Morning Pointe founders learn from previous generation to build major regional chain of assisted living centers

Franklin Farrow, left, and Greg A. Vital are Chief Operating Officer and President and CEO of Independent Healthcare Properties, LLC.
Franklin Farrow, left, and Greg A. Vital are Chief Operating Officer and President and CEO of Independent Healthcare Properties, LLC.

Company at a glance

Name: Independent Health PropertiesBrands: Morning Pointe Assisted Living, Alzheimer’s Memory Care Centers of ExcellenceFounded: 1996Owners: Greg Vital and Franklin FarrowHeadquarters: OoltewahNo. of existing facilities: 27New facilities: Alzheimer’s Centers in Louisville and Russell, Kentucky and a Morning Pointe assisted living center in Spring Hill, Tennessee will open in 2017 and another Alzheimer’s center will open in 2018 in Franklin, TennesseeStaff: Over 1,400 employeesResidents: More than 1,600 seniors

As America's first "Gig city," Chattanooga has begun building a web- and tech-based entrepreneurial economy in the Innovation District created downtown nearly two years ago.

But two decades earlier and 15 miles to the east, an entrepreneurial venture of a much different sort took root when a pair of Ooltewah entrepreneurs left one of the nation's biggest nursing home chains to build a business serving a different niche in the senior care market. Greg Vital and Franklin Farrow have since built their Independent Health Properties (IHP) into one of the biggest operators of assisted living and Alzheimer's care facilities in the region, developing nearly 50 facilities with more than 1,200 employees at 26 existing facilities and plans for even more.

"Over 20 years ago, we stepped out from an established career in a major company and as entrepreneurs said there is a need for a place for those who are living longer and need options and choices that we can help provide," Vital says. "Not everyone needs to go to a nursing home. We saw the opportunity to expand into assisted living and the early need to provide Alzheimer's Care."

Vital and Farrow previously worked at Life Care Centers of America, the nation's biggest privately owned nursing home operator. While the Cleveland-based firm was focused on skilled nursing, Vital and Farrow saw a new opportunity. They started out building facilities for other operators in the assisted living and memory loss care fields that were beginning to grow in the 1990s. So, after developing their business plan at night and on weekends while still working at Life Care, Vital, then 39 years old, and Farrow, then a 26-year-old assistant to Vital, launched Independent Healthcare Properties.

The original business plan developed by the pair focused on finding locations, constructing buildings and leasing the completed structures to other nursing home companies that wanted to be in the assisted living home business. In the first five years, Independent Health Properties built and leased a dozen facilities, which were leased to companies such as Wellington Place (now part of Brookdale Senior Living), Heritage Health Care and others.

By 2002, Vital and Farrow shifted their model from building facilities for others to creating a management company to run such centers. IHP developed its own assisted living center brand, Morning Pointe, which has grown to operate centers in five states. The company added the Lantern at Morning Pointe Alzheimer's Centers of Excellence, and the Alzheimer's and memory loss communities have since grown to represent about 40 percent of the company's revenues.

Along the way, IHP also developed the planned senior housing community known as Greenbriar Cove in Ooltewah, which the company later sold.

Vital and Farrow said the decision to branch out on their own and grow their business was aided by the advice and encouragement of other successful entrepreneurs who had done the same in a previous generation.

"Chattanooga has always been a place where entrepreneurs from one generation help the next, and that was certainly true for our business," Vital says. "We were privileged to develop associations with some great business leaders who encouraged us to think beyond a career in corporate America."

Vital and Farrow, who worked under billionaire Forrest Preston at Life Care Centers before starting their own business, credit three other local business leaders from the previous generation working in other industries in helping build their business.

The late Jim Berry, owner of Republic Parking Systems, helped the pair figure out ways to find and acquire the best sites. Former CBL & Associates Properties' Chief Financial Officer John Foy was a mentor for helping Vital and Farrow with real estate management and leasing. And U.S. Xpress CEO Max Fuller offered valuable advice on corporate strategy and operations, as well as some initial capital for their projects.

"These three were instrumental in different ways to incubate our business when we got started and, like many others in our town, we've tried to now help other entrepreneurs coming up after us," says Vital, who was inducted into the UTC Business School's Entrepreneurial Hall of Fame in 2013 along with Fuller. "We duplicated other business models from their experience to develop this business."

At the same time that IHP was created, the Chattanooga/Hamilton County Business Development Center was established as a business incubator downtown. Since then, other programs for startup businesses have been added locally, including the state's first business accelerator program at The Company Lab, and a private investment and incubator facility known as the Lamp Post Group started by the owners of the former Access America logistics company.

"But I think Chattanooga had a lot of business incubation happening long before there were these type programs and even before the incubator term was popular," Farrow says. "In this town, those who have had a good run in business are willing to pay it forward and help others to succeed. Chattanooga has that environment, and I think that has helped us tremendously. This is a great place to get a start."

Vital says he is also trying to develop the talent and creativity within Independent Health Properties "to build the bench strength for our next 20 years." The company has created a think tank to analyze trends in population, healthcare and development to help the business with trends in demographics, pricing, marketing, services and locations.

To accommodate projected future growth of the company, IHP recently acquired three acres from the Honors Course adjacent to Cambridge Square in Ooltewah, where the company plans to build a new and bigger corporate center.

"We will break ground on that facility in 2018," Vital says. "We anticipate the new corporate support facility to be about 25,000 square feet, which will be another major investment in our hometown."

The new corporate headquarters will be two and half times as big as the existing 10,000-square-foot building that IHP built in 2012.

"This will give us more room for additional staff, but also give us meeting facilities we need to continue to provide the training and reinforcement of our corporate culture that is so essential in a changing health care market," Vital says.

For all its growth, the company has kept a regional focus on the Interstate 65 corridor from Indianapolis, Indiana, to Tuscaloosa, Alabama, and the Interstate 75 corridor from Lexington, Kentucky, down to Calhoun, Georgia.

"We believe the five states we operate in have a similar culture and are within a five- to six-hour drive where we can stay in touch and make sure we understand each community and their needs," Vital says.

The aging population is creating more demand for both assisted living and memory loss treatment facilities. The number of Americans 65 and older is projected to grow by nearly 40 percent by 2030, while those over the age of 85 are expected to increase by nearly 50 percent in the same period, according to projections by the U.S. Bureau of Census.

Vital said the average age of residents in Morning Point senior campuses 20 years ago was 82, and that has since increased to an average age of 86.

"People are living longer, staying in their own homes longer and, ultimately, more people are needing Alzheimer's or other memory care assistance," Vital says.

About one of every three persons over the age of 85 suffers from some level of memory loss, and that share jumps to 50 percent for those over the age of 90.

"We think there's plenty of opportunity for more growth in the Mid-South area."

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