populations with retirees looking for a vibrant, supportive community in which to live. This is in a challenging environment where not only the needs of populations are rapidly shifting but also the scale of ageing populations are dramatically growing — factors which are not distinct to New Zealand.
The Auckland-based firm operates 29 villages, caring for over 4,000 residents in Auckland, Waikato, Bay of Plenty, Taranaki, Manawatu, Wellington, Nelson, and Canterbury. A range of residential home settings are offered from independent villas to apartments, serviced apartments and studios for semi-independent living, as well as rest home rooms, hospital care beds, and secure dementia care facilities.
Great attitudes lead to great performance
Arvida’s pathway to success has been delivered through a commitment to actively improving the lives and wellbeing of their residents. Investment in new thinking across the organisation has allowed Arvida to implement this change theme. The results are evident in outstanding staff and resident surveys and translating into revenue and profit results nourishing some healthy growth.
“A key area of focus in the care business is occupancy, which is the driver for revenue performance. It's essential to have a good reputation to drive occupancy,” Arvida CEO Bill McDonald said. Occupancy at Arvida’s care facilities is at industry leading levels with some facilities permanently operating at close to full capacity.
McDonald also points to the firm’s acquisition strategy as a key differentiator from others in the sector. “Our ability to acquire and integrate well provides access to immediate new cash flows and new brownfield development opportunities that lead to further cash flows,” he explained.
“Part of the reason for the success of our acquisition strategy is that we don't try to corporatise the businesses when we acquire them, but rather we nurture them. We value the businesses that we buy on the basis that they're already operating well, or else we wouldn't be interested in them in the first place,” McDonald reported.
“Over time, we bring the culture more into alignment with the broader Arvida business. It’s a journey that can't be rushed and one that enables us to align our values. If done well, the acquired businesses and resident bodies enjoy the process, and they're glad to have the increased governance and support that we can provide to them as a larger business.”
Growth through better development
Another 170 new homes are to be built by Arvida this year, lifting to an additional 200 new homes built in subsequent years. An independent report ranked Arvida the 12th largest builder of residential homes in New Zealand last year.
Mr McDonald said, “we are experiencing strong demand for our villages and care facilities and we're only expecting that to grow as the population ages.
“About 65 per cent of our portfolio is needs-based product mix as opposed to retirement product. This makes our cash flows generally more resilient despite the property market cycle as the choice becomes more one of necessity.”
Capacity constraints in the country’s construction industry pose numerous challenges for developers, particularly in Auckland where housing supply has been under pressure for some time.
“The current environment in the construction sector certainly provides challenges both from a workforce perspective and also a materials and pricing perspective. Thoroughness in development feasibilities is essential to choosing developments that meet our hurdles and ensuring that we have the capacity to complete them on time and on budget and to the level of quality desired. I think that getting those three factors right is always difficult, but critical if you're going to be rolling out at the rate which we are currently,” he affirmed.
“We've been able to pick up some excellent people and put in place some excellent on the ground construction teams that have made what we’re proposing possible. Otherwise, I think looking at rolling 200-odd units out per year would be a challenge. We're very comfortable with the team and depth of capabilities we've been able to develop in such a short time.”
That level of drive is instilled in Arvida’s organisational culture. It was one of the insights gained from the staff engagement survey this year where 96 per cent said they were determined to give their best effort every day. “We embrace hard work at the core, but there’s a level of collegiality which enables us to enjoy working together and causes us not to be afraid to ask questions, try new things, and push the envelope when that kind of thinking is required.”
“Our hierarchy is very flat. We see our village managers as the key people in our organisation who are running our remote businesses without a structure of regional management over the top. They simply have a network of support through our support partner system … they have governance, guidance, and support when it's needed. We don’t limit their ability to shape the business to the needs the local community. That in a nutshell is driving our innovation and our results.”
Building for longer, well-lived lives
“We've been strict on how we develop our product. That to us is not only about providing a built form, but being more than just property developers, and having specific IP that enables us to actually improve people's lives and transform the ageing experience through the mix of service and physical assets.”
The Arvida care model is called The Attitude of Living Well, encompassing the company’s Five Pillars of Wellness. “To us, the attitude of living well is at the heart of the business — it has enabled us to build a purpose, thus creating a culture and mindset within the business so that all of our workforce and residents are thinking on the same page. That's critical,” he said.
“We see that cultivating an attitude within our communities that enables people to live well is fundamental to the level of success of an ageing community.
“Our five elements are: moving well, eating well — which is critical of course — and if you're doing those two things, resting is important. As we age, our brain functionality can deteriorate, therefore brain exercise and thinking exercises are essential to our ability to live well. Probably the most important for us is engaging well and being connected to the community, as that’s one of the key indicators for having a successful older age.” McDonald described the closeness between Arvida’s villages and their greater communities as, “it’s where a resident enters from the back door and the local community comes in the front door.”
He added, “It's all about moving away from that clinical approach to care and moving more into how people would actually like to live, and how they see themselves ultimately living in their own homes. It’s very simple at its core, but our strategy reflects how we would all like to age.”
To that end, Arvida doesn’t impose a uniform requirement on staff. “We prefer that our teams and our nurses come to work in their own clothes to reflect their own character and personality. They are in essence coming into our resident’s home each day. We actively design our facilities to be very much like home, which of course they are.” We think that’s the right attitude for helping people live their best lives as they age.